A Connecticut Post news report said the loss represented about 15% of the $286 million in the town’s pension accounts. The 70-year-old former Nasdaq chairman was charged by federal agents with securities fraud.
Fiscal Officer Paul Hiller told the newspaper the Madoff fund had produced relatively consistent gains, with returns running between 7% and 14%. “He would never hit a home run,” Hiller said, “but that wasn’t the way it was sold.”
In hindsight, Hiller said, “Some people have said it was too good to be true” and added “The best and the brightest have been duped on this. It’s going to take a long time for this thing to sort out, but we go on.”
Even with the loss, town officials asserted that the fund would be able to pay its obligations to town retirees.
According to the newspaper, Fairfield’s fund covers more than 800 active municipal employees, plus 108 police officers and 96 firefighters. There are now about 300 retired municipal workers receiving benefits, as well as just under 200 retired police and fire personnel.
While town officials plan to hire outside counsel to protect its interests and believe some of the losses may be covered by insurance, First Selectman Kenneth Flatto said he still believes the town will lose a significant portion of the $42 million in the Madoff fund.
The town’s at-risk pension funds were invested in MAXAM Absolute Return Fund as a limited partner, with MAXAM Capital GP LLC, of Darien, as the general partner. The fund is managed by Madoff Securities and specifically Madoff, according to the news report.