Although it could take months to unravel the full list of people and companies affected by the collapse of money manager Bernard Madoff’s $50 billion hedge-fund and alleged Ponzi scheme, published reports include a Steven Spielberg charity as well as familiar names in the Hollywood production and financing communities.
The Wall Street Journal reported late Sunday that, based on regulatory filings, Steven Spielberg charity the Wunderkinder Foundation earned 70% of its interest and dividend income from Madoff in 2006.
A Spielberg representative confirmed to the Journal that the foundation suffered losses on its Madoff investments. He couldn’t comment on whether Spielberg had any of his own money invested with Madoff.
Among the largest is the Royal Bank of Scotland, which recently led the banking syndicate that invested $113 million in Pinewood Shepperton, Europe’s largest studio group.
Also affected are France’s BNP Paribas, a major investor in Luc Besson’s Europa Corp., and Nomura Holdings, a conglomerate that contains the Japanese bank that recently invested $16 million in Indian digital cinema pioneer Real Image Media Technologies, parent of North America’s Qube Cinema.
The Engelbardt family is also listed as a significant investor in Madoff’s funds. Sam Engelbardt was a producer and financer “George A. Romero’s Diary of the Dead,” “Paris, je t’aime” and David Mamet’s “Edmond.” He is also the managing director of Beverly Hills’ Lambert Media Group, an investment and management company that focuses on entertainment, media and technology. Its website lists relationships with Village Roadshow Pictures, Concord Music Group and Village Roadshow Cinemas.
The 70-year-old Madoff, a former chairman of the Nasdaq stock market, was arrested Thursday in what prosecutors say was a $50 billion scheme by the Wall Street veteran to defraud investors, possibly the largest ever pinned on an individual.
The roster of potential victims includes former Philadelphia Eagles owner Norman Braman, New York Mets owner Fred Wilpon and J. Ezra Merkin, the chairman of GMAC Financial Services. Private Swiss bank Reichmuth & Co. says it has $327 million at risk, while Geneva-based Banque Benedict Hentsch Fairfield Partners says it has $47.5 million at risk. Wilpon and his family havemore than $300 million at risk, but MLB commissioner Bud Selig denied reports the Mets franchise could be harmed.
Alleged victims include a long list of Madoff’s friends, neighbors and country-club associates.
Securities and Exchange Commission enforcement attorneys were in federal court Friday to seek emergency relief for investors, including an asset freeze and the appointment of a receiver. Federal judge Louis L. Stanton granted the agency’s request, enabling it to seize the assets of Madoff’s 48-year-old company, Bernard L. Madoff Investment Securities and appointing Lee S. Richards of the law firm Richards Kibbe & Orbe as receiver.
Financial consultants had been suspicious for years about Madoff’s astounding run of success. They couldn’t figure out how he managed to produce steady returns, month after month, even when everyone else was losing money — and leave almost no footprint while moving billions of dollars in and out of the markets.
“People would come to me with their statements and I couldn’t make heads or tails of them,” said Charles Gradante, co-founder of the Hennessee Group and adviser to hedge fund investors.
“He only had five down months since 1996,” Gradante said. “There’s no strategy in the world that can generate that kind of performance. But when people would come to him and say, ‘How did I make money this month?’ he didn’t like it. He would get upset with people who probed too much.”
And yet there had been warning bells for years about Madoff’s company. Jake Walthour, a principal at the hedge-fund consulting firm Aksia, said his firm was hired to investigate Madoff’s business dealings by a potential investor several years ago.
The probe raised several red flags, he said. Madoff’s returns were “abnormally smooth” from month to month and had none of the volatility usually associated with stock investments. It seemed impossible to replicate his investment strategy or verify his track record.
Madoff claimed to be moving as much as $13 billion in and out of the market every month but “no one on the street could verify it or even see his footprints,” Walthour said. “That organization was incredibly secretive.”
Madoff issued only simple paper reports to investors, not detailed electronic data streams that indicate how those investments are doing. There were few if any outsiders involved in his business. His auditor was a tiny accounting firm in Rockland County, New York, that no one had ever heard of before.
“We decided there are several scenarios here, one of which is, this could be a Ponzi scheme,” Walthour said. “None of our clients invested.”
(The Associated Press contributed to this report.)