The list of Minnesotans and organizations involved in the financial collapse of Bernard Madoff reads like a small Twin Cities phone book.
From prominent business leaders to charitable organizations and family trusts, there are nearly 200 Minnesota addresses listed on Madoff's ledgers, according to a list filed Thursday with the U.S. Securities and Exchange Commission. Madoff, a Wall Street money manager, is charged with stealing $50 billion in what may be the largest Ponzi scheme ever.
The potential losses are not listed, but they are expected to be considerable and probably unrecoverable.
"I won't have to eat any differently," said commercial real estate developer Gary Holmes, who put his losses well into seven figures. "But I know some people who are worried if they're going to eat, and where."
Among the Minnesotans on the list is Harold Roitenberg, the retired CEO of the former Modern Merchandising chain of catalog showrooms and a real estate investor who in December said he lost millions of dollars to Madoff.
Star Tribune sports columnist Sid Hartman is on the list, as is businessman and casino entrepreneur Lyle Berman. Hartman wouldn't disclose exactly how much he lost.
"Madoff was peanuts compared to the money I lost on McClatchy [newspaper] stock that I was stupid enough to hold until the end," he said.
Berman, chairman and CEO of Lakes Gaming Inc., invested in two Madoff-controlled funds, but he wouldn't say how much he thinks he lost.
"I heard about Madoff 25 years ago from some friends in California and decided to give him a try," Berman said. "It worked out fine for quite a while."
While Berman has "zero hope" of recovering his money, he hopes to recoup the taxes he paid on gains from the funds. Because those gains were stolen, Berman said, they can be written off.
List ran the gamut
The full list of clients ran 162 pages and includes Madoff's relatives, prominent businesspeople, celebrities and charitable institutions. Broadcaster Larry King, Hall of Fame pitcher Sandy Koufax and actor Kevin Bacon are on the list, along with thousands of other Madoff clients.
The list, compiled for a court-appointed trustee in the case, includes people and entities listed in the money manager's records as account holders during the 12-month period leading up to his arrest in December. It also includes scores of others who called an investor hot line set up by the Securities Investor Protection Corp. (SIPC). While many of those listed likely lost money with Madoff, it is not clear that all of those on the list were victims, or that all of the victims have been identified.
Many of the people who lost money with Madoff did so through investment "feeder" funds, which turned that money over to the New York money manager. Their names would not have been listed individually in Madoff's books, and would only be included in the court's list if they have stepped forward to make claims.
The client list was released shortly after a whistleblower in the case, Harry Markopolos, told House lawmakers at a hearing that he had discovered that additional funds had relayed investments to Madoff in Europe -- and that the managers of these feeder funds may have ignored signs of the massive fraud scheme.
The alleged scheme has swept up scores of wealthy Twin Cities businesspeople who were enticed by Madoff's ability to post unwavering, gravity-defying returns. Local attorneys contacted by alleged victims said last year that combined losses in the Twin Cities could exceed $300 million.
"For the vast majority, the only recourse is the SIPC [a government insurance fund for clients of failed brokerages] and whatever else the courts can accumulate to return to the victims," said Minneapolis lawyer Andy Luger. "We're not optimistic."
The philanthropic community fears that a ripple effect from the Madoff losses will erode charitable giving.
The Minneapolis-based Phileona Foundation, the 28th-largest foundation in the state by assets, was on Madoff's list. Other local foundations on the list include one run by the family of Charles and Candice Nadler, and one created by the late Harvey Werner of Minnetonka, who owned the trucking company bearing his name.
Among the possible victims is the Mayo Clinic, where one of the Madoff-affected funds helps finance the Miles and Shirley Fiterman Center for Digestive Diseases.
Funds such as the Fiterman Foundation typically provide 25 to 50 percent of the budget for medical centers within the Mayo Clinic, spokesman Lee Aase said.
"When foundations can't make contributions for the food shelter or for an educational facility, when that dries up, the quality of a community shrinks," said Minneapolis attorney Charles (Bucky) Zimmerman, who is advising 10 people who are on the Madoff list.
Several financial advisory firms show up on the list, apparently by mistake. Accredited Investors Inc., Marquette Asset Management, Lowry Hill and the firm Lurie Besikof Lapidus & Co. all said they did not direct investments with Madoff but had clients who independently invested with him.
Ross Levin of Accredited Investors said that his firm tried to dissuade clients from investing with Madoff despite the good returns he provided.
"We said we didn't know how he did it. It just didn't make sense that his returns could be so consistent," Levin said. He speculates that his firm got on the list because some clients who did invest with Madoff had included the office address on some forms.
Holmes, president and CEO of CSM Corp., said that he decided to invest with Madoff a couple of years ago, after watching him deliver year after year of strong financial returns. Holmes said he had ramped up his investments in the past six to nine months.
"I went out to New York and saw him. He was very charming, very engaging. I was looking for a big ego and there wasn't one. He was not a bragger," Holmes said.
"You can't beat yourself up over something you can't do anything about."
Staff writers Bob von Sternberg, Dan Browning and news services contributed to this report.
