Madoff wipes out state senator from New JerseyWe wouldn't blame her if that daily prayer now became a daily curse, spitting optional.
By Jacob Berkman
New Jersey state Sen. Loretta Weinberg lost her entire life savings in the Madoff scheme.
While many of the losses of huge foundations and organizational endowments that have been making headlines over the past week are truly mind boggling, Weinberg was not ultra wealthy at all.
A lifelong civil servant, the veteran Democratic lawmaker was among a handful of Madoff victims to give their stories to The Wall Street Journal this weekend. Weinberg makes about $49,000 as an elected official in Trenton, where she represents the 37th District, which covers a highly Jewish region in the northern part of the state.
She had her savings, about $1.3 million, invested with Stanley Chais, another Madoff victim.
From the Journal story, which is subscription only:
"Irwin had a saying, 'If you made a dollar and a half, you put 75 cents into a savings account and you lived on the other 75 cents,' " says Ms. Weinberg, whose husband had his own business building and designing retail stores. "That's how we lived."
Ms. Weinberg's family had investments with Stanley Chais, a Los Angeles money manager who ran what he called "the arbitrage partnerships," and Loretta and her husband also opened up accounts. "It's where my family had their money," she says. "We'd get reports every quarter."
Year in and year out Mr. Chais delivered steady returns of 10% to 14% annually. "We had a family joke that every night we should all say a little prayer for Stanley Chais."
She had never heard of Bernard Madoff -- until last week, when she learned that Mr. Chais had invested her money in Mr. Madoff's entities. Mr. Chais didn't return calls for comment.
[Hat tip to Henry.]
By the way, in no way meaning to diminish the hurt, I do think many of the numbers bandied about in Madoff victim claims are inflated.
Let's take Loretta's case since it is in the realm of the reality of many working couples, unlike some of the multi-million dollar figures cast forth in other victim claims.
If Loretta invested $400,000 with Madoff 10 years ago and he claimed to have given her 12% returns compounded quarterly, she'd have a balance today of $1.3 million.
But in reality Loretta had no such gains and no such balance. Her investment in a legitimately super successful fund could have averaged 6% compounded quarterly for a balance today of $725,000.
And if she was not so lucky and chose to invest in a well-regarded but not so productive mutual fund like Fidelity Magellan over the past ten years at an annualized 2% gain, her balance today would be $488,000.
Losses of any kind are tragic and I am sorry for Loretta and for all other investors who have lost their invested monies.
But the Madoff Ponzi scam losses are all greatly exaggerated since they are based on phony made up balances as of December 11, 2008, inflated sums that never really existed.