The financial carnage coming out of the Bernard Madoff investment scandal is now spreading from charities and wealthy individuals to labor union pension funds. In recent days, several have fessed up to their members their significant exposure to Madoff's investment scheme, which will result in massive losses to their members.
CNBC has learned that one union, the Carpenters local in Syracuse, N.Y., has lost the majority of the $100 million to $150 million it had in pension money because of its dealings with Madoff, people close to the matter said. The union's money manager, J.P. Jeanneret Associates of Syracuse, didn't return a telephone call for comment.
The Syracuse carpenters local isn't alone. Pat Morin, business manager of Empire State Carpenters Union, is sifting through the wreckage in his own portfolio, which at the end of June had around $800 million in assets under management. Morin says his fund has exposure to Madoff as well, largely the result of consolidation in union pension funds where locals like Syracuse had transferred money to his oversight.
Syracuse consolidated in June, but that doesn't mean that the Syracuse fund will now be covered by money in the larger pool. Morin says pension assets remain segregated at least for a period of time, meaning that Syracuse may have to shoulder the entire Madoff hit on its own, which one person close to the matter said was nearly all the money it had under management. Morin declined to comment on the Syracuse exposure.
The labor union exposure to the Madoff Ponzi scheme adds another twist in the scandal, which may be the largest in recent financial history.
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