Madoff had a steady presence on Capitol Hill

WASHINGTON —  When money manager Bernard L. Madoff was arrested in New York recently for allegedly engineering a massive Ponzi scheme, Wall Street financiers were left slack-jawed at the unmasking of an establishment figure who seemed to be an unlikely fraud.

The reaction was similar among many politicians in Washington. For years, Madoff was a generous donor to mostly Democratic causes and maintained a steady lobbying presence through the government relations firm of a former New York congressman.

Still, despite spending more than $900,000 on lobbying fees and campaign contributions over the last decade, Madoff maintained a low profile in the capital.

“Until this thing blew up, I didn’t even know who he was,” said former Rep. Richard Baker (R-La.), who chaired a House banking subcommittee for 12 years, through 2006, that considered issues important to Madoff.

“It’s a bit odd,” Baker said. “I was a big player on market data fees and electronic exchanges” -- two of the issues on which Madoff’s lobbying firm, Lent Scrivner & Roth, listed as advocating. “I don’t remember having a visit or a discussion on these matters with the firm.”

Few of Madoff’s political beneficiaries want to talk about the New York money manager for fear of being tied to his legal problems. But one former Democratic fundraiser who asked not to be identified said the political community that knew him was shocked by his arrest because Madoff, a former chairman of Nasdaq, was known for his expertise as well as his deep pockets.

“People saw him not just as a source of money but also as a source of financial information,” the fundraiser said. “People saw him as a real guru of finance.”

Madoff was arrested Dec. 11 and charged with running a fraudulent investment business that ruined investors across the country, including hedge funds, wealthy individuals and charities. The losses involved could run to $50 billion.

Since 1999, Madoff spent at least $540,000 for lobbying by the Lent Scrivner firm. By Washington standards, his lobbying expenditures would be considered significant but not outlandish for an enterprise of Bernard L. Madoff Investment Securities’ apparent size.

Madoff also occasionally testified before or gave advice to congressional committees about financial matters.

Madoff, his wife and individuals at his company gave $392,900 to federal candidates, parties and committees since 1998, with 89% going to Democrats, according to a Times analysis. Fully $238,200 of that total came from Madoff and his wife alone.

Most of the 13 members of Congress who received funds are New York-area lawmakers or members of committees overseeing financial services.

Madoff’s donations gave him a clear, if understated, presence in Democratic political circles.

“His profile as a large giver certainly gave him more access,” said the former Democratic fundraiser who dealt with Madoff but did not want to be identified because he wants to stay out of the scandal.

After the scandal became known, Sen. Charles E. Schumer (D-N.Y.), who received at least $12,000 from Madoff and his wife since 1992, donated that amount to charity.

Schumer spokesman Brian Fallon said the senator had met Madoff “a few times, but not in the last several years.”

The campaign committee Schumer led from 2004 to 2008, which aims to elect Democrats to the Senate, received $100,000 from Madoff -- $25,000 a year, the maximum allowed by law.

The campaign committee, now chaired by Sen. Robert Menendez (D-N.J.), has not yet said whether it will keep the money, return it or donate it to charity. This is a tough time for the committee to hand back so much money because the economic downturn is expected to make fundraising over the next two years more difficult.

Another recipient of large Madoff campaign donations, Sen. Ron Wyden (D-Ore.), collected at least $14,000. Wyden’s spokeswoman, Jennifer Hoelzer, said she believed the senator had spoken to Madoff only twice, during fundraising calls in 1998 and 2003. Wyden has sent the money he received from Madoff to the Oregon Food Bank.

Also promising to rid himself of Madoff campaign money is Sen. Frank R. Lautenberg (D-N.J.), who received at least $13,000. In addition, Lautenberg’s family foundation, a philanthropic entity, invested in Madoff’s funds. Lautenberg’s spokesman would not say how much it lost as a result.

Madoff’s presence was also felt, albeit lightly, in Congress’ legislative process.

In 1993, he was called as an expert witness on financial matters before a House subcommittee chaired at the time by Rep. Edward J. Markey (D-Mass.). In subsequent years, Markey’s campaign received a total of $10,000 from Madoff and his wife.

In 1994, Madoff wrote a letter to a House energy and commerce staff member explaining how his firm determined pricing for its clients’ stock trades.

In 2004, Madoff offered a six-paragraph statement to the Senate banking committee about rules for coordinating price disclosure on various securities trading markets.

Madoff’s representatives to Congress, the Lent Scrivner firm, registered to lobby on several securities-related issues over the years, including the recent Wall Street bailout bill, database protection and “market integrity issues.”

The firm’s most obvious lobbying success on behalf of Madoff involves a civic project, New York’s Lower East Side Tenement Museum.

In 2002 and 2005, Madoff’s lobbyists landed grants totaling more than $1.1 million for the museum, according to Taxpayers for Common Sense.

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Times staff writer Dan Morain contributed to this report.