ASC not affected by Madoff investment scandal

ASC Trust Corp. did not invest in the $50-billion Ponzi scheme allegedly ran by former Nasdaq chair Bernard Madoff, which prosecutors say has left investors around the world in financial ruin.

The company’s president, David J. John, in an e-mail to the Saipan Tribune, said that ASC was fortunately not part of the Ponzi scheme.

“ASC was not directly affected by the Madoff situation. None of our clients, or any of the funds in the region that we are aware of, had any money invested with the fund. But what I [see with] the situation at hand definitely supports the importance of due diligence and strong audit support for any institution you are going to entrust your money with,” he said.

ASC is a leader in retirement plan consulting services in the Asia Pacific Region. Founded in 1990, it currently manages over $150 million in assets.

The assets of Bernard L. Madoff Investment Securities LLC were frozen Friday in a deal with federal regulators and a receiver was appointed to manage the firm’s financial affairs.

According to the Associated Pres, among the more prominent names in the U.S. said to have plunked down their money in the hedge fund include Philadelphia Eagles owner Norman Braman, New York Mets owner Fred Wilpon, and J. Ezra Merkin, the chairman of GMAC Financial Services.

Beyond U.S. hedge funds, more corporate names disclosed exposure to Madoff. Late Sunday, some of Europe’s biggest banks acknowledged they, too, were exposed to Madoff’s investment fund. Switzerland’s Reichmuth & Co. said the private bank has $327 million at risk. French bank BNP Paribas estimated its exposure Madoff’s fund could lead to 350 million euros ($467 million) in losses. Spain’s Grupo Santander SA, Europe’s second-largest banking consortium, said its clients had an exposure of 2.33 billion euros ($3.1 billion) to Madoff’s investment funds, mostly through the Optimal Strategic US Equity fund, according to reports.

A Ponzi scheme is a fraudulent investment operation that involves paying abnormally high returns to investors out of the money paid in by subsequent investors, rather than from the profit from any real business.

The scheme usually offers abnormally high short-term returns in order to entice new investors. The perpetuation of the high returns that a Ponzi scheme advertises (and pays) requires an ever-increasing flow of money from investors in order to keep the scheme going.

It is named after Charles Ponzi. The term “Ponzi scheme” is used primarily in the United States, while other English-speaking countries do not distinguish in colloquial speech between this scheme and other forms of pyramid schemes.