Florida's Palm Beach Rocked By Madoff Scandal Businesses and individuals are scrambling to determine how much money they may have lost in what federal prosecutors are calling a giant Ponzi scheme run by investment manager Bernard Madoff. Palm Beach, where Madoff had a home and found many of his clients, might have been hit harder than any other community.
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Florida's Palm Beach Rocked By Madoff Scandal

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Florida's Palm Beach Rocked By Madoff Scandal

Florida's Palm Beach Rocked By Madoff Scandal

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RENEE MONTAGNE, Host:

This is Morning Edition from NPR News. I'm Renee Montagne. Banks, individuals, and even charities are trying to determine how much money they've lost from investments made through Bernard Madoff. He's the New York money manager behind what may be one of the biggest Ponzi schemes in history. Losses could total at least $50 billion.

And yesterday a federal judge in New York took steps to liquidate Madoff's firm. We'll hear a report on why so many people were willing to invest with Madoff. First, NPR's Greg Allen reports on one community hit hard by the scandal. Bernard Madoff had a home and found many of his clients in the ritzy enclave of Palm Beach, Florida.

GREG ALLEN: In Palm Beach, few people follow the money closer than Richard Rampell. He runs an accounting firm on the island founded by his father in 1959. Rampell says he started getting lots of calls Friday from clients who'd invested their money with Bernard Madoff, and they all had the same questions.

RICHARD RAMPELL: Well, is my money all gone? Can I get any of it back? I mean, some of these people are very wealthy and they're concerned - people that live in expensive houses or expensive condominiums and may have lost everything. We don't know.

ALLEN: Rampell happens also to be a board member of the NPR foundation. Over the years, he says, his clients received regular statements showing the steady return Madoff was known for. Some clients withdrew millions of dollars from the fund with no problems, but many other investors put almost all of their savings into Madoff's fund.

One thing many of Bernard Madoff's clients had in common was their membership here at the Palm Beach Country Club. It's an elite club with a beautiful well-trimmed golf course, ringed by palms, overlooking the Atlantic Ocean. Madoff was a member. Other members sought introductions in hopes of being allowed into an even more exclusive investment club that brought steady double-digit returns even when the market was down. Rampell says he once ran into Madoff and asked him how he delivered such consistently high returns.

RAMPELL: So, I asked Madoff, you know, what do you do? And he says, well, I don't tell you my trading strategy, that's proprietary - which is not unusual. He says, but I can tell you this. I can make money when the market goes up. I can make money when the market goes down. I cannot make money when the market stays flat, which indicated to me that maybe he's doing some sort of day trading.

ALLEN: And not all of Madoff's clients were super-wealthy. Arnold Sinkin is a retired carpet salesman in Boynton Beach who put his life savings, nearly a million dollars, into Madoff's fund. He's now being forced to put his townhouse up for sale. He and his wife, Joan, were interviewed on ABC's "Good Morning America."

(SOUNDBITE OF TV SHOW "GOOD MORNING AMERICA")

JOAN SINKIN: You can get in with Bernie Madoff. Wow, you're lucky. And it's just gone in one telephone call.

ARNOLD SINKIN: This is what they refer to as the golden years, when you retire and you try and enjoy life. And then you get wiped out in 48 hours.

ALLEN: All over Palm Beach, from the country club to the ultra-exclusive Breakers Hotel, Madoff and his $50 billion fraud has been the talk of the island. Over the weekend, at least one new multimillion-dollar condo near the Breakers was put on the market by an investor hurt in the Madoff fallout. More could soon follow. For answers, panicky investors are turning to lawyers, like Brad Friedman of Milberg LLP. Five days into the scandal, Friedman already represents more than one hundred of Madoff's clients, some with investments totaling over $100 million. Friedman says one of his first efforts will be to find out where all the money went.

BRAD FRIEDMAN: Fifty billion dollars did not just go up in smoke. It didn't disappear. It went someplace. If that money went into some of his other operations, we're going to chase that money down and recover it for investors.

ALLEN: Friedman says fallout from the Madoff fraud is just getting started. As investors come to terms with their losses, ripple effects will spread throughout the economy. And one of the first casualties, he says, will be charitable giving.

FRIEDMAN: The victims of this fraud, for whatever reason, tended to be overwhelmingly Jewish. I suppose many of them because they met Mr. Madoff through a Palm Beach Country Club, at the Glen Oaks Country Club. These communities are decimated, and they're some of the most philanthropic communities in the country.

ALLEN: Even worse, some Jewish charities had their savings invested in Madoff's fund. One philanthropic group, the Jewish Federation of Greater Los Angeles, says it lost more than 10 percent of its endowment, $6.4 million. And yesterday, three foundations, including the Chais Family Foundation which gives millions of dollars yearly to Jewish causes, announced they were being forced to shut down. Greg Allen, NPR News, Miami.

MONTAGNE: To find out more about Bernard Madoff and his connections to clients in South Florida, go to our Web site at npr.org.

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