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The Madoff trickle-down effect
comments (0) December 18th, 2008 in Blogs
Richard Defendorf, contributor
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With as much as $50 billion lost to Bernard Madoff’s alleged Ponzi scheme, there was bound to be fallout in the real estate market. A story published Wednesday by The New York Times highlighted a few specifics.
Some of the real estate industry heavy hitters who invested with Madoff include developers who had pledged their investments with him as collateral for projects. Others among the afflicted are brokers, and still others are brokers’ clients.
Most of the damage seems headed for the commercial market. But residential brokers also are taking calls from Madoff investors who have had to put their apartments on the market, the story noted. As you might guess, these properties will not go for cheap.
Brad Friedman, a lawyer representing about 100 investors primarily in New York and Florida, told the Times several clients have already said they plan to put their apartments on the market. They depended on their Madoff investments to pay their mortgages and co-op fees. “With that source of money frozen, they’ve got no cash,” Friedman said. “They can’t pay the electric bill. They can’t pay the mortgage.”
And some prospective buyers who had invested with Madoff have simply balked on deals. Michele Kleier, a broker on the Upper East Side, told the paper she had buyers pull out of purchases on two $2 million apartments because they lost money to Madoff.
“It’s now two deals in the last four days,” Kleier said. “It’s amazing.”
Also amazing is where Madoff himself will spend his evenings. He has been ordered by U.S. District Court Magistrate Judge Gabriel Gorenstein to nightly house arrest, which he presumably will endure at his $7 million apartment on the Upper East Side. He also must wear an ankle-bracelet monitor at all times. Maybe, too, he’ll take weekends at his cozy $23 million waterfront home in Palm Beach or his $3.3 million beachfront digs in Montauk, Long Island, where he’ll pass the time sipping tea and contentedly humming “In the Jailhouse Now.”
posted in: Blogs, business
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