Fort Lauderdale multimillionaire Michael Bienes never c...

Fort Lauderdale multimillionaire Michael Bienes never cut ties with Bernie Madoff — even after the SEC shut him down.

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.