Bernard
L. Madoff, a financier and former wall street trader, allegedly raked
in an estimated $50 billion over the past 48 years through what he
called "a giant Ponzi scheme," according to reports.

A Ponzi
scheme is an investment ruse that promises big payoffs to investors but
instead pays dividends through money put in by later investors.

In
2005, Tufts invested $20 million in the investment fund Ascot Partners,
"which in turn invested the entire sum with Madoff Securities," Bacow
wrote in an email Friday.

But the loss "will not significantly
affect [Tufts'] operations," he said. It represents less than two
percent of the school's $1.5 billion endowment.

But as a
result of the current recession, the university is reevaluating its
financial outlook: "We're taking a very hard look at expenses; we're
hiring, but we're hiring very selectively," said Tufts spokeswoman Kim
Thurler. "Our number one priority is protecting our students, so we are
increasing our budget for financial aid because we anticipate students
will be needier."

As for a possible lawsuit against Madoff,
Thurler said the school is "investigating all of [its] options. We
haven't made any decisions yet."

But going forward, Bacow said
Tufts will learn from the experience. He wrote, "You have my word that
we will look closely at our experience in this case so that we can
strengthen our investment process for the future."

A Ponzi
scheme is an investment ruse that promises big payoffs to investors but
instead pays dividends through money put in by later investors.

In
2005, Tufts invested $20 million in the investment fund Ascot Partners,
"which in turn invested the entire sum with Madoff Securities," Bacow
wrote in an email Friday.

But the loss "will not significantly
affect [Tufts'] operations," he said. It represents less than two
percent of the school's $1.5 billion endowment.

But as a
result of the current recession, the university is reevaluating its
financial outlook: "We're taking a very hard look at expenses; we're
hiring, but we're hiring very selectively," said Tufts spokeswoman Kim
Thurler. "Our number one priority is protecting our students, so we are
increasing our budget for financial aid because we anticipate students
will be needier."

As for a possible lawsuit against Madoff,
Thurler said the school is "investigating all of [its] options. We
haven't made any decisions yet."