A prominent Buffalo developer who invested in Bernard L. Madoff's alleged $50 billion Ponzi scheme acknowledged "substantial, but not crippling" losses on Thursday, following the release of a U.S. Bankruptcy Court list of Madoff clients.
"We lost a lot of money, but we're fine," said Howard Zemsky, among the three Western New Yorkers named in the list of more than 13,000 Madoff investors nationwide. "My businesses are not impacted at all. My projects aren't hurt, and we'll continue to fund our foundation as we have in the past."
Tamar P. Halpern, a partner and litigator with Phillips Lytle, and Arnold Maxick, a certified public accountant with Freed Maxick and Battaglia, also were on the list -- although both said they did not suffer any losses and had little connection to Madoff.
"As far as I know, I lost nothing," Halpern said. "If there's anything there, it's a tiny amount of money."
Halpern said she inherited an account with Madoff a few years ago, after her mother died. She quickly cashed the account and made no further investments, she said.
Maxick was puzzled as to why he was listed.
"I have not had an investment in Madoff at all," he said.
Zemsky declined to say how much money he lost, but his exposure appeared to be significant.
The Bankruptcy Court list included five accounts for Taurus Capital Partners, a local private equity firm in which Zemsky is principal managing partner; accounts for Zemsky's children; an account for the Howard Zemsky Family Trust; and an account for the Zemsky Family Foundation.
The foundation had assets of $4.3 million and gave out $887,100 to charities in 2007, according to its most recent tax filing. Zemsky serves as a trustee along with Sam and Shirley Zemsky of Stuart, Fla., whose names also are listed in the court document several times.
The foundation's tax filing shows 2007 stock trades in excess of $35 million through multiple Madoff Securities accounts. The trades generated $232,455 in investment income.
Zemsky got the bad news via the Internet on Dec. 12, as the first reports of the investment scam broke.
"I opened up Yahoo! Finance and was absolutely stunned," he said. "It was sort of surreal. I thought, 'Wait a minute, a $50 billion Ponzi scheme? How is something of this magnitude possible?' "
The list released Thursday was further evidence of just how sprawling the alleged Ponzi scheme was.
It included the actor Kevin Bacon and Hall of Fame pitcher Sandy Koufax, as well as organizations such as Brandeis University and Laborers Local 210, which The Buffalo News had reported lost $25 million in its pension and welfare funds.
The Bricklayers and Allied Craftworkers Union Local 3, based in Pittsford, outside Rochester, and with regional offices and membership in Buffalo, also has told members that some pension money invested through a "feeder fund" into Madoff Securities was lost. The fund had a value of $31 million at the end of 2006, the latest data available.
The union was not among the accounts listed in the court filing.
The list was compiled for a court-appointed trustee in the Madoff case and includes thousands of people and entities listed in the money manager's records as account holders during the 12-month period leading up to Madoff's arrest in December.
It also includes scores of others who called an investor hot line set up by the Securities Investor Protection Corp.
While many of those listed likely lost money with Madoff, it is not clear that all on the list were victims, or that all of the victims have been identified.
Maxick said his only connection with Madoff was some "information" the money manager had sent him, but that he didn't respond to.
"Where they got that list, I have no knowledge," said Maxick. "The people who put the list together are either negligent, or there's such a mess over there, they're grasping for straws."
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.
Like Laborers Local 210, the 800-member bricklayers union was connected to Madoff through J.P. Jeanneret Associates, an investment management firm based in Syracuse.
"There were some very sophisticated people and feeder funds involved," said Michael DiVirgilio, a vice president of Local 3 and a trustee of the pension fund. "A lot of people were caught up with this. That just illustrates how sophisticated the fraud was."
As the public got its first look at the 162-page Madoff victim list Thursday morning, Zemsky sent e-mails to friends, business associates and various organizations to let them know they "shouldn't lose sleep" over his losses.
He said his "heart goes out" to the thousands of Madoff victims whose finances were completely wiped out by the Ponzi scheme.
"There are so many people whose lives have been turned upside-down and devastated," Zemsky said. "If there's a bottom-line lesson here, it's that you have to have a diversified portfolio. Thank goodness we do."
A New York native, Zemsky is the former president of Russer Foods and has lived in Buffalo for 25 years, building a reputation as a developer, investor, philanthropist and community project leader. In addition to his private equity company, he is a partner in CityView Properties, the group that redeveloped the former Larkin Soap Co. warehouse on Exchange Street into a successful office complex.
Active in local historic preservation efforts, Zemsky is a board member and former president of the Darwin Martin House Restoration Corp. and is a member of the panel studying reuse options for the idle H.H. Richardson complex on Forest Avenue.
He also is a member of the Niagara Frontier Transportation Authority board of commissioners.
Zemsky described Madoff as a "psychotic, pathological crook" and said he was disappointed that the Securities and Exchange Commission failed to shut down the money manager sooner.
"It's been disappointing to learn the SEC had so much information about what he was up to and didn't stop it," he said.
Despite the gravity of his financial loss and constant reminders of Madoff's mess in the media, Zemsky said he doesn't spend much time dwelling on the bizarre chain of events.
"It doesn't help to be angry or upset," he said.
Nonetheless, Zemsky admitted he was uncomfortable being put in the spotlight because of his ties to Madoff.
"I don't want to be viewed as a victim. It's embarrassing for me and my family," he said. "I would rather focus on the great successes we've had and those yet to come."
News Business Reporter Jonathan D. Epstein and the Associated Press contributed to this report.
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