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Until recently, millionaire philanthropist Michael Bienes was the toast of South Florida, a man who threw lavish parties and fundraisers at his $7 million estate on the Intracoastal Waterway, where he seemed a mixture of Gatsby and Meyer Wolfsheim. Now sources say he is a ruined man, so anguished that family and friends are concerned he might take his own life.
The 72-year-old Bienes, they say, lost his massive fortune in the Bernie Madoff scandal. The New York Times quoted a Bienes attorney saying the man had lost tens of millions of dollars. On top of that, Bienes steered hundreds of people, many of them his own friends, to invest their savings in what turned out to be a $50 billion rip-off.
If you want to know the extent of the fallout from the Madoff scandal here in South Florida, you have to begin with the distraught man in his Fort Lauderdale mansion. The local arts community has lost perhaps its greatest benefactor. Bienes abruptly resigned his board post at the Broward Center for the Performing Arts after the scandal broke. And the Archdiocese of Miami is also reeling from the downfall of a man it had knighted.
But it's not just the arts crowd or the church feeling the pain; it's all of those friends and associates who Bienes fed to Madoff. Those same people, some of whom lost fortunes, are now left to wonder: Did their acquaintance know about the Ponzi scheme? Is he a perpetrator, a victim, or a bit of both?
"I heard [Bienes] lost everything," says Tony Stefanelli, a longtime friend who has surrendered about $14 million in the Madoff scandal. "I understand he was crying and everything else. I don't blame Michael, and don't believe he was involved in any way with the scamming."
That might be true, but the fact remains that Bienes has already been caught violating the law for Madoff. Bienes and longtime business partner Frank Avellino were among the very first "feeders" to Madoff's fund back in the 1960s, raising hundreds of millions of dollars from their accounting firm's clients, friends, and others.
By the early 1990s, they were managing 3,200 investors who'd put in nearly half a billion dollars, all of which they funneled into Madoff's hands.
Unfortunately, the operation was illegal. Both Bienes and Avellino were accountants, not licensed securities traders. The Securities and Exchange Commission caught them in 1992, fined them hundreds of thousands of dollars, shut them down, and forced them to return $440 million they'd raised.
But that appears to have been just a bump in the road in the lucrative relationship between Madoff and Bienes. Investors say Bienes and Avellino never stopped dealing with Madoff or raising money for the swindler's fund. They simply steered some of those same investors — who were accustomed to Madoff's famed 18 percent returns — to Fort Lauderdale accountant Michael D. Sullivan.
Two investors, who spoke on condition of anonymity, said they were encouraged by Avellino and Bienes to put their money in Sullivan's account after the SEC returned their money. Both did so — and lost hundreds of thousands of dollars when Madoff went down.
"The only irregularity was that they were not registered to sell securities," says the investor, who lost about $200,000 and spoke on condition of anonymity. "Everybody got every penny back, including interest. Nobody got hurt. So we were all sitting there with our money and put it back in with Sullivan."
Last month, Sullivan sent a letter informing investors that all of their money had been lost in the Madoff scandal, says the source. The Florida Office of Financial Regulation could find no broker's license or investment advisor's license in Sullivan's name. Sullivan couldn't be reached for comment. A man who answered the phone at his office said he wasn't available. "I am just helping out during this time," he said in a funereal tone.
After the SEC action, Bienes and Avellino partnered in a series of companies that also had investments in Madoff's fund, according to another anonymous investor who produced documents proving it. One of those documents shows that Christ Church United Methodist, which Sullivan attends, was among those investors. Asked about the church's Madoff investment, Pastor Alex Shanks said he would call back. He didn't.
This investor also provided documents from companies run by Bienes and Avellino that invested with Madoff.
It gets worse. Avellino, who sold his $2 million house in Fort Lauderdale in 2007 and owns a winter home in Palm Beach, was recently sued by the housekeeper of yet another residence, his $10 million summer home in Nantucket. The housekeeper claimed in Massachusetts civil court that Avellino caused her to sink her life savings of $124,000 into something called the Kenn Jordan Foundation. She claims Avellino informed her shortly before the Madoff scandal broke that all of her money had been lost.
Florida corporate records show that Avellino ran the Kenn Jordan Foundation from his former address in Fort Lauderdale. It was dissolved in 2001. Avellino and Bienes also ran other partnerships, including Mayfair Bookkeeping Services, from that same address before switching it over last year to Avellino's home address in Palm Beach.