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After $20 million loss in Madoff scandal, Tufts maintains it met investing standards

Published: Sunday, December 21, 2008

Updated: Monday, December 22, 2008 23:12

Should Tufts' losses in the Madoff scandal affect donations to the university?

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Related: Tufts has array of legal options in wake of Madoff losses

After $20 million in losses from an alleged Ponzi scheme, legal experts say it might be time for Tufts to dig in its claws. Full story

Related: Tufts loses $20 million in Madoff scandal

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. Full story

"Once a gift is made to the university, it's treated as a pooled resource. In other words, the endowment as a whole is invested – not any one gift or fund," she said. "Though there may have been Beyond Boundaries dollars within [the lost funds], it would have been a small portion of what's been raised to date."

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11 comments Log in to Comment

Your name
Thu Dec 25 2008 02:06
Nice job on this one Rob, thorough and well written
Your name
Wed Dec 24 2008 22:13
Stern's dealings need to be investigated with an eye toward criminal charges.
Patty Plenty
Tue Dec 23 2008 17:02
The Chairman of the Investment Committee himself manages a fund. I wonder if Tufts invested in that and what the actual returns were....
alumni456
Mon Dec 22 2008 22:49
It is thoroughly embarrassing that Tufts would be involved in such an irresponsible fiasco. It was well known that Mr. Madoff did not utilize a legitimate financial framework by any standard. However the University chooses to spin this story, citing the multitude of victims duped in this scandal is hardly an adequate response to the blatant misappropriation of finances at this first class institution. The kind of shadiness in this type of investment is certainly acceptable for individuals and small corporations in terms of risk assessment - but for a first class academic institution. I hope that the administration doesn't try to skirt the blame or the burden onto the Tufts faithful and at the very least manages to the handle this disaster with a measure of dignity.
Your name
Mon Dec 22 2008 22:13
Mr. Stern needs to resign immediately. He clearly had a conflict of interest when it came to investing university money in this particular fund. What was the university doing investing in a hedge fund anyway. It is disgraceful and embarassing to be associated with the other victims that thought they were special people immune to the natural vicissitudes of the market. Magical thinking? Why did't they give it to the wizard of oz or buy a share of the "emperor's new clothing" company.

Stern should reimburse the university himself!

'05 alum
Mon Dec 22 2008 21:42
It is clear that due diligence was not adequately performed and to say otherwise is clearly mistaken. Universities have no place investing in hedge funds like this. I think it would serve Tufts well to investigate Mr. Stern and his relationship with Mr. Merkin. I believe Mr. Stern should resign in the wake of this disaster.
Rob
Mon Dec 22 2008 20:38
"Tufts is an unfortunate victim, but to think the university should have foreseen these results is a fallacy." ~ '00alum

The whole point of the article is that many who did their due diligence on Madoff were aware that it was a con, and avoided him, despite the promised returns.
Of course the Board of Trustees Investment Committee should have foreseen that it was a con, that's their job. It's equally embarrassing that someone would actually claim to be a lawyer, and therefore: "I am aware of what is and is not wrong and/or unethical."

Well ok then, I guess it's settled. Move along. Tufts should be thankful that Mr. Stern has done such a fine job on their behalf.

Jenny
Mon Dec 22 2008 07:02
The Tufts community is so fortunate to have a group of motivated, dedicated individuals working for its newspaper. This article was very informative and well-written. Thanks for taking the time out of your Winter Break to write this, Rob Silverblatt!
'00 alum
Mon Dec 22 2008 00:01
Ms. Smith, JimStern is an extraordinary alum that Tufts should be proud to have as a member and head of our Investment Committee. He did not commit any ethical violation (trust me, as an attorney who has litigated ponzi schemes in the past, I am aware of what is and is not wrong and/or unethical). The Madoff story is a terrible tragedy that will spawn a ton of litigation. Tufts is an unfortunate victim, but to think the university should have foreseen these results is a fallacy.
Cathy Smith
Sun Dec 21 2008 21:48
Why isn't anyone questioning the role of Jim Stern in all of this? He's chair of the Investment Committee and the Principal of Ascot Partners, Jacob Ezra Merkin, made a large investment in Jim Stern's company, the Cypress Group, according to Saturday's front-page New York Times article entitled "Madoff Scheme Kept Rippling Outward, Across Borders". The Tufts Daily should be interviewing Jim Stern about this first and foremost. I, for one, as an alum who has contributed to Tufts in the past will no longer be contributing to Tufts for this reason. It's one thing to make a bad investment; it's another thing for the chairman of the Investment Committee to be using his appointed office at our Institution for the personal gains of his private company.
Selva Ozelli
Sun Dec 21 2008 19:48
Attached is an article I wrote regarding the US tax implications
of risk management transactions of hedge fund managers. Some of the
tax analysis could apply to Madoff and his foreign investors as well.

atter.

Selva Ozelli, Esq, CPA

http://www.hedgeweek.com/download/259124/Comment%20-%20Cracks%20in%20the%20facade%20-%20risk%20management%20transactions%20of%20hedge%20fund%20managers,%20by%20Selva%20Ozelli.pdf

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