Madoff ‘borrowed £170m from friend’

Bernard Madoff borrowed $250 million from one of his oldest friends just 10 days before he was arrested as he desperately tried to stave off the firm's collapse.

Carl Shapiro, a 95-year-old philanthropist and entrepreneur, gave Madoff his first break on Wall Street and the pair had remained friends over the decades. But now Shapiro has emerged as perhaps the biggest individual victim of the alleged fraud.

As well as losing the $250 million loan, he is also thought to have lost a further $150 million he had invested with Madoff's fund. Shapiro's charitable foundation has lost at least $100 million.

The Wall Street Journal cited sources saying Madoff pledged to pay back the loan with interest or a gain, but none of the money was repaid.

It also emerged that Madoff had been asking other rich investors for money in the dying days of his alleged Ponzi scheme. Wall Street financier Kenneth Langone was among those who refused.

Langone was asked to invest in what he was told was a new fund and was sent a 19-page marketing document.

At a meeting with Madoff at his Manhattan offices, Madoff said he was raising money for a new fund of about $500 million to $1 billion for exclusive clients. He told Langone he needed an answer by the following week as he was moving quickly on the venture. But Langone declined to invest.

Allegedly, it would already have been clear to Madoff that his business was in big trouble. In the first week of December he is said to have told one of his sons that clients had requested about $7 billion in redemptions and that he was struggling to obtain the liquidity necessary to meet them.

Meanwhile, investors burnt in the alleged $50 billion (£34.06 billion) fraud have been given the hope of receiving some funds from a federal investment protection fund as early as next month.

Securities Investor Protection Corp president Stephen Harbeck said that first payouts could be made in "a month or two" if the cash isn't difficult to trace.

But those who used feeder funds, rather than investing directly with Madoff – representing the majority in British and European victims - will have to wait for months, he said.
"You're talking about unscrambling an egg," Harbeck said.