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Dec 15, 2008 6:52 pm US/Central
Report: $100M Of Investment Scheme Came From Minn.
(WCCO)
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Federal Prosecutors say Bernard Madoff made off with more than $50 billion in an elaborate Ponzi scheme. (File)
CBS
We keep learning more and more about one of Wall Street's biggest scandals, including information about more and more money from Minnesota investors.
Federal Prosecutors say Bernard Madoff made off with more than $50 billion in an elaborate Ponzi scheme, and the Wall Street Journal estimates that $100 million of it came from Minnesota.
Sources tell WCCO-TV that he was trolling in these waters for decades.
Madoff's money trail reached around the globe and to the top of the financial world. Owners of the New York Mets and Philadelphia Eagles invested in his scheme.
So did magazine publisher Mort Zuckerman, a foundation run by Steven Spielberg and banks around the world -- a list of sophisticated investors that included dozens of Minnesotans.
Twin Cities-based drug company Upsher-Smith confirms that it invested with Madoff, but he did most of his work at Hillcrest Country Club in St. Paul and Oakridge Country Club in Hopkins, earning trust and money from prominent members of Minnesota's Jewish Community.
Sources also tell WCCO that Madoff started working Twin Cities investors 30 years ago. Back then the buy-in was $500,000, but Madoff made good over the years with dividend checks averaging 10.5 percent.
"If something sounds too good to be true, it probably is," said Professor Andrew Winton of the University of Minnesota.
Winton teaches finance at the University of Minnesota, and is not surprised that Madoff's scheme worked until the market turned down, or that Tom Petters kept his pyramid alive for so long.
"When the markets turn down, a lot of things that people weren't looking at closely during the good times suddenly are revealed to not have really been there," he said.
Late Monday afternoon, a federal judge signed an order to protect Madoff's investors and liquidate his assets in bankruptcy court.
The type of scheme is named after Charles Ponzi. Ponzi tricked thousands of people in New England into investing in a postage stamp speculation scheme in the 1920s.
He wasn't the first to run a scam like this, but Ponzi's operation took in so much money it was the first one known throughout the U.S.
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