Madoff scheme burns Mainers

BANGOR, Maine — After years in New York and Boston, Martin and Marcia Ellis moved to New Hampshire and then to the Bangor area six years ago, just like many retirees in search of a more relaxed lifestyle.

On Dec. 12, the couple’s lives became a lot less relaxed when they found out they lost all their savings in New York investor Bernard Madoff’s alleged $50 billion Ponzi scheme.

Martin Ellis’ daughter called that day to tell the couple the upsetting news.

“It was terrible,” Marcia Ellis, 57, recalled Monday in an interview at the Bangor Daily News. “We couldn’t believe it. Marty said, ‘We’re wiped out.’ We still can’t really grasp it.”

Unlike many who have been burned in the scandal, the Ellises weren’t fabulously wealthy — the few hundred thousand dollars they lost were Martin Ellis’ invested retirement savings from his years working at NBC in New York City.

“How can little people involved in such a big scandal survive?” the couple wrote in a letter sent to Gov. John Baldacci and Maine’s congressional delegation. In the letter, they asked for help with their efforts to retrieve at least part of their money.

It seems as if “little people” investors are the exception rather than the rule in the unfolding Madoff scandal. Since it broke in mid-December, it has become clear that to get in with Madoff, a would-be investor needed lots of money — or connections.

Ties to Brooklyn

The Ellises’ connection to Madoff goes back more than 40 years, to Brooklyn, N.Y.

At first it seemed like a lucky coincidence.

Martin Ellis’ parents lived just down the street from Ruth Madoff’s parents in Brooklyn. When Ruth married her high school sweetheart, Bernard Madoff, that neighborhood connection meant that many in the Ellis family became early investors with him in the late 1960s.

“Years ago, I talked to my brother-in-law about putting money in something other than Madoff,” Martin Ellis, 69, remembered. “He said, ‘What do you need something other than Madoff for?’”

The brother-in-law was in good company. According to a National Public Radio report, even former New York Gov. Eliot Spitzer invested with Madoff — and Spitzer was known as the “Sheriff of Wall Street” when he was New York attorney general.

“The party was going,” Marcia Ellis said. “Everybody was making money. Everybody turned their heads the other way.”

So the Ellises were among those who watched their life savings grow each month, thanks to Madoff’s apparent Midas touch — even as the rest of the financial world seemed to go into free fall last autumn.

Then, disaster. When Madoff was charged by federal prosecutors on Dec. 11 with running an apparent $50 billion Ponzi scheme, it became painfully clear to the Ellis family that the coincidence was unlucky after all.

“[Marty’s] entire family is wiped out,” Marcia Ellis said Monday. “It’s a tragedy.”

The couple now has only Martin Ellis’ pension, Social Security and a home equity loan. They hope that the Securities Investor Protection Corp., a nonprofit organization created by the U.S. Congress to aid customers of fraudulent brokers, might cover some of their losses.

But they aren’t counting on it.

Marcia Ellis, 57, a retired formula specialist for Pepsico, wears bright blue glasses — “$2 from Marden’s” — and seems surprisingly relaxed just weeks after her world changed.

During the interview Monday, she clutched a folder full of information about the victims and perpetrators of what’s being called the world’s biggest financial fraud ever.

“I do all of this research because I can’t sleep,” Marcia Ellis said.

Later Monday, she registered for a Bucksport adult education computer class so that she can look for a job as a secretary. The tough economy and job market worry her, but she knows she’d feel better if she were working.

“You’ve got to stay positive,” Marcia Ellis said.

Six lessons learned

Many of the victims of Madoff’s alleged scheme have famous names or lots of money. Steven Spielberg’s charitable foundation was stung. So was Liliane Bettencourt, the L’Oreal cosmetics heiress.

The Ellises say that they don’t have much in common with these people — except their unfortunate connection to Madoff.

“I want to bust this idea of this just affecting rich people in Palm Beach,” Marcia Ellis said.

“We’re not billionaires,” added her husband.

Lessons the poorer-but-wiser couple has learned could come in handy for everyone, they say.

Marcia Ellis found six tips for investors on the Internet that seem particularly pertinent:

• Limit any financial relationships with friends and family.

“Well, we blew that one,” she said.

• Don’t allow people to sway you into investments you don’t understand.

“There was no need to sway. All the families knew each other,” she said.

• Know where your money is.

“We kept strict accounts and kept every check and statement we got each month, which turned out to be fakes,” she said. “The Feds are still trying to unravel what was truthful and what was not.”

• Keep up with how your investments are doing.

• Always diversify.

“We did have all our eggs in one basket, with terrible consequences, and we know better now,” Marcia Ellis said.

• Ask first and trust later — know what your risk is.

Although these lessons are a little too late to help the Ellises, they are striving to limit the other kinds of damage that can accompany financial catastrophe. When the two talk together, there’s no simmering undercurrent of tension, and that’s intentional, they say.

“We’re very calm because we decided we’d stay calm,” Marcia Ellis said. “We weren’t going to fight with each other, or blame each other.”

This positive attitude seems even more amazing when they reveal that their suddenly modest circumstances mean that they haven’t gone shopping for anything other than essentials since Dec. 12.

That’s what happens when you’re swept up in what Marcia Ellis is calling “the crime of the century.”

“It’s all like we were a part of a house of cards,” she said. “And all of a sudden, it fell — poof.”