An endowment that helps support the Frist Center has likely lost $1 million in a fund connected to disgraced investor Bernard Madoff, but an official says the loss won't affect this year's contribution to the museum.
The Frist Center for the Visual Arts Foundation said Wednesday that it was one of countless investors who have lost money in an alleged $50 billion Ponzi scheme tied to Madoff.
The investment, which was made through a hedge fund operated by Darien, Conn.-based Maxam Capital Management, was among about $6 million in losses suffered by the endowment last year, a decline of about 27 percent of its portfolio's value.
"We had a bad year, not unlike a lot of endowments," said Peter Bird, the foundation's treasurer. "An endowment that did well this past year might have been down 20 percent."
Madoff has been accused of bilking investors through a decades-long scheme that promised steady income but instead paid out returns using new investor money.
Locally, the endowment appears to have invested with Madoff in 2007 when it put money in a Maxam fund recommended by a Memphis investment consultant. The endowment was not aware that the fund passed proceeds onto Madoff, Bird said. The endowment's investment purportedly grew to $1.1 million when Madoff's firm was closed.
The investment was one of many by the endowment, which had $22.6 million in assets as of Dec. 31, 2007, according to an IRS filing. The endowment's portfolio has since shrunk to about $16.5 million, Bird said.
Separately, The Frist Foundation, which funds various Nashville charities, lost another $13 million investment in another fund operated by Madoff. The Frist Foundation, nonetheless, plans to give $5 million to the museum, about $500,000 less than a year ago, Bird said.
Last year's losses could reduce contributions from the endowment to the museum. But because investment gains were previously higher, Bird said the endowment increased this year's contribution to the museum by about $50,000.
The foundation last week gave the museum about $950,000 toward its $11 million budget, Bird said. Frist officials could not be reached for comment.
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