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January 30, 2009

Kristof Tallies Madoff’s Swindler’s List

http://www.jewishjournal.com/blog/item/kristof_tallies_madoffs_swindlers_list_20090130/

Writing in The New York Times, columnist Nicholas Kristof detailed how much money foundations lost in the Madoff Ponzi scheme.

A friend of Kristof’s compiled the most detailed list so far of the dozens of family foundations and private philanthropies invested with the New York crook.  Their assets, worth billions, are now worth bupkis.

The real losers here, Kristoff notes, are the thousands of worthy charities that were the beneficiaries of these foundations’ largesse:

Most of the discussion of the Bernard Madoff scandal has focused on the impoverished zillionaires who are now mere millionaires. Yet much of the money invested by Mr. Madoff was money destined for charities, and so the losers will include some good causes and truly disadvantaged people.

A few private foundations have owned up to the money they’ve lost with Mr. Madoff, but most haven’t. So let me help them out.

I’ve obtained a list of nearly all the private foundations that invested money directly with Mr. Madoff, at least at the time of their most recent tax filings. Even in the unlikely event that they cashed out since then, they may still have to repay the money to others.

What is staggering is how many of these 147 foundations had all their assets invested with Mr. Madoff and may have been wiped out as a result.

Interestingly, the PDF list is grouped more or less by geographical area: LA, Florida, New York, etc.  It reads like a travelogue of Madoff’s journey through the Jewish communities and country clubs of America.

In LA, the victims are (relatively) few but the damage is enormous:

Katzenberg Foundation, Marilyn & Jeffrey  

TOTAL ASSETS: $22,057,386 
POSSIBLE MADOFF EXPOSURE: $10,534,582 
DONATIONS PRIOR YEAR: $455,333
LARGEST DONEE :  Cedars‐Sinai Medical Center 
AMOUNT: $100,000 

The Wunderkinder Foundation  
Steven Spielberg, Grantor
Los Angeles, CA 

ASSETS: $73,280,226 
DONATIONS PRIOR YEAR: $8,624,506
LARGEST DONEE: Cedars‐Sinai Medical Center 
AMOUNT: $2,000,000 

Chais Family Foundation
ASSETS: 178,009,106
MADOFF EXPOSURE: ALL
DONATIONS PRIOR YEAR: $8.1 million
LARGEST DONEE: United Jewish Communities
AMOUNT: $3 million

This list does not break down the damage to smaller foundations whose monies were invested with Chais,

which would seem to include the $18 million exposure of the Jewish Community Foundation

.

[NOTE: According to the Jewish Community Foundation’s PR company, the Foundation had no money invested through Chais.  In a Sunday morning e-mail to me,  Gerald S. Freisleben, president of the PR firm of Foley/Freisleben, stated:

“We have gone to extraordinary lengths to communicate that—as painful, humiliating and unprecedented as the Madoff fraud is—The Foundation invested directly with Madoff on recommendations and decisions of its own Investment Committee.  The Foundation had no relationship whatsoever at any time with Stanley Chais, nor did it invest funds through his firm or rely on him for advice.”

He added that the JCF posts an FAQ about its exposure in the Madoff scheme on it’s web site:

In The Foundation’s expressed commitment to full transparency regarding all matters Madoff, there is a dedicated section of its website that includes regularly updated disclosures and FAQs for your reference.  This specific issue of how The Foundation came to be invested with Madoff is addressed in one of the Q&As, in fact.

The Madoff Affair does reveal, as Kristof points out, a lack of due diligence on the part of these foundations and/or their accountants:

T

hen there’s the question of the accountants who prepared these tax returns. A surprising number of the foundations invested in Mr. Madoff shared the same accounting firms, generally small ones at that. One wonders if they could have looked more skeptically at the kinds of trades that supposedly were being placed on the foundations’ behalf by Mr. Madoff.

There is a need, as we have written, for greater transparency and accountability in the way Jewish non-profits invest.

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