Wednesday, January 14, 2009

Shapiro a Madoff Victim

Richard Shapiro, former chairman of the Califorinia Horse Racing Board, has been "devastated" financially by the $50-billion Ponzi scheme that was engineered by Bernard Madoff, according to a letter that Shapiro wrote to a U.S. Congressman.

"Nearly all of my life's work, savings and pension evaporated on December 11, leaving me in desperate financial straits," Shapiro said in the letter to Brad Sherman, a Democrat who represents the San Fernando Valley, an area where Shapiro lives. The letter was dated January 12.

In the letter, Shapiro asked Sherman to pursue Congressional relief that might help him and other victims of Madoff, who has confessed to defrauding dozens of clients from his company's New York offices. One of Shapiro's proposals is to allow Madoff victims to claim credit for back taxes that they paid on paper profits that didn't really exist.

In an e-mail, Shapiro declined to discuss the letter. "It has nothing to do with horse racing, it is a personal matter," he said.

Shapiro did not say in the letter how much money he had lost. Sherman's office didn't respond to requests for comment.

Four days after Shapiro learned that he had been victimized by Madoff, he resigned as chairman of the racing board, a post he had held since January of 2006. The other commissioners were not aware that he was planning to quit. At the time, Shapiro said his resignation was a "personal decision." Later, in an interview with The Blood-Horse, Shapiro said that he was "becoming increasingly frustrated by the governmental and bureaucratic limitations imposed by being on the board."

Only two months before, Shapiro was re-appointed to the board by Governor Arnold Schwarzenegger. Shapiro's original appointment began in October of 2004.

In the letter to Sherman, Shapiro said that he opened an investment account with Madoff Investment Securities in 2004.

"I continued to add money to my account, believing that I was building a nest egg for my family, and the security of our lives," Shapiro wrote. "I had come to believe that the income I thought I would earn would support our lifestyle, and so I devoted the last four years of my life to community service and charity causes. . . I believed that my investment was safe as the Securities and Exchange Commission was regulating, auditing and overseeing Madoff Securities."

During his term as racing board chairman, Shapiro was embroiled in controversy, mainly because he was at the forefront of the board mandate that required all major thoroughbred tracks to replace their dirt racing strips with synthetic surfaces. Bay Meadows, which went out of business last year, was granted a waiver by the board, but Santa Anita, Hollywood Park, Del Mar and Golden Gate Fields put in artificial surfaces, at a cost estimated at $40 million. The board had reacted to an inordinate number of breakdowns and fatalities at the tracks.

The new surfaces have been met with mixed reviews. Last winter, 11 days of racing were postponed at Santa Anita because its track didn't drain properly, and a second synthetic surface was eventually installed. Santa Anita has sued the original manufacturer, which has counter-sued. This season, there have been five fatalities at Santa Anita, and recently a sizable group of horsemen met to complain that many of their horses have been injured because of an inconsistent surface. Many bettors have backed off from betting races at synthetic tracks, and Santa Anita's handle has shown a double-digit decline when compared to last year at this time.

"Those opposed to change are the most vocal," said Drew Cuoto, president of the Thoroughbred Owners of California, in an interview with The Blood-Horse. "(Shapiro) paid the price with personal attacks and criticism leveled at him."

There have been rumors that Shapiro is being considered for a post, possibly as a state lobbyist, that would be created by a new consortium of California tracks. A racing source with knowledge of the new organization said that the job might pay $200,000 a year.

Shapiro, 55, has owned horses from time to time. He is president of Winco Real Estate Services, which he founded in 1996. His father, Marvin Shapiro, ran Western Harness Racing, which conducted standardbred meets at Hollywood Park and Santa Anita before it was sold in 1983. Richard Shapiro's grandfather, Louis Shapiro, campaigned many horses, including Native Diver, one of the most successful thoroughbreds to ever run in California.

Shapiro is not the first horse-racing figure to be ensnared in the Madoff schemes. It has been reported that the Fairfield Greenwich hedge-fund investment group, which was co-founded by Jeffrey Tucker, a New York breeder, lost $7.5 billion, about half of its assets. Tucker's Stonebridge Farm, which he bought in 2004, is located not far from Saratoga Race Course.

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