A Wall Street power broker’s alleged “Ponzi Scheme” has strapped even more Connecticut organizations. Now attorneys in Florida are looking into the role a Connecticut bank might have had in steering money to the man authorities said is responsible, the New York Times reports.
Like the scheme itself builds, so do the number of Connecticut organizations to be duped by the alleged $50 billion scheme Bernard L. Madoff, 70, is accused of running.
Three Connecticut schools In the southwest corner of the state will be affected, according to the Stamford Advocate. Two Greenwich private schools and a Stamford Hebrew school were partly funded by foundations invested in Madoff's allegedly fraudulent fund, the newspaper reports. Read more here.
The alleged Ponzi continues its reach to Bridgeport where a local charity will lose money it needs to keep its organization going, the Connecticut Post reports. The Regional Youth/Adult Substance Abuse Program, which steers at risk youths away from crime, is facing about a $100,000 hole in its budget after a major funding partner was wiped out, the newspaper reports. Read more here.
Other Connecticut ties:
Center for Children’s Advocacy - $85,000
Center for Children’s Advocacy is a Hartford-based legal advocacy group for children. Read more here.
Fairfield Town Government - $42 million
Volunteer members of Fairfield's pension board had invested $22 million of funds for for 800 town workers and 300 retirees in Madoff's company and thought its stake had grown to $42 million. Read more here.
Fairfield Greenwich Advisors - unknown
The Fairfield Greenwich Group in Connecticut had part of its $7.5 billion fund invested with Madoff. Read more here.
Hadassah: $90 million
Hadassah is a national volunteer organization of Jewish women founded in 1921. It has 26 Hadassah chapters in Connecticut, and the Nurses’ Council, according to its Web site. Listen to the podcast here.
Maxam Capital Management - $280 million
Darien-based Maxam Capital Management may be forced to close, the New York Post reported.
History of the Ponzi Scheme
The “Ponzi” scheme was names after Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s, according to the U.S. Securities and Exchange Commission.
Ponzi thought he could take advantage of differences between U.S. and foreign currencies used to buy and sell international mail coupons, according to the SEC.
He told investors he could give them a 40 percent return in 90 days, compared with 5 percent for bank savings accounts. People responded. He took in $1 million during one three-hour period in 1921.
Though a few early investors were paid off to make the scheme look legitimate, an investigation found that Ponzi had only purchased about $30 worth of the international mail coupons.