City police, fire staff hit by Madoff

Millions in pension funds lost through disgraced investor

January 03, 2009|By Julie Bykowicz | Julie Bykowicz,

Baltimore police and fire employees lost about $3.5 million in pension money invested in a fund with ties to disgraced money manager Bernard L. Madoff.

Madoff's alleged $50 billion Ponzi scheme has dented public funds and nonprofits across the country, with new victims discovered daily. Also affecting Maryland is the demise of a justice foundation that routinely gave millions to organizations such as the Annie E. Casey Foundation and Baltimore's Job Opportunities Task Force. The JEHT Foundation announced days after Madoff was arrested that it had lost everything and would close at the end of this month. JEHT was slated to give a consortium of Maryland crime groups, including the Baltimore Safe & Sound Campaign, $500,000 for "crime fighting strategies," said Thomasina Hiers, assistant secretary of the state Department of Public Safety and Correctional Services. Hiers did not describe the project or say whether it could continue.

Madoff, who is on home detention after his Dec. 11 arrest in New York, provided a catalog of assets to the U.S. Securities and Exchange Commission on New Year's Eve. Regulators are working to untangle the web of affected investors.

The hit to the Baltimore police and fire pension - though just a sliver of the fund's overall investment portfolio - is the largest Madoff-related loss revealed so far in the Baltimore area.

"We took a beating just like everyone else did in '08, and this just added insult to injury," said pension board Chairman Stephan G. Fugate.

The city police and fire pension has about $1.5 billion, Fugate said. About $73 million is managed by New York-based UBP Asset Management, which, in turn, invested about 5 percent of that money with Madoff, Fugate said.

Fugate said the pension board learned about its exposure to Madoff on Dec. 16.

"As soon as we found out, we cut ties [with UBP] immediately," he said.

He said the board anticipates dissolving its relationship with UBP by March and will likely join a lawsuit filed by someone who had lost more money in the scandal.

Nationally, Jewish organizations have been hit hard by the scandal. The Rockville-based Charles I. and Mary Kaplan Foundation lists about $3.2 million in dividends and interest from a "Madoff Account" on its 2007 IRS Form 990, the most recent available online. It appears that Madoff managed most of the foundation's $31 million in assets, but organization representatives have yet to say whether they lost money.

The endowment fund of the Jewish Federation of Greater Washington, also based in Rockville, had more than $10 million invested with the now-defunct Bernard L. Madoff Investment Securities. The Associated: Jewish Community Federation of Baltimore was not affected, officials said.

Another casualty of the scandal is the JEHT Foundation, based in New York. JEHT was established in 2000, according to its Web site. Madoff managed the foundation's money.

The Job Opportunities Task Force, a Baltimore group that advocates for low-income workers and job seekers, has received money from JEHT for at least four years, said the group's director, Jason Perkins-Cohen, including $115,000 last year.

Perkins-Cohen said the group does not have any outstanding grants with JEHT but was sad to see it go under.

"This is a huge loss for the nation," Perkins-Cohen said. "JEHT was one of the few organizations helping people overcome their criminal background. When that support is lost, it's just devastating."

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.