Some of Aspen’s wealthiest residents have been stung hard by the collapse of Bernard Madoff’s alleged $50 billion investment scam. The 70-year-old money manager, who federal authorities say targeted elite enclaves around the world, unsurprisingly had a foothold in this notoriously well-heeled resort town. Sources acquainted with local Madoff investors say the number of Aspenites with significant losses from his firm’s collapse likely numbers above 50 and possibly much higher.
By Andrew Travers, Dec 19, 2008, Aspen Daily News
“If I had to extrapolate based on the people I know and the people I know I don’t know, I would guess it’s between 75 or 100,” said Wally Obermeyer, who runs Aspen-based Obermeyer Asset Management and is among the most highly regarded wealth managers in the nation.
Restaurateur and retailer Leonard “Boogie” Weinglass said he personally knows 10 Aspenites who had significant investments with Madoff and some who had 90 to 95 percent of their life savings wiped out when the Madoff bubble burst last week. Those victims collectively lost around $150 million.
Madoff, former chairman of the Nasdaq stock market and head of Bernard L. Madoff Investment Securities LLC, was arrested by federal agents in New York last Thursday on securities fraud charges. The allegations stem from an invitation-only offshoot investment firm Madoff ran that apparently had no legitimate investments. Authorities believe it may be the largest-ever “Ponzi” or “pyramid” scheme, where a manager takes investments and uses them to pay other investors as false profits. The alleged scam was exposed when Madoff’s clients tried to cash out in light of the ongoing global financial crisis.
The Aspen victims bought into Madoff’s firm progressively over the last two decades, sources said. And as his firm reported consistent positive returns, word of his financial success spread through the upper echelons of Aspen society in exclusive sanctuaries like the Aspen Mountain Club.
The Madoff effect on Aspen may be as intense, though likely not as widespread, as it reportedly is in Palm Beach, Fla., where the 70-year-old alleged Ponzi scammer hung his hat part-time. Hundreds of millions of dollars have been lost and nest eggs throughout that community crushed in the Madoff fallout, with the area’s Jewish community bearing the brunt.