Two Investors Talk About Losing Millions In Madoff Scandal

<p lang="en-US">Dec. 28--Sitting at a desk in his immaculate house in Palm City, Neil Friedman calmly pulls out a stack of trade confirmations and account statements from Bernard L. Madoff Investment Securities.</p> <p>The detailed papers show positions in a Standard & Poor's 100 index fund and such blue-chip stocks as Apple, Google, Hewlett-Packard, Schlumberger, Pfizer and Citigroup.</p> <p>For three decades, while he worked as an insurance agent and pension plan administrator and then retired to Florida, Friedman received similar statements from Madoff.</p> <p>During that time, the nest egg of Friedman and his wife, Constance, grew to $4 million. Friedman, 74, felt so comfortable with Madoff, so trusting, that he used no other investment advisers.</p> <p>"I had everything I owned with him," Friedman said. "We knew him personally. We were at parties he attended, sat at the same table. I had no reason not to be pleased with him." All that changed this month when Madoff's seemingly successful investment fund collapsed. Prosecutors say Madoff ran a $50 billion Ponzi scheme that duped sophisticated, wealthy investors such as the Friedmans and Larry Leif of suburban Delray Beach.</p> <p>Leif lost $8 million, his life savings, when Madoff's scam imploded.</p> <p>"Dec. 10, I had $8 million," Leif said. "Dec. 11, I was broke." Like Friedman, Leif is a self-made man, a successful entrepreneur who for decades entrusted his nest egg to Madoff, a money manager with a stellar reputation.</p> <p>Leif's ex-wife, Ronnie Sue Ambrosino, invested her life savings, $1.7 million, with Madoff, too. She has been touring the country in a motor home for the past few years, and after the Madoff collapse, she unsuccessfully tried to refinance the camper.</p> <p>Ambrosino was in Arizona last week, and wondering how she could afford to fill the motor home's gas tank.</p> <p>Leif and Ambrosino never met Madoff, but Leif first invested with Madoff's firm in the 1970s because a company he ran had its pension fund with Madoff. Many of his colleagues kept their money with Madoff through the years, and they, too, have been devastated.</p> <p>"This is a financial holocaust," Leif said. "Everybody in my past life is broke. They're trying to sell their house in two weeks. This is the biggest financial scandal in the history of America." Leif and Ambrosino blame federal securities regulators for not discovering Madoff's scam. They have appeared on CNN and CNBC to tell their stories. Leif hopes to testify before Congress, and Ambrosino is asking other investors to e-mail her at [email protected].</p> <p>"The only way I can get back my life is to fight for it," Leif said.</p> <p>Before the Madoff scandal erupted, Leif signed a contract to sell his home west of Delray Beach for $825,000. If that sale closes, he'll use the proceeds to support himself.</p> <p>It'll be a step down for Leif, 58. He made his money by building and selling two companies, one that made athletic clothes and gear and another that made children's tents.</p> <p>"I am the American dream," Leif said. "I did it all right. Never went to college. Was president of my own company at 22. Paid my taxes. The only thing I do wrong is I speed. And this is my payoff." For the past 11 years, Leif has lived off his savings and worked as a volunteer business coach. Until Dec. 11, he never suspected anything was amiss at Madoff's firm.</p> <p>"To give you a concept of how sophisticated it was, as soon as a company paid a dividend, it was on the account statement the next day," Leif said. "At the end of the year, his tax reporting was meticulous. He balanced to the penny every year. It was perfect." Friedman, who during his working years earned designations as a chartered life underwriter and a certified financial planner, said he, too, had no reason to question Madoff.</p> <p>"Even though I was a certified financial planner, I wasn't prepared to analyze his returns. I didn't feel I was equipped," Friedman said.</p> <p>Others looked at Madoff's investment strategy and didn't feel so comfortable. Palm Beach resident Frederick Adler said he invested "a small amount" of money with Madoff in the 1990s. But after the dot-com meltdown, Adler decided to pull his money out of Madoff's fund.</p> <p>"I got out of it probably six or seven years ago, mainly because I didn't understand it," he said.</p> <p>Adler said he had dinner with Madoff and his wife a couple of times through the years and was impressed by Madoff's demeanor.</p> <p>"They're very quiet, charming people," Adler said. "I'd like to tell you I anticipated this, but he had such a good reputation." Tel Aviv money manager Laura Goldman likewise grew suspicious of Madoff. When she lived in Palm Beach in the 1990s, Goldman happened to meet Madoff at Green's Pharmacy.</p> <p>They struck up a conversation and agreed to a business meeting at The Breakers, where Madoff urged Goldman to bring her clients to his fund. But Goldman found it odd that Madoff told her that clients were lucky to invest with him, and that he would say nothing about his investing strategy or his favorite stocks.</p> <p>"That was my first clue that he was a little off," Goldman said.</p> <p>She later made a few phone calls to options traders and learned that none of them was trading options for Madoff, which she found curious, given his huge portfolio.</p> <p>In 2001, after Barron's and trade publication MAR/Hedge ran articles questioning Madoff's returns, Goldman mailed copies to members of the Palm Beach Country Club. The reaction wasn't what she expected.</p> <p>"Those people were so hostile to me," Goldman recalled. "They said I was jealous. They said the publications were anti-Semitic. Jews had more faith in Bernie Madoff than they did in God." Friedman, for his part, said his faith in Madoff was anything but blind. He first learned of Madoff in the 1970s, while living on Long Island next door to Jerome Horowitz of Friehling & Horowitz, the auditor that approved Madoff's financial statements.</p> <p>Constance Friedman attended Far Rockaway High School with Madoff, but didn't meet him until years later.</p> <p>Madoff "was extremely glib, extremely friendly," Neil Friedman said. "He wasn't pushy. I had no reason to question him." Even though his savings disappeared, Friedman still considers Horowitz a friend.</p> <p>Friedman's financial loss stings in part because he worked long and hard to amass his life savings. He says the only thing he inherited when his father died was a wristwatch.</p> <p>A native of Queens, Friedman took his first job at 10, when he worked as a delivery boy. He served in the Army during the Korean War.</p> <p>"We always worked hard," Friedman said. "We're just like regular folks. We live normal lives." Now, he's struggling to recover from a stunning financial blow. The Friedmans' only income is $1,900 a month from Social Security. That's enough to cover their mortgage, but little else.</p> <p>Friedman already has considered, and rejected, moving in with his adult children. With unemployment soaring, he doesn't see returning to work as a likely option. Instead, Friedman is considering turning his passions for photography and gardening into jobs.</p> <p>"My lifestyle is greatly affected," Friedman said. "Nobody is hiring. I don't know what I'm going to do. We're not ostentatious, so we certainly hope to survive."</p>