About 100 employees at Sterling Properties in St. Louis had the option of investing with Madoff through their 401(k) plans, and dozens did so, a company official told the St. Louis Post-Dispatch. Investing with Madoff was one of several options in Sterling Properties’ 401(k) plan, and employees also had the option of investing with Madoff outside their 401(k) accounts.
According to the Post-Dispatch, the company had no hint of trouble until Madoff, a former chairman of the NASDAQ stock exchange, was arrested last week and charged with running a gigantic Ponzi scheme, in which money from new investors was used to pay off existing investors who wanted to cash out.
Employees are hoping to recover part of their investment through the bankruptcy courts and from the Securities Investor Protection Corp., which insures investors against fraud, the news report said.
Most of Madoff’s victims include wealthy families, hedge funds, money management firms and large international banks. According to the Post-Dispatch, employees of the Robert I. Lappin Charitable Foundation in Massachusetts lost both their jobs and perhaps much of their retirement savings, as both the foundation’s money and its 401(k) plan were invested through Madoff’s firm. The foundation has closed its doors.
The town of Fairfield, Connecticut’s pension fund is another victim. It had $42 million invested with Madoff (See CT Town Pension Claims $42M Madoff Fund Loss).