List of victims grows in Madoff case

NEW YORK - The epicenter of what may be the largest Ponzi scheme in history was the 17th floor of the Lipstick Building, an oval red-granite building rising 34 floors above Third Avenue in Midtown Manhattan.

A busy stock-trading operation occupied the 19th floor, and the computers and paperwork filled the 18th floor of Bernard L. Madoff Investment Securities.

But the 17th floor was Bernie Madoff's sanctum, occupied by fewer than two dozen staff members and rarely visited by other employees.

They called it the "hedge fund" floor, but federal prosecutors now say the work Madoff did there was actually a fraud scheme whose losses Madoff himself estimates at $50 billion.

The tally of reported losses climbed through the weekend to nearly $20 billion, with a giant Spanish bank, Banco Santander, reporting yesterday that clients of one of its Swiss subsidiaries have lost $3 billion.

Some of the biggest losers were members of the Palm Beach Country Club, where many of Madoff's wealthy clients were recruited.

The list of prominent victims grew as well. According to a person familiar with the business of the real estate and publishing magnate Mort Zuckerman, he is also on a list of victims that already included the owners of the New York Mets, a former owner of the Philadelphia Eagles, and the chairman of GMAC.

Zuckerman is chairman of Boston Properties, owner of the Prudential Tower in Boston and other landmark buildings. Calls to Zuckerman and his representatives were not returned last night.

The 17th floor is now an occupied zone, as investigators and forensic auditors try to piece together what Madoff did with the billions entrusted to him by individuals, banks, and hedge funds around the world.

So far, only Madoff, the firm's 70-year-old founder, has been arrested in the scandal. He is free on a $10 million bond and cannot travel far outside the New York area.

But a question still dominates the investigation: how one person could have pulled off such a far-reaching, long-running fraud, carrying out all the simple, practical chores the scheme required, like producing monthly statements, annual tax statements, trade confirmations, and bank transfers.

Firms managing money on Madoff's scale would typically have hundreds of people involved in these administrative tasks. Prosecutors say he contends to have acted entirely alone.

"Our task is to find the records and follow the money," said Alexander Vasilescu, a lawyer in the New York office of the Securities and Exchange Commission. As of last night, he said, investigators could not shed much light on the fraud or its scale. "We do not dispute his number - we just have not calculated how he made it," he said.

Scrutiny is also falling on the many banks and money managers who helped steer clients to Madoff and now say they are among his victims.

While many investors were friends or met Madoff at country clubs or on charitable boards, even more had entrusted their money to professional advisory firms that, in turn, handed it on to Madoff - for a fee.

Investors are now questioning whether these paid advisers were diligent enough in investigating Madoff to ensure that their money was safe.

Where those advisers work for big institutions like Banco Santander, investors will probably look to them, rather than to the remnants of Madoff's firm, for restitution.

A spokesman for Santander declined to comment on the case.