The growing list of victims in Los Angeles from the meltdown at Bernard L. Madoff Investment Securities LLC reads like a who’s who of L.A. Jewish communal life, including the Jewish Community Foundation, The Jewish Federation of Greater Los Angeles, Jewish Family Service, Jewish Free Loan Association and Beit T’Shuvah.
Private foundations like Steven Spielberg’s Wunderkinder Foundation and individual investors like DreamWorks Animation CEO Jeffrey Katzenberg have also lost untold amounts of money.
For at least one Encino-based foundation, the Madoff mess has proven catastrophic. The Chais Family Foundation, which had donated $12.5 million annually to Jewish causes in Israel and the former Soviet Union, suffered such a substantial loss that it closed its doors Sunday.
“I don’t think L.A. knows yet how bad they are going to be hit,” said Ruthie Rotenberg, executive director of LimmudLA, a yearly volunteer-led Jewish conference that received a significant chunk of its $700,000 annual budget from Chais.
Like the reverberations from the downturn in the housing market that landed the United States in recession and helped place the auto industry at the brink, the extent of the effect on the Jewish community from what is being called the largest investment fraud in American history is still unknown. It’s likely only to worsen as more victims come to light, since many of Madoff’s investors were wealthy Jewish philanthropists - or their foundations and nonprofit beneficiaries - and major donors to Jewish causes.
“It is going to take months to unravel this,” said Gary A. Tobin, president of the Institute for Jewish & Community Research. “But the fallout will last decades.”
“It is just an unthinkable situation,” said Dena Schechter, past president of L.A.‘s Jewish Family Service (JFS). “Clearly there are going to be agencies and foundations and families who are out of business. This guy worked a very specific community for a very long time. The fact that it is concentrated where it will have untold impact - ultimately, who knows, there could be lots of people who will never be in a position to give again. We just don’t know. I don’t even want to speculate. It’s too horrible.”
Tobin says we’re talking about hundreds of millions of dollars nationally that will no longer be available for Jewish causes. Locally, tens of millions were lost. So far, the fallout from what Madoff called a $50 million Ponzi scheme has been about as bad as anyone could have imagined. And could very easily get worse.
For some other recent blog posts about Madoff, check out these links from The God Blog: