Tufts loses $20 million in investment fraud

Tufts University was taken for $20 million in a fraudulent investment scheme this year, but that won't hurt its $1.5 billion endowment. $50 billion NYC scam hits Somerville By Jack Nicas Tufts University lost $20 million in one of the largest investment frauds ever, said Tufts President Lawrence Bacow Friday. Bernard L. Madoff, a financier and former wall street trader, allegedly raked in an estimated $50 billion over the past 48 years through what he called "a giant Ponzi scheme," according to reports. A Ponzi scheme is an investment ruse that promises big payoffs to investors but instead pays dividends through money put in by later investors. In 2005, Tufts invested $20 million in the investment fund Ascot Partners, "which in turn invested the entire sum with Madoff Securities," Bacow wrote in an email Friday. But the loss "will not significantly affect [Tufts'] operations," he said. It represents less than two percent of the school's $1.5 billion endowment. But as a result of the current recession, the university is reevaluating its financial outlook: "We're taking a very hard look at expenses; we're hiring, but we're hiring very selectively," said Tufts spokeswoman Kim Thurler. "Our number one priority is protecting our students, so we are increasing our budget for financial aid because we anticipate students will be needier." As for a possible lawsuit against Madoff, Thurler said the school is "investigating all of [its] options. We haven't made any decisions yet." But going forward, Bacow said Tufts will learn from the experience. He wrote, "You have my word that we will look closely at our experience in this case so that we can strengthen our investment process for the future." A Ponzi scheme is an investment ruse that promises big payoffs to investors but instead pays dividends through money put in by later investors. In 2005, Tufts invested $20 million in the investment fund Ascot Partners, "which in turn invested the entire sum with Madoff Securities," Bacow wrote in an email Friday. But the loss "will not significantly affect [Tufts'] operations," he said. It represents less than two percent of the school's $1.5 billion endowment. But as a result of the current recession, the university is reevaluating its financial outlook: "We're taking a very hard look at expenses; we're hiring, but we're hiring very selectively," said Tufts spokeswoman Kim Thurler. "Our number one priority is protecting our students, so we are increasing our budget for financial aid because we anticipate students will be needier." As for a possible lawsuit against Madoff, Thurler said the school is "investigating all of [its] options. We haven't made any decisions yet." But going forward, Bacow said Tufts will learn from the experience. He wrote, "You have my word that we will look closely at our experience in this case so that we can strengthen our investment process for the future."