Enron, Madoff and now FTX: New York’s Belfer family strike out again

A New York oil dynasty that was a client of the legendary fraudster Bernard Madoff and lost billions in the demise of Enron has been embroiled in the collapse of FTX, according to court documents.

Investment firms for the Belfer family, whose name sits above galleries at New York’s Metropolitan Museum of Art, were included in a list of shareholders of the cryptocurrency exchange FTX and its US business that were released in court documents this week.

FTX founder Sam Bankman-Fried has been accused by US prosecutors of orchestrating “one of the biggest financial frauds in American history”, drawing comparisons to the Ponzi scheme architect Madoff and sprawling bankruptcy of Enron, which sank amid fraud allegations. Bankman-Fried has pleaded not guilty.

The Belfer family, one of Enron’s largest shareholders, lost around $2bn in the company’s collapse, according to estimates at the time. The family’s patriarch, Robert Belfer, played a high-profile role as a long-serving member of Enron’s board of directors for several decades until 2002. Several family foundations and companies also invested with Madoff’s sham investment firm.

A representative for Belfer’s family office, Belfer Management, run by Robert’s son Laurence Belfer, said the family does not give interviews and declined to comment. Robert Belfer said in 2011: “Needless to say, Enron was a painful experience” and that the financial losses had forced the family to reduce the scale of its giving.

The ability of FTX to woo the wealthy New York family gives a fresh sign of how far Bankman-Fried had penetrated the US elite in his drive to attract investment for his businesses. Billionaire Robert Kraft and several celebrities and well-known athletes are also shareholders in FTX, the court documents show.

Belfer Investment Partners held shares from FTX’s equity fundraisings in 2021 and early 2022, as well as investing in the crypto exchange’s US business, the documents show. Another firm linked to the family, Lime Partners LLC, also held shares in FTX and FTX US. The two companies’ combined stake in FTX Group was valued at $34.5mn as of the most recent fundraising round early last year, according to share prices provided by a person familiar with the deal.

The Belfers are known for their extensive philanthropic donations. Robert and his wife Renee made large donations to the Met Museum to renovate the New York institution’s Greek and Roman galleries, which are named for the Belfers. The family are also major benefactors of Harvard, where the centre for international affairs at the University’s Kennedy School is named after them.

The family descend from Arthur Belfer who moved to the US from Poland around the time of the second world war and imported feathers for down pillows and sleeping bags before branching out into rubber and petroleum. The family oil company was acquired in the 1980s by a predecessor of Enron, making the Belfers major stakeholders in the doomed energy giant.

Their financial misfortunes include trusting Madoff’s phoney investment firm. However, according to court documents, after the demise of Enron, the Belfer companies withdrew more than $28mn from Madoff’s scheme before it collapsed.
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