http://www.boston.com/news/education/higher/articles/2008/12/20/tufts_loses_20m_in_madoff_scheme/?mod

Tufts University has lost $20 million through an investment in a fund tied to Bernard Madoff, the Wall Street trader accused of running the largest Ponzi scheme in history.

The losses occurred through Tufts's stake in Ascot Partners, which invested the sum with Madoff Securities, school president Lawrence Bacow wrote in a letter e-mailed to the university community yesterday.

The $20 million amounts to less than 2 percent of the school's $1.5 billion endowment, he said.

"The news this past week has been dominated by a financial scandal of unprecedented scale and scope," Bacow wrote. "I am sorry to report that Tufts is one of a growing number of victims of the crimes allegedly committed by Bernard Madoff."

Bacow said Tufts had written off the value of the bad investment and will "cooperate with any investigations of this fraud and will work to recoup as much of our investment as possible."

Tufts was the first local university to announce that it had become entangled in the scheme that has hit major charities and investors all over the world, with estimated losses of at least $50 billion, according to authorities.

MIT will also be affected because one of its major donors, The Picower Foundation, announced yesterday that it would cease all grant-making immediately and close its doors in coming months. The foundation's endowment was also managed by Madoff.

The Picower Foundation has supported MIT in various gifts for the last eight years.

Since 2000, the foundation has given the university $200,000 annually to attract and support talented doctoral students in science and engineering among members of underrepresented minority groups. The fellowships are named in honor of Norman B. Leventhal, a 1938 MIT graduate and longtime friend of the Picowers.

The foundation's $50 million gift in 2002 established The Picower Institute for Learning and Memory at MIT, directed by Nobel laureate Susumu Tonegawa. It also included $12 million for four endowed professorships and $8 million for research.

It was unclear last night how the university will respond. "We just found out ourselves today," said Patti Richards, a university spokeswoman. "We're shocked by the news and we're still processing it."

Earlier this week, Yeshiva University in New York said it had lost about $110 million in investments tied to the Madoff scandal. On Tuesday, New York Law School sued J. Ezra Merkin, founder, general partner, and manager of Ascot Partners, with whom it invested $3 million in 2006. Merkin had sent a letter to Ascot investors last week announcing that virtually all of Ascot's assets, $1.8 billion, were invested with Madoff.

Tufts's investment officers became aware of the university's exposure last Thursday after reading an alert in The Wall Street Journal, said Tufts spokeswoman Kim Thurler. The university has not decided whether to sue. "We are evaluating all of our options," Thurler said.

The losses attributed to Madoff coincide with tough economic times buffeting colleges and universities, which have announced budget cuts and other steps to weather the financial downturn. Tufts officials expect the college's endowment to drop by 25 percent by the end of the fiscal year and are seeking $36 million in cuts in its $600 million nonresearch budget.

Bacow has put new capital projects on hold and the university will be more selective in hiring faculty and staff. He has also suggested the possibility of forgoing raises next year to avoid significant layoffs.

The financial climate has raised concerns that Tufts may not be able to maintain its goal of "need-blind" admissions, which does not factor the ability to pay into the decision of whether to admit a student.

In his letter, Bacow said the write-off from the Madoff investment will not significantly affect the college's operations. "We also have an obligation to our students and faculty to manage these resources wisely for their benefit," he wrote. "You have my word that we will look closely at our experience in this case so that we can strengthen our investment process for the future."