Madoff scandal hurts real estate silent investors
On the WNYC radio show “The Brian Lehrer Show,” yesterday, host Brian Lehrer talked to Real Deal columnist Michael Stoler and Christine Haughney, a reporter at the New York Times, about the Bernard Madoff scandal and some of the lesser known implications on real estate in the city. Stoler said one aspect of the crisis that hasn’t been addressed is that developers’ financial statements, which list Madoff investments, are now inaccurate. That will further hurt the commercial market and also affect the commercial banking sector. Haughney said that many of the Madoff investors were also silent investors in real estate, especially condo projects in the city. As loans and construction financing are difficult to obtain, developers are looking to silent investors for funding, and the money that these Madoff investors lost would have gone towards developments in the city. Stoler added that Madoff most likely fabricated many of the real estate trades on his hedge fund statements. Madoff was arrested last week on accusations of running a fraudulent investment company and losing $50 billion in investments.