Politicians Dropping Madoff Money

December 18, 2008— -- Politicians are grappling with what to do about the estimated $370,000 in donations they received from accused investment fraudster Bernard Madoff, his relatives, and employees.

Rep. Ed Markey, D-Mass., will donate $10,000 from his campaign funds to Massachusetts charities, according to his spokesman. That amount equals the donations he received since 1992 that were linked to Madoff. Madoff was arrested last week on charges stemming from an alleged $50 billion Ponzi-style investment scheme that victimized wealthy investors, including charities and celebrities.

Nearly $9 of every $10 Madoff gave to politicians went to Democrats, according to a review of his contributions.

Sen. Hillary Clinton, D-N.Y., struggling under millions in debt from her presidential campaign, indicated she would not take steps to separate herself from the $2,000 she received from Madoff and his wife eight years ago. A spokesman said that the donations were given to Clinton's 2000 Senate campaign fund, which no longer exists.

The Democratic Senatorial Campaign Committee told ABCNews.com it was "reviewing" the question of whether and how it should part with $100,000 it received from Madoff and relatives over the past several years.

Sen. Frank Lautenberg, D-N.J., told the Wall Street Journal through a spokesman "we will be ridding ourselves" of $10,000 he received from Madoff and associates during the same period. Sen. Charles Schumer, D-N.Y., told the paper he would contribute $6,000 to widows and orphans of New York City police and fire personnel, as a way to free himself of Madoff's questionable money.

On Tuesday, Sen. Ron Wyden, D-Ore., told the Oregonian newspaper he would donate the $14,000 he received from Madoff and his wife to the Oregon Food Bank. Oregon Democratic Senator-elect Jeff Merkley told the paper he was giving the $2,300 Madoff gave him to Habitat for Humanity.

Madoff made headlines last week when an unsealed criminal complaint in federal court in New York charged that he has been running a decades long Ponzi scheme that defrauded investors of $50 billion dollars.

A former chairman of NASDAQ, Madoff was an investment advisor who catered to a handful of high net worth clients, one of whom told ABC News that Madoff was so sought after that, as recently as two months ago, he was turning down potential new business. His handful of clients routinely expected -- and received -- double digit returns, up market or down.

According to a SEC document filed in Jan. 2008, and cited in the complaint, the firm had between 11 and 25 clients for the fiscal year ending Oct. 2007 and managed about $17 billion in assets in 23 different accounts.

Bernard Madoff Investment Securities, in addition to that private client practice, is also a market maker that trades with other dealers in bonds, the S&P 500 and NASDAQ, according to Bloomberg News.

The firm was the 23rd largest market maker on NASDAQ in October, handling a daily average of about 50 million shares a day. The firm specialized in handling orders from online brokers in some of the largest U.S. companies, including General Electric Co. and Citigroup Inc., Bloomberg News reported.