Jewish Journal

Madoff’s ‘unspeakable evil’ shocks those who thought they knew him well

Web Extra Video: Anatomy of a Ponzi Scheme

by Dean Rotbart

Posted on Dec. 16, 2008 at 8:21 pm

AP Video: How a Ponzi scheme works

In April 2004, Bernard L. Madoff and his wife, Ruth, devised a plan to save Jewish lives.

In the effort to bolster Gift of Life, a Florida-based nonprofit that maintains a unique Jewish bone marrow registry, the Madoffs funded and helped roll out an ongoing program to enlist large numbers of fresh, young donors whose marrow will be available for decades to come to provide life-saving transplants.

The same Bernie Madoff this month decimated untold Jewish lives and institutions.

The paradox -- one man possessed of bountiful quantities of good and evil -- is confounding to many who knew Madoff and only now are discovering his dark side.

Check the JewishJournal.com home page for frequent updates to the Madoff story and our ongoing all-Madoff blog, Swindler's List

"Like everybody else who trusted and invested with Bernie Madoff, he betrayed my trust," said Stanley Chais, a long-time Beverly Hills philanthropist who not only personally invested with Madoff, but also facilitated others who wished to do likewise. The Chais Family Foundation, which for more than two decades provided substantial funding to global Jewish causes, ceased operations on Sunday after Madoff-related losses left it penniless.

Besides shuttering his cherished foundation, Chais, who pronounces his name "Chase," told The Jewish Journal he and his family have lost "a huge amount of money."

Interviews conducted by The Journal with Madoff investors, as well as with officials of charities that were the recipients of Madoff's donations, reveal a complex web of relationships through which Madoff lured unsuspecting investors and they, in turn, helped attract additional prey.

Madoff's commitment to Gift of Life, for example, helped the organization raise funds from Madoff investors, including Fred Wilpon, owner of the New York Mets; J. Ezra Merkin, chairman of GMAC; and Norman Braman, a one-time owner of the Philadelphia Eagles.

One rich vein of prospective clients was the Palm Beach Country Club, home to some of Florida's wealthiest Jewish families. "It is our understanding that a significant number of the individuals harmed are leaders in the Jewish philanthropic community," confirms Jeremy Slusher, an attorney with Broad & Cassel.

Asked whether Madoff used his charitable work as a "cover" to lend his investment scheme credibility or whether he genuinely wished to help the charities he sponsored, a long-time business associate of Madoff, speaking on the condition of anonymity, said he thinks the answer is most likely both.

"He lost his moral compass," said this individual. "You have certain challenges and turning points in your life. He crossed a barrier and could never come back."

Having lost $1.2 million in Madoff's scam, Robert and Sarah Chew, who relocated two years ago from Los Angeles to Colorado, never even heard the name Bernie Madoff until a lawyer phoned Robert last week to say the couple's money had vaporized.

Worse, Sarah's extended family, roughly a dozen relatives with strong Southern California roots, lost nearly $30 million over Madoff's deception.

Robert's experience, confirmed by others, is that he and members of his family did not have direct accounts with Bernard L. Madoff Investment Securities. Rather, his investments and withdrawals were funneled through a convoluted legal construct that involved sub-partnerships, limited partnerships and other entities that kept all but a select few from interacting directly with Madoff Investment Securities.

Robert, a writer and public relations consultant who is not Jewish, said that he and Sarah entrusted their monies to Beverly Hills' Chais, who was as close to Madoff as they ever got. In writing about his losses at Time.com, Chew described Chais as "the Los Angeles network organizer" for Madoff.

Others independently confirm that Chais handled Madoff-related investments from limited partnerships and subpartnerships, including those involving Robert and Sarah Chew. Robert said of Chais, "He is completely innocent as far as I know."

Jay Sanderson, whose Jewish Television Network (JTN) had been one of the beneficiaries of the Chais Family Foundation, was not aware that the foundation folded until contacted by a reporter for The Jewish Journal.

"[Chais] is a very good friend and has been a very significant supporter of my work," said Sanderson, who added that his relationship with Chais goes back at least 15 years. "If I was making a list of the best human beings that I know in my life, he'd be on that list."

Sanderson described the funds JTN received from the Chais foundation as "meaningful," although he wouldn't be specific, adding, "In this environment, every contribution is meaningful."

At Gift of Life, founder Jay Feinberg said that due to the tight economy, his group already had been scaling back goals for its bone marrow registry for 2009 when news of the Madoff scandal arrived.

Just after this year's High Holy Days, Gift of Life turned to Madoff to serve as chairman of its board, a position that Feinberg, a leukemia survivor, had held since Gift of Life's founding in 1995. Feinberg said he and other board members hoped Madoff's leadership would help take the group "to the next level."

Asked if he has heard from Madoff since news of the fraud erupted, Feinberg sighed, "I doubt I'll ever hear from him again."

The long-time business associate of Madoff who wishes to remain unnamed, at first wrestled with the question of whether he believes Madoff is good, evil or both. Yet as he spoke, his judgment became obvious.

"I think he did some evil things, let me put it that way," this fellow investor said, expressing disbelief that Madoff involved his brother, children, nephews and nieces in a criminal enterprise. "Unless you are the mafia, would you expose your children to that kind of thing?" he asked.

As if thinking out loud, the investor observed that if Madoff had paused long enough to weigh the fallout from his swindle, perhaps Madoff could have limited the damage even after the line had been crossed. Yet, the investor reasoned, Madoff was "impervious" to his eventual impact.

"Bernie was going to ruin people's lives in an unimaginable way, unspeakable evil," the investor concluded. "It is a real sickness."

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