Wall Street Investment Scam Victims Emerge
Like a mutant virus, the financial fallout of Bernard Madoff's multi-billion-dollar scheme continues to spread across the United States, Europe and Asia, touching everyone from the anonymous rich in ritzy Palm Beach to A-list Hollywood directors, Nobel Laureates and former NFL owners like Norman Braman, reports CBS News Chief Investigative Correspondent Armen Keteyian.
Around the world, investors who sunk cash into veteran Wall Street money manager Madoff's investment pool spent the weekend calculating how much exposure they might have. The 70-year-old Madoff, well respected in the investment community after serving as chairman of the Nasdaq Stock Market, was arrested Thursday in what prosecutors say was a $50 billion scheme to defraud investors.
Retired West Palm Beach, Fla. couple Joan and Arnold Sinkin lost their life savings in the scheme. "Our life is upside down," Joan told CBS' The Early Show.
Her husband added, "It's like a bad dream. We're bankrupt."
But the victims of Madoff's scheme are not just retired Floridians who invested their life savings. Rather, financial institutions, charities and savvy investors - who supposedly knew what they were doing - were all taken in by the fiendish scam.
"There were a lot of very sophisticated people who were duped, and that happens a great deal when you've had somebody decide to be unscrupulous," said Harvey Pitt, a former chairman of the Securities and Exchange Commission, a regulator in charge of monitoring investment funds like the one Madoff operated.
"It isn't just the big investors," he said. "There's a lot of charitable and foundation money involved in this, which is the real tragedy."
"Madoff has just hurt so many innocent people who really didn't deserve to be hurt," Braman, former owner of the Philadelphia Eagles, says.
Braman joins an ever-widening circle of victims in the $50 billion Ponzi scheme. Including:
"The money needed to fund the programs of the Lappin Foundation is gone," it said. "The foundation staff has been terminated today."
All of this raising questions as to how the SEC could have investigated Madoff in 2007 - without bringing charges.
"The question is what did they see, what did they know, and why did the investigation close?" says former SEC attorney Jacob Frankel.
At Madoff's securities firm in Manhattan a small squadron of investigators was digging through records. Trying to determine if, as some believe, money is stashed overseas, and whether or not Madoff could have cooked a complicated set of books - as he claimed - all by himself.
"It's hard to believe one person could have pulled off such a large fraud," Frankel said.
Already two charitable foundations have shut down; and many in Palm Beach are reportedly putting jewels, and even these condos up for sale, Keteyian reports. The price of trusting a man destined, it appears, to set a whole new standard for fraud.
Meanwhile, a federal judge has signed an order saying investors who may have been duped need the protection of the Securities Investor Protection Act.
Judge Louis Stanton also directed that proceedings to liquidate the assets of Bernard L. Madoff Investment Securities LLC be moved to bankruptcy court.
The order was signed Monday afternoon after the Securities Investor Protection Corp. submitted papers asking for the protection for investors.
Stanton assigned Irvin Picard to preside as trustee over the liquidation.
The order came just days after federal prosecutors charged Madoff with securities fraud.