Baltimore City’s police and fire department pension fund lost at least $3.65 million in the alleged Ponzi scheme run by Bernard Madoff, officials said, another hit to a fund that has lost $1 billion in the last year.
Stephan Fugate, chairman of the Baltimore City Fire and Police Retirement System’s board of trustees, said he expects the fund will lose 5 to 6 percent of $73 million invested with New York-based UBP Asset Management. The loss is unrealized until confirmed by UBP, whom the city fund has cut ties with, Fugate said.
The loss is not a significant hit to the overall fund, which Fugate said is worth approximately $1.5 billion. But he said its total worth has fallen in the last year from $2.4 billion thanks to a brutal stock market plunge.
The 37 percent decline tracks with the overall market, which experienced its worst annual performance since the Great Depression.
“We’re probably down on track with the S&P 500 [index], down 30 to 40 percent,” Fugate said. “There’s no joy in that, but we’re not in the 70 percent range like Legg Mason.”
Madoff’s alleged $50 billion scheme has touched investors around the country, but the pension fund is the largest local victim discovered so far. Fugate said the fund will likely be a party in a lawsuit filed by another investor who lost more to Madoff.
On Sept. 16, the board fired Legg Mason as one of its money managers after the Baltimore-based firm lost the fund $7 million in four years.
Fugate said the system placed $78 million with Legg in June 2004 at the behest of Gov. Martin O’Malley’s administration, but pulled $14 million over the last year and a half. At the time of Legg’s firing, the fund had lost $7 million.
Legg Mason portfolio manager Sam Peters told the board at the time that the losses were due to Legg’s strategy of value investing, placing money in troubled companies with solid fundamentals.
