From Singapore to Switzerland to Fairfield, investors are reporting losing billions in what is being called history's largest swindle.
The man behind it, officials say, is veteran Wall Street money manager Bernard Madoff, who was well respected in the investment community after serving as chairman of the Nasdaq Stock Market.
He was arrested Thursday in what prosecutors say was a $50 billion scheme to defraud investors.
One of the financial losers is Fairfield's town government's pension plan for 800 town workers and 300 retirees. The volunteer members of Fairfield's pension board had invested $22 million in Madoff's company and thought its stake had grown to $42 million.
Madoff told authorities he has been paying returns to investors using money paid in by new recruits - running a Ponzi scheme.
The list of other alleged victims who sunk cash into Madoff's investment pool reads like a who’s who of finance and the arts, including real estate magnate Mortimer Zuckerman, the foundation of Nobel laureate Elie Wiesel and a charity of movie director Steven Spielberg.
"It's good company to be in," said Ken Flatto, Fairfield's First Selectman. "We'll pursue recourse."
For years, Madoff he steadily returned 8 to 12 percent per year, no matter what and Flatto said that was attractive.
Fairfield first invested $5 million with Madoff in 1997, on the advice of Tremont Capital, its pension board's former adviser, said Flatto. In 1999, it put in $17 million more, he said.
Fairfield did hire New England Pension Consultants to advise the pension board. Though it dropped Tremont, it did not cash in its investment with Madoff.
Fairfield's pension plan amounted to $286 million when last counted, so the portion lost to Madoff is only 15 percent. Still, the $270 million in liabilities exceeds the plan's assets after subtracting the swindled $42 million.
"Other towns would love to be only 13 percent underfunded," Flatto said. "The State of Connecticut is 50 percent underfunded," he said.
The plan was valued at $350 million until last summer. The pension board is to meet Monday night in executive session to discuss litigation.
Madoff is free on $10 million bond.
The Wall Street Journal also reported potential investors and firms exposed to the alleged fraud include Fairfield Greenwich Advisors, which has offices in Greenwich, and Maxam Capital Management, based out of Darien.
The Fairfield Greenwich Group in Connecticut had part of its $7.5 billion fund invested with Madoff.
"We are shocked and appalled by this news," Jeffrey Tucker, founding partner of Fairfield Greenwich Group, said in a news release. "We have worked with Madoff for nearly 20 years, investing alongside our clients. We had no indication that we and many other firms and private investors were the victims of such a highly sophisticated, massive fraudulent scheme."
"There were a lot of very sophisticated people who were duped, and that happens a great deal when you've had somebody decide to be unscrupulous," said Harvey Pitt, a former chairman of the Securities and Exchange Commission, a regulator in charge of monitoring investment funds like the one Madoff operated.
The extent of the potential damage prompted a leading fund manager in London to lash out at U.S. regulators for failing to detect the fraud earlier.
"I think now it is very difficult for people to invest in things that are meant to be regulated in America, because they haven fallen down in the job," Nicola Horlick, the manager of Bramdean Alternatives, which has 9 percent of its funds invested in Madoff's scheme, told the British Broadcasting Corp. "This is the biggest financial scandal, probably, in the history of the markets."
On Friday, representatives from several major U.S. banks declined to comment on if they had exposure to Madoff's company. Both BlackRock Inc. and Goldman Sachs Group Inc. said they had no exposure.
The FBI has set up a hot line for investors who believe they might have been victimized by Madoff.
Authorities are also advising investors to gather any documents they have related to investments with Madoff and his companies.
Three Web sites are available to assist victims; two are administered by a court-appointed trustee and receiver, and a third belongs to the Securities and Exchange Commission.
On Tuesday, prosecutors sent a letter to a magistrate judge to say Madoff has requested additional time to meet his $10 million bail conditions. The judge ordered a hearing Wednesday.
The hot line number is (212) 384-2359.