Posted on 10/21/2009 1:16:38 PM PDT by SwinneySwitch
AUSTIN — The Texas treasury lost $19.5 million through an investment in the Ponzi scheme run by convicted financial swindler Bernard Madoff.
The money was part of a $224.5 million investment the Texas Treasury Safekeeping Trust Co. had with a Texas-based hedge fund called Austin Capital Safe Harbor. Austin Capital closed in May due to losses it suffered in one of Madoff's scam investment funds.
Comptroller Susan Combs chairs the Treasury Safekeeping Trust, which manages $50 billion in tobacco lawsuit settlement funds, TexPool investments for 2,000 local governments and Treasury Pool for managing state funds.
Combs spokesman R.J. DeSilva said the $19.5 million was written off last December after Austin Capital notified the state the money had been lost when Madoff's Ponzi scheme collapsed. The treasury had been investing with Austin Capital since 2006.
While many state investment funds lost millions of dollars in value with last year's stock market decline, the value could return once the market rebounds. But money lost to Madoff's Ponzi scheme is gone forever.
Though Austin Capital's losses have been public for months, Combs' office did not publicly acknowledge the losses by the state of Texas until contacted by the Houston Chronicle and the San Antonio Express-News.
DeSilva said the state has taken no action to try to recoup the lost money. But he said state officials are monitoring lawsuits against Austin Capital and its parent company, KeyCorp., to see if there is a class-action lawsuit on behalf of investors. By law, he said, the state cannot join lawsuits brought by union pension funds.
The Austin Capital offices in Austin no longer have a working telephone. The company was owned by Key Bank of Ohio.
Spokeswoman Laura J. Mimura said KeyCorp decided to “curtail Austin's operations” in May after learning it had lost $186 million in investments with Madoff. She declined to discuss lawsuits against Austin Capital or the investments by the Texas Treasury Safekeeping Trust.
The Texas treasury lost $19.5 million through an investment in the Ponzi scheme run by convicted financial swindler Bernard Madoff. The money was part of a $224.5 million investment the Texas Treasury Safekeeping Trust Co. had with a Texas-based hedge fund called Austin Capital Safe Harbor. Austin Capital closed in May due to losses ...
Great name, Safe Harbor ,,,
What fees did they extort until they closed?
What salaries?
What bonuses? For their great advice ...
A simple mutual fund wasn’t good enough to invest in ???
So Texas stole 50 billion from tobacco companies and actually lost a few million of it. Well ain’t that too bad. Hell, even Madoff didn’t steal 50 billion, did he?
Wonder why they aren’t going after the parent bank? Glanced at some stale numbers on the internet. Not in great shape, but I’ve seen a lot worse.
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