We all know how massive of a securities fraud Bernard Madoff perpetrated on Americans.
Some of the more recent estimates put the losses suffered by victims of Madoff’s scheme at $65 billion.
Most also know that Madoff’s Ponzi scheme had many international tentacles.
But until I read a recent article in a Dutch newspaper, and researched a few other foreign publications, I did not have a good grasp of how vast the international involvement, connections and losses were.
In small Netherlands alone, albeit a financial powerhouse, the losses may amount to nearly 2 billion euros (approximately $2.7 billion), according to Het Financieele Dagblad.
In addition to large financial institutions such as Fortis Nederland, which has the biggest exposure (most of it because of secured loans made to third parties), there are pension funds, insurers and private individuals who were bamboozled by Madoff.
The number of private individuals who invested with Madoff in the Netherlands, and lost, is still not known, but it could certainly run into more than one thousand.
But the tentacles of Madoff’s massive fraud reached far beyond the Netherlands.
The list of duped foreign investors is immense and growing.
Other foreign financial institutions with significant exposure include the Royal Bank of Scotland, whose losses could be as high as $600 million; Man Group of Britain; HSBC of London with a possible original exposure reported to be $1 billion; BNP Paribas and Natixis of France; Japan’s Nomura; the Austrian Bank, Medici, with a $2.1 billion exposure; and Banco Santander of Spain.
The latter, Banco Santander, had a total exposure of close to $3 billion, including potential losses of clients of its hedge funds.
[Last week, Santander reached an agreement for claims against its Geneva-based, Madoff-involved, hedge fund, Optimal Investments, “bringing to $1.225 billion the amount collected so far to distribute to Madoff's defrauded customers” according to Court trustee Irving Picard, who has been filing lawsuits in Manhattan’s Bankruptcy Court against large investors to collect funds from Madoff’s, historic Ponzi scheme.]
Since Banco Santander has extensive operations in Latin America, one would expect to find many more Madoff victims there, too.
And, mira, a Latin American Herald Tribune headline, quoting the Wall Street Journal, screams: “Wealthy Latin Americans are among the biggest victims of an alleged $50 billion Ponzi scheme orchestrated by financier Bernard Madoff…”
According to the article:
… some of those affected were brought into the Madoff investment fund through Spain’s Banco Santander, which has major operations in Latin America.
“Other investors appear to have been introduced to the scheme through their friendship with Andres Piedrahita, a socially prominent, Colombian-born banker living in Madrid and London.”
Ernesto Canales, a leading corporate lawyer in Monterrey, Mexico’s industrial capital, told The Journal that Santander clients in the northern city “were invited to invest in that fund.” He estimated that Santander’s Mexican clients may have lost some $300 million.
We may never know how many Latin American investors were duped and how much they lost because, according to the Journal, “many in the region are reluctant to step forward due to the private nature of Latin American fortunes, worries about security, and concerns about tipping off local tax authorities.”
We may also never know exactly how many other foreign investors fell for Madoff’s scheme.
There are, however, estimates of the number of total world-wide victims and claimants.
One report claims that “the list of victims is immense, international and growing - at least 13,500 different accounts according to bankruptcy court documents.”
Another recent headline has: “To Date, Madoff Scam Sparked About 9,000 Claims”
One such “Madoff’s Client List,” is 163 pages long, contains around 100 entries per page, and can be found here.
On March 6, 2009, the Wall Street Journal published a list of “some of the most exposed investors.” The list is interactive and can be sorted in ascending or descending order of “exposure.”
When sorted in descending order, the list is headed by U.S. Fairfield Greenwich Advisors, at $7.5 billion of exposure.
But starting with the third one on the list, Spanish Banco Santander, with a $2.87 billion exposure, the list truly resembles a financial Tower of Babel with so many foreign financial institutions involved in or affected by Madoff’s Ponzi scheme.
And we sould remember that each of those large financial institutions on that list represents thousands of customers, clients, investors who oftentimes lost their entire life savings, thanks to Mr. Madoff.
On March 12, after pleading guilty to 11 felony counts, including securities fraud, mail fraud, wire fraud, money laundering, and perjury, Bernard Madoff was ordered to jail. If convicted he faces a 150 year sentence.
Mr. Madoff should thus have plenty of time to learn how to say “sorry” in Dutch, Spanish, French, Japanese, and in all the other languages of his thousands of victims.