Hands-on approach allowed West Virginia state investment board to avoid Madoff fallout

The West Virginia Investment Management Board does not have any exposure to Bernard Madoff's alleged $50 billion Ponzi scheme, said Craig Slaughter, the board's executive director.

Charities, individuals, hedge funds and others have reported a combined exposure of more than $30 billion but actual losses are not yet clear, according to The Wall Street Journal. The newspaper has reported that Madoff allegedly has said the losses could exceed $50 billion.

Madoff is alleged to have operated a pyramid scheme that pays returns to investors out of money paid by more recent investors. This type of fraud is known in the United States as a Ponzi scheme. It takes its name from Charles Ponzi, who used the technique in the early 1900s.

Slaughter said the Investment Management Board's hedge fund portfolio approach "does not contemplate using the fund-of-funds structure that caused some of our peers to be exposed to Madoff.

The state Investment Management Board, which invests money from public employee pension programs, has reportedly lost about $2.6 billion since June because of the recession and ongoing Wall Street crisis. As of Oct. 31, the board's portfolio was valued at about $8.1 billion.