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

A New York oil dynasty that was a client of legendary swindler Bernard Madoff and lost billions in the collapse of Enron is involved in the collapse of FTX, according to court documents.

Investment firms for the Belfer family, whose name hangs over galleries at New York’s Metropolitan Museum of Art, were included in a list of shareholders of cryptocurrency exchange FTX and its US business, which 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 Ponzi scheme architect Madoff and the sprawling bankruptcy of Enron, which sink amid accusations of fraud. Bankman-Fried has pleaded not guilty.

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

A representative for the Belfer family office, Belfer Management, run by Robert’s son Laurence Belfer, said the family does not grant 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 scale back its giving.

FTX’s ability to lure the wealthy New York family provides a new sign of how deeply Bankman-Fried had penetrated the American elite in his effort to attract investment for his businesses. Billionaire Robert Kraft and several famous celebrities and athletes are also shareholders in FTX, court documents show.

Belfer Investment Partners held stakes from FTX’s equity fundraising in 2021 and early 2022, as well as investing in the US crypto exchange business, the filings show. Another family-related firm, Lime Partners LLC, also held stakes in FTX and FTX US. The two companies’ combined stake in FTX Group was valued at $34.5 million 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 many 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 after the Belfers. The family are also big benefactors of Harvard, where the center for international affairs at the university’s Kennedy School bears their name.

The family descends from Arthur Belfer, who moved to the US from Poland around the time of World War II and imported feathers for pillows and sleeping bags before branching out into rubber and oil. The family oil company was bought in the 1980s by an Enron predecessor, making the Belfers major stakeholders in the doomed energy giant.

Their financial misadventures include trusting Madoff’s bogus investment firm. However, according to court documents, after Enron collapsed, the Belfer companies withdrew more than $28 million from Madoff’s scheme before it collapsed.