ANDOVER (AP) — The dean of the Massachusetts School of Law said he and a friend may have lost millions of dollars between them in an alleged $50 billion Wall Street swindle.
The implosion of a Wall Street firm owned by Bernard Madoff left regulators scrambling to seize control of its assets yesterday.
The collapse of the firm came just hours before Madoff's arrest yesterday on a single securities fraud count.
Madoff, who allegedly told his employees he was running a "giant Ponzi scheme," was freed on $10 million bail.
Fear ran deep for investors in Bernard L. Madoff Investment Securities LLC. Stephen Weiss, who said he had spoken to at least 30 of them, said some entrusted all of their savings to Madoff, who had delivered steady returns for decades.
One investor, Lawrence Velvel, 69, dean of the Massachusetts School of Law, said he and a friend may have lost millions of dollars between them.
"This is a major disaster for a lot of people," Velvel said in a telephone interview from his Andover office. "You work all your life, you finally manage to save up something, and somebody who's entrusted with it, it turns out suddenly he's a crook. Lots of people are getting fully or partially wiped out."
Velvel said he wants to know where government regulators, as well as accountants and others at Madoff's company, were when the money was being lost.
According to a criminal complaint filed with the court, Madoff told senior employees of his firm Wednesday that he had blown more than $50 billion with fraudulent financial moves, that he was "finished" and that he had "absolutely nothing." The FBI said yesterday that family members turned Madoff in after he confessed his fraud to them.
Madoff's lawyer, Dan Horwitz, said his client was "a long-standing leader in the financial services industry with an unblemished record" and would "fight to get through this unfortunate event."
Madoff, a former Nasdaq stock market chairman, founded his firm in 1960, using $5,000 he earned in part as a lifeguard on Long Island beaches. In the industry, he had a reputation for safe investments and steady returns that made individual investors eager to place their money with him and competitors suspicious of his success.
Marc Powers, a former SEC enforcement branch chief and head of the securities practice at Baker Hostetler, said Madoff was "a very well-respected, highly regarded person" on Wall Street.
Velvel said he listened to Madoff's employees explain how the firm made profits in good times and bad through computerized trading on blue chip stocks and options, enabling small and steady profits on scores of trades.
"It made all the bloody sense in the world," he said. "The way we understood, they never went for the big hits. If you take a percent here, a half percent there, this can add up to what Madoff was saying."
