The size of the scandal surrounding Wall Street trader Bernard Madoff's alleged fraud continues to unravel, drawing in charities, foundations and top investors. Mort Zuckerman, the head of a charitable trust caught up in the schemes, and an SEC analyst offer insight.
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The size of the scandal surrounding Bernard Madoff's alleged fraud is beginning to come into sharp and painful relief.
The heralded investment manager and former head of the Nasdaq Stock Exchange stands accused of bilking investors of up to $50 billion.
Many Madoff clients were residents of Palm Beach, Florida, where the investor has a home. Joan and Arnold Sinkin were among Madoff's less well-heeled investors, and their nest egg is now gone.
ARNOLD SINKIN, retiree:
This is what they refer to as the golden years, where you retire and you try and enjoy life, and then you get wiped out in 48 hours.
Madoff's pyramid scheme covered its losses by paying out fictional investment gains to older clients with money taken from new clients. Over the years, Madoff had cultivated a long list of wealthy investors seduced by his impressive, but fake track record of consistent returns.
In addition to private investors, the fraud has also affected charitable groups. One has already been forced to close. Foundations run by the Nobel Prize-winning author Elie Weisel, New Jersey Senator Frank Lautenberg, and director Steven Spielberg have acknowledged losses.
And some big companies are taking big hits. Banks, like Spain's Banco Santander, the Royal Bank of Scotland, and the French-concerned BNP Paribas are looking at billions in losses.
For more on those losses and how the alleged fraud continued for so long, we are joined by Jacob Frenkel, a former U.S. criminal prosecutor and enforcement lawyer for the Securities and Exchange Commission. Mr. Frenkel worked at the SEC from 1988 to 1997, but was not involved in any investigations or complaints about Madoff.
And Mort Zuckerman is editor-in-chief of U.S. News and World Report. He's also chairman and publisher of the New York Daily News. His charitable trust invested money with Madoff that lost $30 million.
Thank you, gentlemen, both of you for being with us.