A News Times report quoted Town of Danbury Finance Director David St. Hilaire as saying the city lost $400,000 in a fund managed by UBP, a private Swiss bank with ties to Madoff. Madoff was arrested last month on fraud charges for swindling investors out of as much as $50 billion.
“One of our fund managers didn’t necessarily follow their internal protocols as we expected them to,” St. Hilaire said, according to the newspaper. “We are working with the fund manager right now to recover some of that money. The risk is theirs, not ours.”
He added that until this, UBP had provided good returns for Danbury’s pension accounts. “This is just another kick in the gut for us in a miserable year,” St. Hilaire said.
According to the news report, the city’s pension fund, now about $190 million, lost an estimated 28% last year. St. Hilaire told the newspaper that even with the market losses and the $400,000 lost with Madoff, the city pension fund still has more than enough money to cover the $14 million in payments made to retired employees annually.
Mayor Mark Boughton said he is confident Danbury will be able to get its money back. “(Investing with Madoff) was not a conscious decision for us,” he said, according to the news report. “It was done through one of our funds. We were not even aware of it. I feel confident we’ll be able to recoup the money.”
Recently, the town of Fairfield, Connecticut, claimed it lost $42 million in investments with Madoff (see Town Pension’s Madoff Hit Prompts Additional $500K Contribution ).