Another Madoff Investor: Uma Thurman's Fiancé

This month's Bloomberg features an article about the French fund-of-fund manager Arpad Busson, who happens to be engaged to Uma Thurman: "Uma Thurman No Help to Arpad Busson in Madoff Fraud’s Nightmare". Excerpt:

Arpad Busson is angry. He’s just looked at the latest returns of a hedge fund he used to invest in; it’s down more than 60 percent in the past nine months.

“That a-hole!” Busson says of the New York-based manager, as he walks out of the conference room at the Mayfair offices of EIM SA, the $11.5 billion fund-of-hedge-funds firm of which he is founder and chairman. Though EIM yanked its money out of the fund in April 2008, when it was down only 25 percent, Busson says there are too many like it out there.

“If these managers are not focused on preservation of capital, they should not have the right to manage other people’s money,” he says.

Busson’s opinion matters. Since he launched EIM in 1992, he has been instrumental in luring billions of dollars of public and corporate pension money into his and other funds of funds. The industry, which Busson helped pioneer, allows investors to spread their risk among hedge funds with different strategies.

Busson gets dinged later in the article for allocating a small percentage of his clients' funds to Madoff's firm:

An investment with Madoff was a litmus test for whether a fund of funds did proper due diligence, says Salomon Konig, who invests about $75 million with funds of funds as chief investment officer at Aventura, Florida- based investment firm Artemis Capital Partners LLC. “Whenever a fund had money with Madoff, it raised a red flag,” Konig says. “It meant they were chasing returns.”

It's worth reading the rest of the article for some insight into the origins of the fund-of-fund industry, and for the story of how the enterprising Busson leveraged his connections from an affluent upbringing to become a lot wealthier.

The photo on the top left, of Busson and Thurman, is from Bloomberg. The photo on the top right, is of the French actor Mathieu Amalric, who bears a striking resemblance to Busson. Almaric starred as the villain in last year's James Bond film Quantum of Solace, and was perhaps best known in the U.S. before that for his role as the stroke-paralyzed Elle editor Jean-Dominique Bauby in the French film The Diving Bell and the Butterfly.

Great Name for a Hedge Fund Adviser

From the Financial Times's front pager on the Madoff scandal ("Madoff fallout spreads worldwide"):

“This was the train wreck that happened in broad daylight,” said Jim Hedges, a hedge fund adviser who did not place any investors’ money with Bernard Madoff Investment Securities.

A Question about the Madoff Scandal

Why confess now? If you're running a Ponzi scheme, and investors are starting to ask for their money back, why not do what other, putatively legitimate, hedge fund firms have done and announce that you are restricting withdrawals for a few months while you sort out illiquid positions? You'd still have the problem that your actual assets are significantly less than what you have claimed, but, again, why the need to confess the scheme? Let's say that the returns you've claimed imply that you have $50 billion in assets under management, but you only have $15 billion. Wouldn't 2008 be a convenient year to blame the difference on suffering catastrophic investment losses?

I guess Madoff's sense of guilt caught up with him, but it seems like an awful year such as this one would be one in which it might be possible to unwind a Ponzi scheme without getting caught.