No Hollywood ending in Madoff investment case
“Good news, bad news” probably doesn’t begin to describe the day Hollywood screenwriter Eric Roth had last week.
Roth was nominated Thursday for a Golden Globe award as screenwriter of “The Curious Case of Benjamin Button.” And that same day, he learned that he lost all his retirement money to Bernard Madoff’s alleged $50-billion Ponzi scheme.
“I’m the biggest sucker who ever walked the face of the Earth,” Roth said Tuesday. “But the tragedy is the people who lost their life savings and their dreams.”
Roth, whose screenwriting credits include “Forrest Gump,” indicated that his losses were heavy, although he declined to give a dollar figure. He said he had entrusted his funds to an investment manager he had used for decades.
Although Roth declined to identify his financial advisor, the role of the many investment managers who steered money to Madoff’s New York-based company will come under scrutiny in the months ahead as investors look to them to recoup their losses.
One such investment firm, Brighton Co. of Beverly Hills, was sued this week in federal court in Los Angeles. In the suit, Michael Chaleff of Arlington, Va., said he and other investors had lost about $250 million on investment partnerships that Brighton placed with Madoff.
The head of Brighton, according to the suit, is Stanley Chais of Beverly Hills, a philanthropist who had served on charitable boards with Madoff and who now describes himself as a victim of the money manager.
Reed Kathrien, an Oakland attorney who is representing Chaleff, said he would seek to have the suit certified as a class action on behalf of all the investors who entrusted their money to Chais (pronounced “Chase”) and Madoff.
“A lot of them were in the entertainment business,” Kathrien, with the firm of Hagens Berman Sobol Shapiro, said of the investors.
He said many of those investors were “niche” workers who weren’t household names, but who lost small fortunes “because they’d been in [the investment funds] for 10 or 20 or 30 years.”
The suit alleges that the Brighton firm was “aware of, or recklessly disregarded, the misuse and mismanagement of investment funds.”
Chais could not be reached for comment Monday or Tuesday. But in its online edition, the Jewish Journal of Los Angeles quoted Chais saying he was also a victim and suffered large losses.
“Like everybody else who trusted and invested with Bernie Madoff, he betrayed my trust,” Chais said.
Chais also told the publication that he not only personally invested with Madoff but also “facilitated” others who wished to do likewise.
Spokesmen for the Securities and Exchange Commission and the California Department of Corporations said they could find no record of Chais registering as an investment advisor or a broker.
The Chais Family Foundation, which for more than two decades provided substantial funding to global Jewish causes, shut down Sunday after Madoff-related losses left it penniless.
Madoff’s decades-long enterprise also entangled such high-profile investors as director Steven Spielberg and Jeffrey Katzenberg, chief executive of DreamWorks Animation SKG.
Katzenberg and Spielberg’s Wunderkinder Foundation both had investments with Madoff that were made on their behalf by their business manager, Gerald Breslauer, according to people familiar with the situation.
Breslauer’s Century City-based firm once represented the who’s who of Hollywood and the music industry. Today, the practice he and his partner, Mickey Rutman, run centers around the affairs of Spielberg and Katzenberg, according to several people familiar with the operation.
Breslauer declined to comment Tuesday through an office assistant who said, “We don’t discuss our clients’ affairs.”
Attorneys, agents and other industry insiders who have done business with Breslauer for many years spoke in glowing terms about the 80-year-old business manager, saying he had been highly regarded in Hollywood for his integrity and play-it-safe approach to investments.
“He certainly is a victim here,” producer Tom Pollock said of Breslauer.
Pollock, who formerly headed Universal Pictures, said he had known Breslauer “for over 30 years” and characterized him as “one of the most conservative business managers I’ve ever known.”
Madoff was arrested Thursday and reportedly conceded that he had operated a Ponzi scheme, using money from newer investors to pay off early investors. The assets of his Bernard L. Madoff Investment Securities were frozen last week in a deal with federal regulators, and a receiver was appointed to manage the firm’s financial affairs.
Jewish charitable groups were among those reporting the biggest losses. On Tuesday, the New York-based United Jewish Congress said it was considering closing its Los Angeles office because of investment losses.
United Jewish Congress President Richard Gordon said in a statement that money also had been lost from a separate independent fund administered by the United Jewish Congress containing a bequest from the estate of the late Lillian and Martin Steinberg. That fund had been used to support Israel.
“Sadly, Mr. Madoff did not return the trust they placed in him,” Gordon said. “It is our belief that all of the money . . . that was invested with Mr. Madoff has been lost.”
The Times reported Monday that the Jewish Community Foundation of Los Angeles, a nonprofit asset manager for philanthropies, had suffered $18 million in Madoff-related losses. The foundation’s chief executive, Marvin Schotland, said the decision to invest with Madoff had been made by a volunteer committee with assistance from paid financial advisory firm Cambridge Associates.
On Tuesday, a Cambridge Associates spokeswoman said the Jewish Community Foundation had begun investing with Madoff four months before the organization hired Cambridge in July 2004. Cambridge “never recommended direct investments in Madoff’s funds” to clients, according to a statement issued by the spokeswoman.
Nevertheless, “certain of their clients chose to invest in his funds based on the advice of their investment committees or personal relationships with him,” the statement said. “Cambridge Associates encouraged their clients to limit their exposure to Madoff when they chose to invest, and unfortunately, a small number of their clients invested with Bernard Madoff on their own accord.”
A spokeswoman for the Jewish Community Foundation declined to comment Tuesday.
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Here is a list of companies, organizations and individuals that have said they lost money in Bernard Madoff’s alleged Ponzi scheme:
Amount reported lost (in millions)
Amount reported lost (in millions)
Fairfield Greenwich Group / New York
Grupo Santander / Spain
Bank Medici / Austria
HSBC Holdings / Britain
Natixis / France
Royal Bank of Scotland Group / Britain
BNP Paribas / Paris
BBVA / Spain
Man Group / Britain
Reichmuth & Co. / Switzerland
Nomura Holdings / Japan
MassMutual’s Rye Investment Management / Rye, N.Y.
Aozora Bank Ltd. / Japan
Credit Mutuel CIC / France
Dexia / Belgium and France
Unicredit / Italy
Benedict Hentsch & Cie / Switzerland
Fairfield town boards / Fairfield, Conn.
Mortimer B. Zuckerman Charitable Remainder Trust
Jewish Community Foundation of Los Angeles
Phoenix Holdings / Israel
Harel Insurance Investments & Financial Services / Israel
Robert I. Lappin Charitable Foundation / Salem, Mass
Nordea / Sweden
Jewish Federation of Greater Los Angeles
Neue Privat Bank / Switzerland
Chais Family Foundation / Encino and Israel
Credit Agricole / France
Fortis Bank / Netherlands
Fred Wilpon (New York Mets owner)
Irwin Kellner (MarketWatch.com economist) / New York
J. Ezra Merkin (GMAC Financial Services chairman) /
Massachusetts state pension fund
Mortimer B. Zuckerman Charitable Remainder Trust
Norman Braman (Philadelphia Eagles ex owner) / Miami
Sen. Frank Lautenberg family foundation / New Jersey
Societe Generale / France
Union Bancaire Privee / Switzerland
Wunderkinder Foundation (Steven Spielberg charity) /
Yeshiva University / New York
Sources: Associated Press, Times research, Boston Globe and Newsday
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