Major Investor, Fairfield Greenwich, Visits Bernard Madoff's Offices to Verify Holdings
After the Barron's article appears, Madoff meets Fairfield Greenwich partner Jeffrey Tucker at his offices in Manhattan's Lipstick Building.
Tucker wants to verify Fairfield's holdings -- now worth about $3 billion.
Tucker meets with Madoff and his chief lieutenant, Frank DiPascali. He later tells investigators the two men showed him records of trades and named a third party who had cleared them. Tucker doesn't ask for verification and doesn't visit the firm's offices on the 17th floor, where the trades were largely conducted.
It is estimated the Noel family earned $500 million from this fund. A former employee described it as a "veil of secrecy".
The Fairfield Sentry fund required a $100,000 minimum investment and was billed as a way to tap Madoff's trading expertise using "algorithmic technology" while Fairfield with due diligence conducted "systematic investment compliance". It had more than $7 billion invested with Madoff, and became one of his largest victims. It was Fairfield's signature fund, one of several feeder funds through which money from wealthy foreign investors could capitalize on Mr. Madoff’s investment acumen. Its marketing prospectus promised low volatility and steady returns, and boasted 11 percent annual return over the last 15 years, with only 13 losing months, a record that grew increasingly desirable over recent years of volatility. The fund was backed by loans from banks including Banco Bilbao Vizcaya Argentaria and Nomura Holdings, which invested about $304 million.
The Mugrabis, extremely wealthy art collectors from Colombia who have lived in New York for more 20 years, and long time friends of Piedrahita (a Colombian who had married Mr. Noel’s eldest daughter, Corina), were investors.
"We had very little money with the fund — just under a million dollars — so I am not that upset personally," said Alberto Mugrabi, a son of the family patriarch. "It was a very informal thing. We know Andrés (Piedrahita) since forever, from Bogotá, he’s a great guy, and he says to us, ‘This is the Madoff thing, he’s the master.’ I trusted Andrés. I still trust him."
In early 2005, The Abu Dhabi Investment Authority invested approximately $400 million. After redemptions in 2005 and 2006, it continued to $132 million, 2% of the funds assets. One of the largest of the world’s sovereign wealth funds, its assets were estimated in early 2008 to be approaching $700 billion.
Korea Life Insurance invested about $30 million to $50 million in the fund.
Cathay Life, a Taiwan insurer invested about $12 million.
Samsung Investment and Securities invested about $6.3 million.