Posted by Dean Rotbart
In an email sent Friday to alumni and other members of the Tufts University community, President Lawrence S. Bacow disclosed that the Medford, MA school is also a victim of the Madoff investment scam. Bacow, who himself is Jewish, says the university’s funds had been invested through Ascot Partners, an investment management firm run by J. Ezra Merkin. Merkin, who until the scandal broke had served on the board at Yeshiva University, is also blamed for YU’s losses of at least $110 million.
Here is the Tuft’s email:
December 19, 2008
I have promised to keep you informed when the economic news of these extraordinary times has special significance for Tufts. The news this past week has been dominated by a financial scandal of unprecedented scale and scope. I am sorry to report that Tufts is one of a growing number of victims of the crimes allegedly committed by Bernard Madoff.
In 2005, the university’s Investment Committee authorized an investment with Ascot Partners, which in turn invested the entire sum with Madoff Securities. We have written off the value of this investment, which totaled $20 million, or slightly less than 2 percent of our endowment. This write-off will not significantly affect our operations. We will cooperate with any investigations of this fraud and will work to recoup as much of our investment as possible.
It is personally painful for me to communicate this information to you. We deeply appreciate the trust and confidence that each donor places in the university. We also have an obligation to our students and faculty to manage these resources wisely for their benefit. You have my word that we will look closely at our experience in this case so that we can strengthen our investment process for the future.
I will continue to keep you informed as we work our way through these difficult times. For now, I send all the members of the Tufts community my very best wishes for the holiday season ahead.
Lawrence S. Bacow
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December 19, 2008 | 8:37 pm
Posted by The Web GuyHadassah, the womens' Zionist organization, admits that a tough economy -- and the Madoff scandal -- has cost the group dearly, but that won't keep them from fulfilling their mission.
A Message from Nancy Falchuk, Hadassah National President
Shalom from Hadassah House.
I'm speaking to you at a defining moment in Hadassah's history. This is a moment in which the past and the future are calling on us for leadership and action.
Like all of America's citizens and institutions, Hadassah has felt the impact of the global financial crisis. And as I'm sure you have heard by now, Hadassah was also one of many philanthropic organizations that fell victim to Bernard Madoff.
Despite the substantial loss, I want to assure you of Hadassah's strength, sustainability and commitment. We will get through this crisis because of the wisdom that is our inheritance, because of the fortitude of our leaders and members, and because our life- enhancing and life-saving programs demand it of us.
As difficult as the crisis is, the good news is that we are ready for it. For much of the past year Hadassah has been restructuring and cutting costs. Plans we had in place for the coming year are now on fast forward.
We've had to tighten our belt so much it hurts. But everything we do to meet the challenge is aimed at protecting our core mission of strengthening Israel and the Jewish people.
Protecting our mission and our values takes more than planning. That's why we need every member of Hadassah, and generous non-members as well, to be involved. This a critical moment in which your financial support is so urgent.
I'm asking every one of you to give as much as you can. And while all gifts are welcome, to protect the Hadassah body as a whole, we especially need unrestricted funds, not dedicated to any our wonderful specific projects.
We stand on the shoulders of women who built Hadassah, our grandmothers, our mothers and our daughters. Their example of devotion through wars, Depression and the Holocaust inspire us today. And what we do today is for the benefit of future generations, people who will be touched, educated, perhaps have their lives saved, because of how we respond to this call to action. We can't let them down.
December 19, 2008 | 3:38 pm
Posted by Dean Rotbart
More awful news awaits the many charities and individuals who have already lost some or all of their wealth to the Bernard L. Madoff swindle.
As this saga unfolds, it is probable that the government will seek restitution even from some innocent victims if the homes they own, the cars they drive or the donations they made were derived – even unknowingly, from the illegal fruits of Madoff’s scam.
Worse, even if the government chooses not to pursue such innocents, a phalanx of plaintiffs attorneys are trolling this very moment for clients who are certain to mount a legal assault on charities, universities and other non-profits in a bid to force them to disgorge past donations whose origins can be linked back to the Madoff scheme.
At the very least, large numbers of individuals and institutions who today consider themselves to be victims of the Madoff scandal should brace for forthcoming legal actions that will allege their remaining wealth is not theirs at all – rather, it is the recoverable property of other claimants who were bilked by Madoff.
To keep their homes, cars, jewelry and other possessions, individuals scammed by Madoff – especially those who still have visible assets – will almost certainly have to hire their own defense lawyers to battle for their rights.
To keep their libraries, laboratories, scholarship programs, hospital services, meal programs and the like, universities and other non-profits who continue to operate in the wake of the Madoff scandal will also almost certainly have to retain law firms to combat efforts to strip those non-profits of past Madoff-related donations – whether directly from Madoff or indirectly from Madoff investors.
It is, say fraud investigators, lawyers and a former federal prosecutor who I spoke with in the past two days, a nightmare that will continue to haunt everyone who had funds invested with Madoff for many, many years to come.
In a worst case scenario, that I have dubbed the ‘Madoff Syndrome’ – in reference to the kind of supercritical meltdown portrayed in the 1979 film, The China Syndrome, Jewish charities and other worthy non-profits may be legally bound to return all funds ever received from Madoff and his minions, even though such funds were long ago spent on worthy deeds and even though existing endowments would be entirely wiped out. Dozens of today’s finest Jewish charities could be felled.
One fraud expert who I spoke with says that the final safety net that is likely to stand between plaintiffs’ attorneys and a complete ‘Madoff Syndrome’ meltdown would be federal legislation to limit the liability of Madoff recipient non-profits.
The specter is daunting. It features well-known Jewish charities and non-profits suing and being sued by one another – and by outsiders – in a desperate bid for their very survival.
The few foundations that have already turned off their lights and locked their doors may yet say a prayer of thanks that they won’t be around to experience the gut-wrenching battles that await the survivors.
December 19, 2008 | 12:22 pm
Posted by Dean Rotbart
The $50 billion estimate of how much investors lost in the Bernard L. Madoff Ponzi scheme is likely as bogus as the rest of Madoff’s claims.
In the week since Madoff was arrested by federal agents in his New York apartment, the world has more or less taken at face value his own reckoning of the size of his mega-swindle.
Moreover, news reports have detailed lists of those who entrusted their funds to Madoff and his Bernald L. Madoff Investment Securities (BMIS) firm and are now out millions, tens of millions, hundreds of millions and even billions of dollars.
Those numbers may also, in the end, prove bogus.
Because in a pure Ponzi scheme, say experts, there are no “real” investments and hence no “real” profits to be lost.
Almost without a doubt, many of the victims of the Madoff scheme who are reporting to the news media how much money they lost with Bernie Madoff are still under the hypnotic-like fantasy that their “profits” had been real. But they most probably weren’t.
It is like the math word problems that my sixth grade daughter gets nightly for homework. Follow along:
It is September 2008 and a Jewish charity is given a $1,000 donation from a happy Bernie Madoff investor. The grateful charity takes that $1,000 and invests it with BMIS.
In October, the charity is delighted to see that its investment is now worth $1,010. In November, amazingly, it has risen to $1,022. On December 1st, it is worth $1,035.
Then comes the bad news on December 12th that Madoff and BMIS are one large fraud. How much did the Jewish charity lose?
Of course, the reality of this scheme and the profundity of those injured by it are a lot more complex than my daughter’s math homework.
But even my 12-year-old daughter can tell us, and the news media, that to report the Jewish charity lost $1,035 of its endowment is inaccurate.
The $35 in returns were phony, that much is easy to understand. Although on paper the Jewish charity may have been told it “earned” that money, inside Madoff central, there were no investments and hence no earnings. The money that the Jewish charity “invested” likely went out the BMIS door the very same day to keep up the charade for other so-called “investors.”
What takes an honors student to understand, however, is that the $1,000 the Jewish charity received in the first place also did NOT exist.
That donation was made from funds that another Madoff victim had extracted from his “profits” which came from funds that another victim had deposited with Madoff and so on and so on and so on.
To repeat, the thousand dollar donation in the first place to the Jewish charity, which the donor thought was his money, was in fact the fruits of the swindle of another, who undoubtedly reviewed her statement and was – until December 12, 2008, satisfied with the profits that she had been earning with BMIS.
So when the news media and others take out their adding machines and run the tape – all the way up to $50 billion, the media seem virtually certain to be counting the same “losses” many times over.
There are real losses in the Madoff scandal, and those numbers will be large too. If prosecutors and forensic accountants can ever strip away all the “profits-that-existed-only-in-the-warped-mind-of-Bernie-Maddof” funds, they’ll find that real people and real institutions lost real money, but probably nowhere near as much as the media are reporting and the feds are letting go uncorrected.
Sadly, it is consistent with the life and modus operandi of Bernald L. Madoff, that he would even exaggerate how big a crook he actually is.
December 19, 2008 | 3:55 am
Posted by Danielle Berrin
The Bernard Madoff scandal is provoking spasms of angst and introspection in the American Jewish community (not that we don’t do angst and introspection normally) and I thought I would ask David Wolpe, one of the greatest American rabbis (as well as Christopher Hitchens’ sparring partner), a few questions about this drama and its cultural and theological implications:
Jeffrey Goldberg: Should Bernard Madoff be excommunicated for his sins against his people?
David Wolpe: We do not practice formal excommunication. I would not prevent him from entering a synagogue to pray. We are in the atonement business. However, he should be barred from any honor or recognition. To the extent permitted by his sentence he should do something of service to the community to make small reparations for the incalculable harm he caused. Short of formal excommunication, however, informal ‘shunning’ has a nice, solid ring to it.
JG: “Shunning,” huh? Does that imply that you believe his crimes might be irredeemable? At what point do you give up on a sinner?
DW: Maimonides lists sins—following the laws of the Mishna—that cannot be fully forgiven. Common to most is an inability to make restitution (another example is one who coldly assumes “I’ll sin, be forgiven, sin, be forgiven” etc.). Madoff cannot conceivably make restitution to the unnumbered he has hurt—from lost personal savings to people dependent on the bone marrow registry whose holdings he squandered. Perhaps someone of purer soul might be persuaded to find redemption possible for him. I confess I cannot.
JG: Do Jews wring their hands too much? I didn’t notice a great deal of Christian angst over Ken Lay.
DW: I wonder if the people in Ken Lay’s church wrung their hands. Since Judaism is not a religion, but more like a religious family, bound by strong communal ties, Jews are more likely than Christians to feel pride or shame in the actions of other Jews. You don’t get strong bonds without a degree of identification. That is why the foolishness in other people’s families doesn’t embarrass us.
JG: Should we be embarrassed because we’re supposed to be so smart (especially with, you know, money) and yet we got fleeced by Bernie Barnum, or should we be embarrassed because there are evildoers among us? And what does this mean for tribal trust?
DW: We should be grateful that trust still exists. Cunning is an unlovely stereotype; I can’t read a balance sheet to save my soul (perhaps not the best metaphor in this instance) and I am hardly alone. It may hurt that trust, which is sad; for years the fact that the diamond business all over the world, among Jews and non-Jews, is conducted with a handshake because Jews set it up that way is a tribute to decency and probity. One man’s venality and cruelty can’t set the standard.
Vast amounts of money call not only for trust but for a solid sense of genuine value in this world. Rabbi Akiba says in the Talmud that the central commandment is to love your neighbor as yourself (Leviticus 19:18). May I propose that these days, “Guard your soul carefully” (Deut. 4:9) deserves pride of place.
December 19, 2008 | 3:05 am
Posted by The Web Guy
From Jacob Berkman at JTA:
Jerome Fisher, the owner of Nine West shoes, who reportedly lost $150 million through investments in Bernard Madoff, gave heavily to the Israel Museum, according to the latest 990 tax form for his foundation.
The Jerome and Anne C. Fisher Charitable Foundation gave $226,228 to the museum in 2006. The Fishers sponsor the museum’s directorship, which is now held by James S. Snyder.
The Fishers also gave $5,000 to the American Friends of the Magen David Adom, Israel’s Red Cross, in 2006.
The gift to the Israel Museum was the Fishers’ second largest of 2006, as they gave $333,334 to the University of Pennsylvania that year as well.
Jerome Fisher, almost came to blows with Madoff’s chief fund raiser, Bob Jaffe, at a black-tie birthday party in Palm Beach Saturday night.
More on The Fundamentalist Blog
December 19, 2008 | 12:00 am
Posted by Danielle Berrin
As Bernard Madoff awaits trial in his $10 million Manhattan apartment, non-profit organizations in Israel are closing their doors.
The Chais Family Foundation, which closed its Encino office last Sunday is now closing its Jerusalem satellite. Foundation chair Avraham Infeld told NBC News he got a phone call from the Chais family who said, “You’re gonna have to close down the office, you’re gonna have to fire the staff, and please let everyone know we cannot fulfill another penny of committment.”
Infeld said the foundation’s $250 million endowment is “gone—there’s nothing there.”
There is grave concern that Jewish philanthropists affected by the Madoff scheme may have to curb their support to Israeli universities, hospitals and social service programs.
Watch the NBC Nightly News report
December 18, 2008 | 10:27 pm
Posted by Brad A. Greenberg
Since losing $18 million in cash investments—worth $25.5 million on paper at the end of October—the Jewish Community Foundation has emphasized that it is “aggressively pursuing every possible recovery and remedy.” Tomorrow it will make that effort more official when it announces the creation of a special committee charged by the board with recovering the money the foundation invested with Bernard Madoff on behalf of the participants in its common-investment pool. Members of the committee will include foundation Chair Cathy Siegel Weiss and Chair-elect Lorin Fife, as well as a yet-unidentified senior member of the Jewish Federation of Greater Los Angeles.
“Even as we remain shocked and appalled by the alleged fraud perpetrated not only on us but hundreds of other victims, The Foundation is moving swiftly and decisively to undertake the level of self-examination and review that is expected of us as stewards of Jewish Los Angeles’ charitable assets for 54 years. We take our role in the community very seriously,” Marvin Schotland, president and chief executive, said in a statement.
Schotland stressed again that losses were limited to the common-investment pool and didn’t affect the donor-advised funds: “We remain highly stable—a hallmark of this foundation.”
Good luck to the special committee. From what I’ve read and heard, it’s going to be a rough road.