Tony Steffanelli Fla Investor- Madoff victim tied to Michael Bienes

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Madoff's Man
Fort Lauderdale multimillionaire Michael Bienes never cut ties with Bernie Madoff — even after the SEC shut him down.
By Bob Norman
Published on January 20, 2009 at 2:52pm
Millionaire philanthropist Michael Bienes has been the toast of South Florida, a man who threw lavish parties and fundraisers at his $7 million estate on the Intracoastal, where he seemed to be a cross between Gatsby and Meyer Wolfsheim.

Now sources say he is a ruined man in that same opulent house, so anguished that family and friends are concerned he may take his own life.

The 72-year-old Bienes, they say, lost his own massive fortune in the Bernie Madoff scandal. The New York Times quoted a Bienes attorney saying the man had lost tens of millions of dollars. On top of that, Bienes steered hundreds of people, many of them his friends, to invest their savings in what turned out to be a $50 billion rip-off.

If you want to know the extent of the fallout from the Madoff scandal here, you have to start with the distraught man in the Bay Colony mansion. The Fort Lauderdale arts community has lost perhaps its greatest benefactor. Bienes abruptly resigned his board post at the Broward Center for the Performing Arts after the scandal broke. And the Archdiocese of Miami is also reeling from the downfall of a man it has knighted.

But it's not just the arts crowd or the church feeling the pain; it's all those friends, associates, and acquaintances whom Bienes fed to Madoff. Those same people, some of whom lost fortunes in the Madoff disaster, are now left to wonder: Did Bienes know Madoff's lucrative fund was a Ponzi scheme? Is he a perpetrator, a victim, or a bit of both?

"I heard [Bienes] lost everything," says Tony Stefanelli, a longtime friend who has lost about $14 million in the Madoff scandal. "I understand he was crying and everything else. I don't blame Michael and don't believe he was involved in any way with the scamming."

That may be true, but the fact remains that Bienes has already been caught violating the law for Madoff. Bienes and his longtime partner, Frank Avellino, were among the first "feeders" to Madoff's fund back in the 1960s, raising hundreds of millions of dollars from their accounting firm clients, friends, and just about anybody they could find who had money.

By the early 1990s, they were managing 3,200 investors who'd put in nearly half a billion dollars, all of which they funneled into Madoff's hands.

Unfortunately, the operation was illegal, because Bienes and Avellino were accountants and not licensed to trade securities. The Securities and Exchange Commission caught them in 1992, fined them hundreds of thousands of dollars, shut them down, and forced them to return $440 million in investments they'd raised.

But that appears to have just been a bump in the road in the lucrative relationship between Madoff and Bienes. Investors say Bienes and Avellino never stopped dealing with Madoff or raising money for the swindler's fund. They simply steered some of those same investors — who were accustomed to Madoff's famed 18 percent returns — to Fort Lauderdale accountant Michael D. Sullivan.

Two investors, who spoke on condition of anonymity, told me they were encouraged by Avellino and Bienes to simply put their money into Sullivan's account after the SEC returned their money. Both did so and both lost hundreds of thousands of dollars when Madoff went down."The only irregularity was that they were not registered to sell securities," says the investor, who lost about $200,000 and spoke on the condition of anonymity. "Everybody got every penny back, including interest. Nobody got hurt. So we were all sitting there with our money and put it back in with Sullivan."

Last month, Sullivan sent investors a letter saying all their money had been lost in the Madoff scandal, the source said. The Florida Office of Financial Regulation could find no broker's license or investment adviser's license in Sullivan's name. I called Sullivan's office and asked for comment regarding Bienes and Madoff. The man who answered the phone said Sullivan wasn't available.

"I am just helping out during this time," he said with an almost funeral-like tone.

In addition to the Sullivan connection, Bienes and Avellino partnered in a series of companies that also had investments in Madoff's fund in the years following the SEC action, according to another investor who produced documents proving it.

One document shows that among those investors was the Christ Church United Methodist, which Sullivan attends. When asked about the church's Madoff investment, Pastor Alex Shanks said he would call me back. He hadn't done so prior to publication time.

That investor, who also asked to remain anonymous, also provided documents from companies that were invested with Madoff and run by Bienes and Avellino. Avellino sold his $2 million house in Fort Lauderdale in 2007 and owns a winter home in Palm Beach.

It gets worse. Avellino was recently sued by the housekeeper of yet another residence, his $10 million summer home in Nantucket. The housekeeper claimed in Massachusetts civil court that Avellino caused her to sink her life's savings of $124,000 into something called the Kenn Jordan Foundation. She claims that Avellino informed her shortly before the Madoff scandal broke that all her money had been lost.

Florida corporate records show that Avellino ran the Kenn Jordan Foundation from his former address in Fort Lauderdale. It was dissolved in 2001. Avellino and Bienes also ran other partnerships, including Mayfair Bookkeeping Services, from that same address before switching it over to Avellino's home address in Palm Beach last year.

The Mayfair firm also does business in London, where the Bieneses own a home and have donated millions to the London opera scene. Madoff, incidentally, also has a headquarters in London, specifically — where else? — in the Mayfair financial district.

Interestingly, an early registered agent listed on companies run by Bienes and Avellino was Keith Wasserstrom, the disgraced former Hollywood commissioner who was convicted in 2007 of official misconduct. His involvement ended in the mid-1990s.

Well-heeled friends of Bienes' generally don't want to talk about the situation. When I called longtime chum and one-time business partner Fred Millsaps, his wife, Audrey answered the phone. She told me her husband didn't want to discuss Bienes or Madoff.

"He's very distressed about it," she said. "Many people are very distressed about it."

I asked her if she and Fred were invested in Madoff's fund.

"Bienes and my husband talked about it, but the decision was made not to invest, thankfully," she said.

Gauging the damage the Madoff scandal has done to South Florida isn't easy to determine, but there were definitely hundreds of victims. If Bienes is truly wiped out, then that alone counts as a tragedy for many charities.

Bienes told a London publication in 2005 that he and his wife, Dianne, had donated some $30 million to causes in South Florida. Indeed, they gave enough money to have their names etched in plaques all over town.

The couple donated $1 million to the Broward County Library, where the downtown campus has the Bienes Museum of the Modern Book. As for the Catholic Church, Bienes gave $4 million to Holy Cross Hospital for the Michael and Dianne Bienes Comprehensive Cancer Center. More recently, they poured $2.5 million into St. Thomas Aquinas High School, which then opened the Bienes Center for the Arts.

The Archdiocese of Miami knighted Bienes and his wife recently, not a small feat for a Jewish kid from New York.

Piecing together Bienes' life isn't easy. He became a certified public accountant and worked at a New York firm with Madoff's father-in-law, Saul Alpern. He and Avellino met Madoff at the firm and began funneling investments to him in the 1960s.

Bienes was originally married to a Jewish woman and had children before a divorce. Sources say he has little to no contact with his children.

He then met and married Dianne Dydo. The couple, who have no children, began visiting Fort Lauderdale in 1974 and settled here permanently in 1987, according to old newspaper accounts.

"They were thought of as these wacky people who would give away money," one of the Madoff victims says.

Before they left for London, Dianne took elocution lessons to learn to speak with a British accent. At one point, both of them had their teeth capped with white "veneers."

"They were these big, white Chic­let things — they could barely talk with them," the source says.

The Bieneses were well-known for the parties they threw at their Bay Colony home, which is splayed across two lots, one with the 6,000-square-foot house, the other with a 10,000-square-foot "party pavilion" they built in 1991. The estate includes a large indoor pool, a climate-controlled wine closet, and a cold-storage compartment for Dianne's furs.

In a 1993 article about the Bienes estate, the Sun-Sentinel described the home as "an elegant configuration of stately columns, towering picture windows and expansive terraces that seem to go on... and on... and on."

The Sentinel, and to a lesser extent the Miami Herald, routinely wrote glowingly of the couple's home and the parties they held in the early 1990s, when the Bieneses were donating millions to the Broward County Public Library, the Florida Philharmonic Orchestra, the Miami City Ballet, and the Opera Guild of Fort Lauderdale. An example from the Sentinel: "How can you not feel good at a Bienes' party? The food is always superb. The service, impeccable. You never worry where to dump that canapé toothpick or that empty glass. Someone always appears to whisk it away. Tuesday night, chefs filled your plate at the buffet, and an attendant carried it to your table for you. All you had to do was chew."

One night in 1995, in what seems an incredibly symbolic stroke, the couple threw a "Gatsby Gala," celebrating those times of legendary parties — and legendary excess — that precipitated the Great Depression.

"The pool was covered with a dance floor, Jerry Wayne played the music of long ago," society writer Martha Gross wrote in the Sentinel. "The hooch flowed like water, and flappers swarmed about... The dinner was exquisite. Gold service plates and table wear, gold-tipped napkins, gold runners between the bowls of roses. You've got the picture — 24 carats all the way."

Interestingly, neither newspaper reported the SEC action in 1992.

Bienes' friend Stefanelli attended some of those parties. He says Bienes, whom he once vacationed with in Brazil, confided in him that the Catholic Church was heavily invested, as was Monsignor Vincent Kelly of Fort Lauderdale, along with Kelly's relatives in Ireland. The Archdiocese of Miami denied that it had any of its funds invested with Madoff.

"You want to know how it feels?" Stefanelli says. "How does it feel to be a rich, wealthy millionaire one day and the next day you have nothing or next to nothing?"

The 76-year-old Stefanelli also invested his children's money with Madoff, whom Bienes arranged for him to meet at the swindler's New York office in 1992 after the SEC action. He invested directly with Madoff, whom he says deserves to be treated like a murderer rather than allowed to stay out of jail on bond.

"My sons want to kill me right now, but my daughters are a little more understanding," he says. "My wife is ill, and I don't have much left. I have some property, but that's not easy to sell. I have enough for a few years, and I don't think I'll last much longer than that."

Through it all, he has faith that Bienes didn't knowingly lead him to desolation. But like everybody else, he can't be sure.

Contact the author:

Bob.Norman@BrowardPalmBeach.com.