One man's story of how I got involved with Madoff Tom Tugand - Tom Tugand

Madoff and Me
by Tom Tugend Jan 5 2009
Not all victims of Bernard Madoff's fraud were Hollywood stars or Palm Beach swells. Regular guys got swept up, too. Here is one man's story.

The victims of Bernard L. Madoff's fraud includes no small number of boldface names and institutional investors.

There are Hollywood moguls Steven Spielberg and Jeffrey Katzenberg, financiers Fred Wilpon and Henry Kaufman, and actors Kevin Bacon and Kyra Sedgwick.

Then there were banks like HSBC and Banco Santander, and nonprofit groups including Yeshiva University and the Robert I. Lappin Charitable Foundation.

But a number of average-Joe investors have discovered that they, too, had money invested with Madoff. Their retirement funds, family trusts, and other savings usually found its way to Madoff through "feeder" funds, some of which were run by friends, acquaintances, or financial advisers.

Since they were not direct investors with Madoff, their status in recovering any money is uncertain. But there is no doubt that they, too, are victims of what appears to be the greatest Ponzi scheme in history.

Here, in his own words, is one investor's story:

In 1992, when I was 67 years old, I unexpectedly found myself with some extra cash on hand. During the preceding half century, I had served in three wars, earned a master's degree, married, bought and paid off a house, and put three daughters through college.

I had started my fulltime working life in 1950 as a copyboy and later reporter on the San Francisco Chronicle and then, for over 30 years, was simultaneously a science writer at UCLA and a freelance journalist. My wife, Rachel, had worked full or part-time during much of that period.

We had bought a hillside house in suburban Los Angeles in 1968 and were close to paying off our mortgage.

Our two older daughters had married, were working and raising their own families, and our youngest child was independent, and likely to marry in the near future.

As a family, we were always quite disciplined about the household budget. As a matter of principle, we never got into debt and we paid off our credit card balances in full every month.

I wasn't exactly a tightwad, we traveled frequently overseas, but, as my daughters like to remind me, when they were kids and scrawled drawings, I made them use BOTH sides of a blank sheet.

So in 1992, Rachel and I found ourselves with an extra $25,000 in the bank and decided to invest it, but knew enough to know that we knew nothing about the market.

So we turned to a trusted friend, whom we shall call Phil, who was our sometime lawyer and a fellow volunteer in local political campaigns. Phil had many years of successful investment experience, and although $25,000 was pretty small potatoes in his league, we insisted that we wanted into the game.