December 12, 2008
Is Bernie Madoff Jewish? Very. Oy.
Los Angeles Jewish Community Foundation among Madoff's victims
Bernard Madoff at a 2007 roundtable discussion with Justin Fox, Ailsa Roell, Robert A. Schwartz, Muriel Seibert, and Josh Stampfli.
"It's all just one big lie."
With those words Bernard Madoff confessed to senior executives of Bernard L. Madoff Investment Securities that the $17 billion hedge fund company he founded was nothing more than a Ponzi scheme.
According to Timeonline.com, Madoff is at the center of "the largest investor swindle ever blamed on a single individual."
Madoff was arrested Thursday by Federal agents and charged with securities fraud. In its complaint the Securities and Exchange Commission said Madoff was at the head of an "ongoing $50 billion swindle." He could face 25 years in prison.
The news that broke today on the front pages of the New York Times and the Wall Street Journal reverberated in Jewish communities across the world.
"A lot of Jewish charities had investments with him," one prominent investor -- who said he had no connection to Madoff -- told The Jewish Journal. "So did a lot of Jews."
The collapse of the Madoff business leaves a mess that is yet to be sorted out and whose victims are just coming to the fore.
But what's already clear is that Madoff used his ties to the Jewish community to garner at least some of his ill-used funds.
UPDATE SUNDAY 1:41 p.m.:
By Sunday the initial casualty reports showed that Madoff's crimes reached deep into the Los Angeles Jewish community.
"It has come to our attention that the Jewish Community Foundation [Los Angeles] is included among a number of major institutions as well as individuals who may have been victimized by an alleged fraud," wrote Jewish Community Foundation Board Chair Cathy Siegel Weiss and President and CEO Marvin Schotland in a letter sent to board members.
"Regretfully, the Foundation was one of those clients. Mr. Madoff was highly regarded and his firm has been one of the most prominent firms on Wall Street for decades. We were shocked to learn of this alleged fraud."Some $18 million of the Foundation's Common Investment Pool (currently valued at 11% of its assets) was invested with Madoff, according to the letter. The CIP represents endowments from a variety of long-established Jewish organizations. The Journal is investigating which participants were involved and how much they stand to lose, and whether officials can expect any sort of remediation.
Meanwhile, there are reports that many other local institutions and individuals have been hit by the scandal. Senior Writer Brad Greenberg and blogger Dean Rotbart are investigating and verifying these reports and will have updates here.
Madoff is a trustee of the Yeshiva University and a long-time philanthropist in Jewish circles.
According to Yeshiva University, "Bernard L. Madoff, a member of the University's Board of Trustees since 1996, was elected chairman of the Board of Directors of Sy Syms School of Business in 2000. Mr. Madoff is chairman of Bernard L. Madoff Investment Securities, one of the nation's largest third-market dealers in New York Stock Exchange and over-the-counter securities.
A benefactor of the University, Mr. Madoff recently made a major gift to the Sy Syms School."
The first known charity victim, according to JTA, is the The Robert I. Lappin Foundation in Salem, Mass. which gave away about $1.5 million to Jewish causes.
After Madoff's arrest, The Robert I. Lappin Foundation in Salem laid off all of its employees and locked its doors on Friday after its benefactor's assets were frozen because they were invested with Madoff.
"Mr. Lappin investments were frozen," the foundation's executive director of the foundation Deborah Coltin told JTA. "The assets are frozen. We have no money. The foundation cannot access its money."
Lappin, who was reached by JTA Friday afternoon, said that he lost $8 million – the entirety of his foundation's money – because it was invested with Madoff. Lappin, who had been involved financially with Madoff since 1991 also took a "significant" hit personally. He said that he knew nothing of Madoff's fraudulent activities.
The foundation, which gave away about $1.5 million per year to Jewish causes, let go all of its workers, one fulltime employee and six part-time employees.
Forbes details the fall of Madoff:
"Bernard Madoff is a longstanding leader in the financial services industry," his lawyer Dan Horwitz told reporters outside a downtown Manhattan courtroom where he was charged. "We will fight to get through this unfortunate set of events."
A shaken Madoff stared at the ground as reporters peppered him with questions. He was released after posting a $10 million bond secured by his Manhattan apartment.
The SEC filed separate civil charges.
"Our complaint alleges a stunning fraud -- both in terms of scope and duration," said Scott Friestad, the SEC's deputy enforcer. "We are moving quickly and decisively to stop the scheme and protect the remaining assets for investors."
The SEC said it appeared that virtually all of the assets of his hedge fund business were missing.
Madoff had long kept the financial statements for his hedge fund business under "lock and key," according to prosecutors, and was "cryptic" about the firm.
And Reuters has the story here:
REUTERS - Edith Honan and Dan Wilchins:
In the wake of the scandal, Internet message boards are alive with anti-Semitic vitriol.
The web site dealbreaker.com provides a list of Madoff's victims supplied by CNBC's David Faber:
Hey. If it's small comfort the prosecutor in the case is Jewish, and it was Madoff's sons who turned their crooked dad in.
Thousands of small Jewish investors who played by the rules and worked and saved are now financially ruined because of this man. For all but your garden variety bigots, one horrifically monstrously putrid apple doesn't mean squat about the whole tree.