Tufts and Bernard Madoff

Along with every alumni of Tufts University, I received the following email yesterday. The email raises many simple questions, such as: why does the President of Tufts not follow simple capitalization rules and capitalize the word University? Or, why is the University's endowment so small? But, it also raises a host of much more troubling issues about a heard mentality that involved blindly chasing returns. Particularly, how could so much of the University's money be placed with a single fund without simple due diligence that would have uncovered the fact that Madoff's accountants weren't real? Seems like a lot of money was blindly thrown in one man's direction without the simplest investigation by any investors.

December 19, 2008

Dear Friends:

I have promised to keep you informed when the economic news of these extraordinary times has special significance for Tufts. The news this past week has been dominated by a financial scandal of unprecedented scale and scope. I am sorry to report that Tufts is one of a growing number of victims of the crimes allegedly committed by Bernard Madoff.

In 2005, the university’s Investment Committee authorized an investment with Ascot Partners, which in turn invested the entire sum with Madoff Securities. We have written off the value of this investment, which totaled $20 million, or slightly less than 2 percent of our endowment. This write-off will not significantly affect our operations. We will cooperate with any investigations of this fraud and will work to recoup as much of our investment as possible.

It is personally painful for me to communicate this information to you. We deeply appreciate the trust and confidence that each donor places in the university. We also have an obligation to our students and faculty to manage these resources wisely for their benefit. You have my word that we will look closely at our experience in this case so that we can strengthen our investment process for the future.

I will continue to keep you informed as we work our way through these difficult times. For now, I send all the members of the Tufts community my very best wishes for the holiday season ahead.

Sincerely,

Lawrence S. Bacow
President