MOSERS Hit with $3.5M-Madoff Loss

January 20, 2009 ( - Missouri State Treasurer Clint Zweifel has called for a thorough investigation of the circumstances under which the Missouri State Employees' Retirement System (MOSERS) suffered a $3.5-million loss in an investment related to accused fraud mastermind Bernad Madoff.

In a Web site statement, Zweifel, a MOSERS board member, said the loss grew out of an unspecified investment with Silver Creek Capital Management, a Seattle-based manager of funds of hedge funds with approximately $8 billion in assets under management.

According to Zweifel, Silver Creek then transferred the   MOSERS money to Madoff. The St. Louis Business Journal reported that Silver Creek invested in Gabriel Capital, founded by former GMAC chairman and billionaire Ezra Merkin (See NYU Joins List of Potential Madoff Victims ), which then invested with Madoff.

Madoff, a now-disgraced financier, stands accused of masterminding a worldwide Ponzi scheme that authorities say could total $50 billion.

class=”clsfont”> “The relationship between MOSERS and Silver Creek should be thoroughly examined and all courses of action should be considered,” Zweifel said in the news release. Specifically, the Treasurer said MOSERS needed to look into:

  • Whether the system has any additional potential Madoff problems with other investments;
  • Development of policies that promote increased openness and transparency of MOSERS’ investments by defining what issues are appropriate to discuss in open session versus executive session;
  • Improved and more detailed disclosures so MOSERS board members know and understand how specific investments are performing; and  
  • Increased due diligence by asset managers at MOSERS to provide for increased accountability.    “This is particularly important considering the “fund-of-fund” investment method sometimes used by MOSERS,” Zweifel said.  

class=”clsfont”> “The Board and the MOSERS staff should immediately take steps to remedy the situation at MOSERS,” said Zweifel, in the announcement, “It is unfortunate that anyone was affected by Madoff.   It is crucial we take immediate action to see that this does not happen again.”

MOSERS is a $6-billion statewide public pension fund that provides retirement, life insurance and long-term disability benefits to 100,000 state employees, retirees and beneficiaries.