Video released of alleged $50bn fraudster

A UK council could lose more than £7 million from its pension fund which has been caught up in an alleged £33 billion Wall Street fraud. Hampshire County Council says its losses could reach £7.1 million, 0.3 per cent of its pension fund's total assets of £2,400 million, amid the Ponzi scheme scandal involving the hedge fund of 70-year-old Bernard Madoff. The pyramid schemes operate on the "rob Peter to pay Paul" principle and are named after 1920s crook Charles Ponzi, who promised investors a 40 per cent return on their investment in just three months by using money from new investors to pay existing ones. It emerged at the weekend that the veteran Wall Street money manager had some of the world's biggest banking institutions and hedge funds, the super rich and the famous, pensioners and charities in his investment pool. Old footage has also emerged of Madoff saying it is tough to skirt the law. He said: "It's virtually impossible to violate rules. When this is something that the public really doesn't understand, if you read things in the newspaper and you see somebody violate a rule, you say 'well, they're always doing this'. But it's impossible for a violation to go undetected. Certainly not for a considerable period of time." A Hampshire County Council spokesman said: "Whilst any losses are deeply disappointing, they should be seen in the context of the much larger falls in the overall value of the Fund as a result of the financial crisis from £3,100 million in October 2007 to £2,400 million now, a fall of £700 million (22.5 per cent)." The council has moved to reassure its fund's 46,000 contributors and 27,000 pensioners that their payouts are not at risk. Madoff, well respected in the investment community after serving as chairman of the Nasdaq Stock Market, was arrested last Thursday. He once boasted to the US Securities and Exchange Commission about how much money he earned and had previously advised the government on how to avoid investment scams. In April 2004, during a SEC hearing, he told then-commission chairman William Donaldson about his massive profit, saying: "Our firm has made a fairly decent living as a fast market competing with a slow market. So I'm not sure it's in our own best interest for everyone to become a fast market." HSBC, Grupo Santander, Royal Bank of Scotland, BNP Paribas, Nomura and UBS are among some of the big financial institutions who had allegedly invested with the fund.

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ITN | December 16, 2008

Tags:. .madoff. .undetected. .ponzi. .pensioners. .context