This is a rush transcript from "Your World With Neil Cavuto," December 15, 2008. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: Meanwhile, the list of victims ripped off in that $50 billion Ponzi scheme is growing. Bernard Madoff now accused of scamming the likes of Steven Spielberg and Elie Wiesel and Mort Zuckerman.

The publishing and real estate magnate joins me right now.

Mort, when I heard this at first, I said, there had to be a typo. I could see the others, but I could not see you. What happened?

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MORT ZUCKERMAN, CHAIRMAN & PUBLISHER, THE NEW YORK DAILY NEWS: Well, it's not actually me. It's a charitable trust that I formed back in 2000 and 2001.

And the funds of that trust are managed by a group of different fund managers. One of these fund managers put all of the funds — which was not insignificant — into the hands of Madoff. I have never met him and never heard of him until Friday, when the charitable trust was informed...

(CROSSTALK)

CAVUTO: And how much was in the trust?

CAVUTO: The trust is approximately $300 million.

CAVUTO: And how much went to Madoff?

ZUCKERMAN: Thirty million — approximately $30 million — so it's about 10 percent of trust.

Now, this money was provided to the charitable trust by me to be given out to charity, not to be wasted by some irresponsible — and perhaps other adjectives apply — fund manager. To put it all in the hands of one man, this man Madoff, he put the entire fund — which was called the Ascot Fund, which is a fund that over $1.6 billion — into the hands of this one man.

I find that astounding.

CAVUTO: Is he still working on the charity?

ZUCKERMAN: He may be working, but not for me.

CAVUTO: OK. So, you fired him?

ZUCKERMAN: Well, at this point, he's lost all the money, pretty much. So, any funds that I would have anywhere close to him, I am going to remove. And I'm going to also look into the normal legal remedies.

CAVUTO: But, Mort, you became a billionaire because you went through things like this with a fine-tooth comb. Why not the charitable foundation which in your name does of lot of good work? I would imagine that would be a pet interest.

ZUCKERMAN: Well, it was. And I thought this man was a very responsible man.

But what he did basically was frankly misrepresent to me what this was all about. He at no time gave me any reason to believe that he was transferring all of these funds to Madoff. I never even heard of Madoff. This was to be a diversified group of investments of somebody who was experienced in the financial world and who had managed funds of a lot of charitable organizations that I was familiar with.

CAVUTO: But you see the spreadsheet, so to speak, right? You see where moneys are going. Charitable foundations, too, not to the same degree, but like companies, have their books, right?

ZUCKERMAN: We were not informed that these funds had gone to Madoff for three years. Literally, we did not know this.

CAVUTO: So, it was fine when Madoff was making money for clients, right? So, when all of a sudden, it turned out...

ZUCKERMAN: Not really making money for clients.

(CROSSTALK)

CAVUTO: Well, I know that. That's my point. When it looked like this was. All of a sudden, you are out of this money. I think what raised hackles with people, Mort, is that if it could happen to Mort, if it could happen to an entity associate with Mort, arguably one of the most successful financiers on the planet, then man, oh, man, this is deep.

ZUCKERMAN: Well, in the first place, as you know, we're going to through an unbelievable amount of turmoil in the financial world in general. And a lot of the people whom we thought were savants in the financial world have proven to be a lot less than that and have gotten not only their...

(CROSSTALK)

CAVUTO: But I thought you were a savant.

ZUCKERMAN: Well, I will put it this way. There is nothing that you can do to prevent somebody who basically misrepresents to you.

Now, there may have been ways — this man, whom I hired, as the others were — there were quite a few others who are also managing the funds — they did their due diligence. Apparently, this man did not do his due diligence.

(CROSSTALK)

CAVUTO: Was he the guy who ran the thing?

ZUCKERMAN: No, he was the guy who ran the Ascot Fund.

(CROSSTALK)

CAVUTO: Which was your...

ZUCKERMAN: And I invested in the Ascot Fund.

CAVUTO: Gotcha.

CAVUTO: And this is the money you use for your various charitable endeavors?

ZUCKERMAN: Yes, part of it — 10 percent of the charitable organization, the funds were invested with...

(CROSSTALK)

CAVUTO: How did he come to you and let you know, Mr. Zuckerman, there's a problem?

ZUCKERMAN: I got an e-mail on Friday.

CAVUTO: What did the e-mail say?

ZUCKERMAN: The e-mail said, I regret to inform you, and I feel so badly, but, alas, the money that we had invested in the Madoff fund — which turns out to be all of the money in the fund — has been lost. I really feel badly, because I lost some money, too. I can't tell you how badly I feel.

(CROSSTALK)

CAVUTO: What drove him to Madoff to begin with? The story you hear from athletes and actors and these who are drawn to it is that he had these sort of hedge fund eye-popping returns in good and bad markets, like the hedge fund go-go days. People did not ask a lot of questions. They just went along for the ride.

ZUCKERMAN: Well, I did not even know that these funds from the charitable organization which I set up, I didn't know they were invested in Madoff.

CAVUTO: Well, what was the return on the fund? Do you remember?

ZUCKERMAN: Well, I do not know. They were probably somewhere between 8 and 12 percent, depending on the year. That's my recollection.

CAVUTO: So, generous, but not over the top?

ZUCKERMAN: No. And I wasn't looking. I wanted to make sure that this was to be invested safely and get a reasonable return — not to be invested with a high risk. I had no idea.

By definition, if you put all the money into one fund, it is high-risk. There is no diversification. Diversification is the fundamental principle of this. I had no idea this was happening. And he did not indicate that in any of the meetings we had with him.

CAVUTO: Well, you know what they said after this whole Madoff thing, Mort, is that now they're going to rain down on hedge funds in general, that he might have been the exception to the hedge fund rule, but now it's time to really re-regulate, go after the hedge funds, as you would mutual funds, as you would banks, as you would brokers, and never let it happen...

ZUCKERMAN: Well, hedge funds have become a huge player in the financial world, along with of course investment banks. All of the major investment banks that survived the Great Depression are now gone. In one form or another, they are all gone. The hedge funds, frankly, controlled huge amounts of money and when — and huge amounts of debt, I might add.

And when everything was on the way up — where they had a relatively small equity and a large amount of debt — they made a lot of money. Now, when things began to go down, they lost a lot of money.

CAVUTO: Absolutely. It collapses. Can you get any of this money back?

ZUCKERMAN: I doubt it.

CAVUTO: Really?

ZUCKERMAN: The only way I'm going to be able to get it back is if I can establish that there was something wrong that was in violation of the agreement that fund manager had with the charitable trust. And that I'm going to look into with my lawyer.

CAVUTO: But it would never remotely compensate you...

ZUCKERMAN: No, for sure, and that is the sad part of it, because this was intended to be given for charitable purposes. It does not affect my own personal finances, but it does affect a lot of the charitable contributions that I had hoped to make.

CAVUTO: Do you replenish the fund of your own accord?

ZUCKERMAN: Over time, I will definitely do that.

CAVUTO: But you are still a billionaire?

ZUCKERMAN: So they tell me.

CAVUTO: OK.

ZUCKERMAN: But thank you for asking.

(LAUGHTER)

CAVUTO: I was just curious, because I don't want to see you hopping across the street...

(CROSSTALK)

ZUCKERMAN: No, no, no.

(CROSSTALK)

CAVUTO: ... Tuesday specials.

ZUCKERMAN: As the fee for appearing on this program, you gave me a subway token.

(LAUGHTER)

ZUCKERMAN: I thought that was kind of a little bit generous. It's more than I usually get, by the way.

(CROSSTALK)

(LAUGHTER)

CAVUTO: It's two-for-one night.

ZUCKERMAN: The coffee was terrific.

CAVUTO: The coffee was.

ZUCKERMAN: Yes.

CAVUTO: You did pay for that.

(CROSSTALK)

CAVUTO: Yes. OK.

Mort Zuckerman, thank you very much. All right.

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