NEW YORK // In a Connecticut town, local officials scrambled to get a handle on damage to their pension funds. A Massachusetts Jewish charity announced it was shutting down. In New York, a distinguished economist feared he had lost his US$2.2m (Dh8m) nest egg. Damage continued to ripple from the massive fraud allegedly engineered by storied Wall Street money manager Bernard Madoff, even as investigators continued trying to unravel the scheme's working and its reach yesterday. While details remained sketchy, the sudden collapse of Mr Madoff's firm last week began showing an impact far beyond the world of the ultra-wealthy. The firm's extensive dealings with charitable foundations and other groups suggested the fraud could take a toll in unexpected places. "It's devastating to people and communities and lives," said Deborah Coltin, executive director of the Robert I Lappin Charitable Foundation. The Salem, Massachusetts, organization sponsors Jewish educational programs and is being forced to close its doors. The 70-year-old Mr Madoff, well-respected in the investment community after serving as chairman of the Nasdaq Stock Market, was arrested Thursday in what prosecutors say was a $50bn scheme to defraud investors. Some investors claim they've been wiped out, and it is thought more are yet to come forward. Late yesterday, a federal judge in New York directed that proceedings to liquidate the assets of Bernard L Madoff Investment Securities be moved to bankruptcy court. US District Judge Louis L Stanton also ordered that clients of Mr Madoff's private investment business seek relief under a federal statute that set up a special government reserve fund to rescue cheated investors. Stanton signed the order after the Securities Investor Protection Corporation asked that steps be taken to protect investors in the scheme. Congress created the SIPC in 1970 to protect investors when a brokerage firm fails and cash and securities are missing from accounts. Funds can be used to satisfy the remaining claims of each customer up to a maximum of $500,000. The figure includes a maximum of up to $100,000 on claims for cash. The biggest victims include international banking institutions HSBC Holdings of Britain, Royal Bank of Scotland Group and Man Group, Spain's Grupo Santander SA, France's BNP Paribas and Japan's Nomura Holdings. All reported that they had fallen victim to Mr Madoff's alleged Ponzi, or pyramid, scheme. A criminal complaint says that for years Mr Madoff paid returns to investors out of money he got from newer clients. The alleged victims who sunk cash into Mr Madoff's investment pool include real estate magnate Mortimer Zuckerman, and a charity of movie director Steven Spielberg. Irwin Kellner, a well-known economist for MarketWatch.com, filed a lawsuit Friday against Mr Madoff in US District Court in Long Island, seeking repayment of more than $2.2m he invested with the money manager. But the list of people and organizations allegedly taken by Mr Madoff reached into the ranks of the little guy, too. When local officials in Fairfield, Connecticut, heard of Mr Madoff's arrest "it set off every bell," said Paul Hiller, the town's chief fiscal officer. The town's employees board and police and fire board - which cover 971 workers - had $41.9m invested with Madoff, said Mr Hiller. Town officials immediately notified their investment fund to liquidate. "At that point, it was too late," Mr Hiller said. Without the Madoff funds, the town's pension funds remain safe, officials said, but the loss meant they've lost their cushion. Others, though, have no such comfort zone. Officials at the New York-based JEHT Foundation, a nonprofit focused on juvenile justice and fair elections, said it was freezing all its grants and would shut down at the end of January. The group gets all its fundings from a couple, Jeanne and Kenneth Levy-Church, whose personal investments were managed by Madoff. Another New York nonprofit, the Philoctetes Center for the Multidisciplinary Study of the Imagination, may be forced to close, spokesman Adam Ludwig said. New Jersey Sen Frank Lautenberg, one of the wealthiest members of the Senate, entrusted his family's charitable foundation to Madoff. Lautenberg's attorney, Michael Griffinger, said they were not yet sure the extent of the foundation's losses, but that the bulk of its investments had been handled by Madoff. Reports from Florida to Minnesota included profiles of ordinary investors who gave Mr Madoff their money. Some had been friends with him for decades, others were able to invest because they were a friend of a friend. They told stories of losing everything from $40,000 to an entire nest egg worth well over $1m. They join a list of more-powerful investors that have come forward. The roster of names includes Spielberg's charity, the Wunderkinder Foundation; New York's Yeshiva University; former Philadelphia Eagles owner Norman Braman; New York Mets owner Fred Wilpon; and J. Ezra Merkin, the chairman of GMAC Financial Services. Among those overseas confirming exposure, Banco Santander, the largest bank in the euro zone by market capitalization, said its clients have $3.07bn invested with Madoff. HSBC, Britain's largest bank, said a "small number" of its institutional clients had a total of about $1bn in Madoff funds. * AP