Tufts may have lost $20 million of its endowment in Bernard Madoff's alleged $50 billion Wall Street fraud scheme, according to an e-mail sent by University President Lawrence Bacow to the Tufts community this afternoon. (Click to read the full e-mail on The Hill blog)
The university invested the money in 2005 with Ascot Partners, a hedge-fund firm that then invested the entire sum with Madoff's securities firm, Bacow said. The school has written off the total amount, which is equal to nearly 2 percent of the endowment, and its disappearance "will not significantly affect … operations," Bacow added.
The university will participate in investigations of the fraud and will attempt to recover its losses, he said.
Madoff was arrested last Thursday and charged with securities fraud for allegedly running a fraudulent advisory business and losing investors billions of dollars. The arrest came a day after the 70-year-old former Nasdaq chairman told his sons details of what he called "basically, a giant Ponzi scheme," according to a complaint filed in court.
Madoff attracted clients with promises of strong, consistent returns, but he allegedly just paid out income with the principals of newer investors. The scheme may have lasted decades.
Tufts joins a long list of large banks, charities and wealthy individuals who may have taken a hit in the scandal. At least one other institution of higher learning has reported falling victim; Yeshiva University, where Madoff served on the institution's board, said it might have lost over $100 million.
From Bacow's e-mail:
"It is personally painful for me to communicate this information to you. We deeply appreciate the trust and confidence that each donor places in the university. We also have an obligation to our students and faculty to manage these resources wisely for their benefit. You have my word that we will look closely at our experience in this case so that we can strengthen our investment process for the future."
Check TuftsDaily.com over break for continued updates.
