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Ponzi North


Date: Friday, February 6, 2009
Author: Paul Waldie and Sinclair Stewart, Globe and Mail

When people around Phillip Robinson saw how lucrative his investments were, they wanted in. Now, the Canadian link to Bernard Madoff is becoming clear, and it isn't pretty.


Phillip Robinson has survived the Second World War, the Great Depression, a broken marriage and more than a few business scrapes. Now at age 83, he has one more challenge to face – surviving Bernard Madoff.

For 20 years, Mr. Robinson believed his life savings were being well managed by Mr. Madoff's New York-based investment firm. He met Mr. Madoff in 1988 and was so impressed that he sunk $4-million into his funds over the years.

His connections to Mr. Madoff surfaced in a court filing yesterday in New York that revealed the scope of Mr. Madoff's client base in the United States and Canada. The Canadians ranged from a Montreal investment firm connected to a branch of the Bronfman family, to a Marxist scholar at Dalhousie University who once played basketball with radical socialist Abbie Hoffman, to a member of the Pencer family of soft-drink fame.

It's not clear how much each invested, and sources close to a few of them said the information was incorrect.


Mr. Madoff “was low-key, very convincing,” Mr. Robinson recalled from Saint-Faustin-Lac-Carré, Que., where he runs Mont Blanc and Grey Rocks ski hills. His pitch “was so convincing. I'm still half convinced.”

Mr. Robinson encouraged his two sons, daughter, brother, business partner, accountant and nephew to invest as well. Now, with Mr. Madoff facing charges of fraud in New York and allegations he ran a $50-billion (U.S) Ponzi scheme, the Robinsons have lost more than $13-million.

“I'll hang on as best I can,” said Mr. Robinson, who was already coping with a bitter divorce and a struggling business before the Madoff scandal erupted. “I'm 83 and I've lived through a lot of bumps before. It's like I tell a good friend of mine, ‘We wake up and we start fighting the dragons.'”

Much of the Canadian connection comes back to Mr. Robinson, whose encounter with Mr. Madoff two decades ago ultimately led to a string of investments.

It all began in Philadelphia when Mr. Robinson's old friend, Alfred Reischer, introduced him to Mr. Madoff.

Mr. Reischer owned an accounting business in Philadelphia, where Mr. Robinson went to university, and the two had kept in touch while Mr. Robinson built a career in real estate and as a local politician in New Jersey.

Mr. Robinson came to Quebec in 1976 after falling in love with skiing. He bought a ski hill, got married and settled down. Around the time Mr. Robinson married, Mr. Reischer began raving about some investments he'd made with Mr. Madoff, highlighting the steady returns of almost 12 per cent annually. Mr. Robinson was intrigued and his friend set up a meeting with Mr. Madoff.

Mr. Robinson didn't understand everything Mr. Madoff talked about that day, describing his investment strategy as a sequence of “put and call options,” but he took his friend's advice and jumped in. His children, brother, nephew and business partner followed suit later.

Soon Mr. Robinson's Montreal accountant, Issie Farber, took note, too. He was doing Mr. Robinson's taxes and marvelled at the investment returns. “He saw what I was earning and he asked if he could get in,” Mr. Robinson said. “So I called Mr. Madoff's secretary and I got him in.”

Sources close to the Farbers say the family could be out as much as $4.5-million. Mr. Farber died several years ago and his widow, Sandra, declined to offer specifics yesterday. “I was just watching Regis & [Kelly Ripa] on television and she was saying how many people in New York, how many people in Florida [are on the list],” Ms. Farber said. “It's very sad.”

At the time he invested with Mr. Madoff, Mr. Farber was a director of Cott Corp., where he was a well respected numbers man. He brought Cott executive Sam Pencer into the Madoff fold, according to the list of clients. A source close to the family estimated its losses at more than $10-million.

Mr. Pencer's widow, Judy, who lives in Toronto, declined comment and referred questions to her Montreal accountant, Barry Rashkovan.

Mr. Rashkovan is Ms. Farber's son-in-law and does some accounting work for her as well. Yesterday, he said he did not handle any investments for Ms. Pencer or Ms. Farber, and did mainly tax work. “I was not invested and the reason my name is on the list is because one of my clients was invested and I got the [Madoff fund] statements from one of my clients. I don't know how this client of mine got involved with Madoff in the first place,” he said.

Mr. Robinson's daughter, Nancy, used her investments with Mr. Madoff to start a charity in Boston called Citizens for Safety, which advocates for measures to stop trafficking of illegal guns. She also relied on several Madoff clients for donations. Now she isn't sure the charity can continue.

“I'm struggling to keep my house, keep my job,” Ms. Robinson said yesterday. She works full-time at the charity, which has about 1,000 members. “We just trusted that if these other individuals who were so savvy were invested then it had to be a good thing.”

The other Canadians on the list were not connected to Mr. Robinson and it is not clear if they were Madoff clients or simply on a mailing list.

One was Gerbro Inc., the Montreal investment firm for the family trust of Marjorie and Gerald Bronfman. Nadine Gut, the president and chief executive officer of Gerbro, said she cannot comment on any matters relating to the company because it is a private organization. A source close to the family said Gerbro has no investments in Madoff funds and never did and that it's a mystery how its name got on the list.

Gerald Bronfman, who is deceased, was the son of Harry Bronfman, one of Seagram founder Samuel Bronfman's brothers.

Two other names were more puzzling – Herb and Ruth Gamberg, a pair of modest, left-leaning professors who came to Halifax in the 1960s and taught at Dalhousie University before they retired.

Mr. Gamberg, 75, is regarded as one of the world's leading Marxist scholars, according to a documentary about his life under development by Halifax director Walter Forsyth. He grew up in Worcester, Mass., and on his trips home from Brandeis University he would play pickup basketball with his younger friend, Abbie Hoffman, the radical social activist who comprised part of the Chicago Seven. After coming to Canada, he helped establish the Foundation Year Program at King's College, and became one of the early members of Dalhousie's sociology department, writing on everything from prison reform to socialism to the history of Nova Scotia's political left.

Although they are retired, the Gambergs remain politically energized. They added their names to a petition nominating folk singer Pete Seeger for a Nobel Peace Prize, and were among a group of signatories protesting Barrick Gold's Pascua Lama mining project in Chile.

The Gambergs could not be reached for comment yesterday.

Mr. Robinson said he doesn't feel guilty for encouraging others to invest with Mr. Madoff. “Everyone has to make their own decision,” he said. “I don't blame my friends who were also getting me in.”

He feels sad for the widow of his old friend Mr. Reischer, who died four years ago and put most of his money in Madoff funds. “His wife is destitute now,” Mr. Robinson said quietly.

Mr. Robinson said he is coping alright with his financial woes, divorce and business troubles – he is preparing to liquidate Grey Rocks. “I still walk and still breathe and talk,” he said.

When asked what he will do about the $4-million he lost with Mr. Madoff, Mr. Robinson chuckled and replied: “Wait until the grim reaper calls me, I guess.”

With reports from Bertrand Marotte, John Partridge and Les Perreaux