Medical research laboratories at the University of Pennsylvania and the University of Pittsburgh are among the latest victims in the expanding trail of financial fraud linked to New York financier Bernard Madoff.

The scandal will cut off funding for Penn research projects on diabetes and Parkinson's disease, both of which had been backed by the Picower Foundation of Florida. The foundation announced Friday that it would immediately cease all grantmaking because Madoff had managed its endowment.

Penn genetics professor Mitch Lazar was just one year into a three-year effort to understand how a diet high in fat influences diabetes-related genes, as part of the growing field called epigenetics. Picower had expected to grant him about $300,000 a year.

Lazar said he had just started to compare so-called epigenetic changes in mice fed different diets. He had planned to see whether such changes could be passed to later generations, but without more funding, that part of the project may never come to pass.

"We knew there was some interaction between the Picower Foundation and Madoff, but we didn't imagine the extent of this," Lazar said. The foundation, he said, was willing to back risky science that might not get funded by the government.

He said he still had enough money to keep the project going for another year, but after that it would have to end if he can't find new money.

Also left to scramble for new funding was Virginia Lee, who heads a Parkinson's disease group focused on drug discovery at Penn. Over the last five years, she and her colleagues had received $3 million from Picower to look for new Parkinson's drugs.

"We all will have to look for other sources of funding because of this tragic situation," said Lee, director of Penn's Center for Neurodegenerative Disease Research. "We're still trying to digest this information.

"I feel very saddened by this whole situation," she added. "For the people who are employed based on the grants, the people who are the recipients of the philanthropic activities, it's terrible."

Also searching for new sources of money is John Timothy Greenamyre, a professor of neurology in Pitt's medical school who received about $750,000 a year for Parkinson's disease research from Picower.

"I thought it affected prim, rich people in New York City," Greenamyre said yesterday of the Ponzi scheme that Madoff has estimated will cost investors $50 billion. "It hit home in Pittsburgh in a really horrible and tangible way."

The loss of the Picower grant, which Greenamyre had been receiving since 2004, is the first significant fallout of the Madoff scandal to reach the Pittsburgh region.

For the short term, the Pitt medical school will cover the operating expenses of Greenamyre's lab, which employs 13 people. But the fate of his research is far from certain.

"We will find alternate funding, I have no doubt about that," he said. "The question is the time frame for doing that. It's virtually impossible to come up with substantial amounts of money instantaneously. It's really devastating to the laboratory, when we had this real momentum built to really work on Parkinson's disease full force, and all of a sudden we don't."

Greenamyre's research focuses on the mechanisms that cause nerve cell death, as well as on the effects of environmental contaminants, such as pesticides, on Parkinson's disease.

The lab receives money for Parkinson's research from other private and federal funding sources, he said, but some of his newest work, such as research on gene transfer in the brain, is funded solely with Picower money.

The Picower Foundation in Palm Beach, Fla., founded in 1989 by Barbara and Jeffry Picower, has distributed more than $268 million in grants for such institutions and causes as libraries, educational children's television programming, and the rights of refugees.

Brain research - including into Parkinson's disease - also was a major focus for the Picowers, according to their New York attorney, William Zabel. In 2002, the foundation gave $50 million to the Massachusetts Institute of Technology to build a center for brain research.

At the Michael J. Fox Foundation for Parkinson's Research in New York, reports were trickling in yesterday of other Parkinson's research centers affected by the demise of the Picower Foundation.

"At least in a few cases, the Picower money was the primary bread and butter, and those people might be hurting for cash," said Brian Fiske, associate director of research programs at the Fox foundation.

Inquirer staff writer Faye Flam contributed to this report.