The mess caused by Bernard Madoff’s alleged $17 billion Ponzi scheme is much worse for American Jews than I thought. Originally, I assumed it would give fodder to anti-Semites along the lines of the financial meltdown. Turns out Madoff’s hedge fund was backed heavily by Jewish individuals, institutions and organizations. At least two foundations have already closed their doors. We’re talking less than four days since the story broke.
I’m looking right now at how this will shake out for the Los Angeles Jewish community. Early indications are that the hit will be big.
For one, the Jewish Community Foundation, which manages the endowments for a number of major Jewish institutions, had invested $18 million with Madoff. At the end of October, that investment, mostly made years ago, was valued at $25.5 million. Today it is essentially a big fat goose egg. And I’ve heard the story is the same for a number of salt-of-the-earth members of the Jewish community, many of whom had invested the bulk of their savings with Madoff.
Madoff was, reportedly, an affable, intelligent guy. He was incredibly well-respected here in Los Angeles and even more so back east. At the end of the day, he was a salesman, and what he sold were returns good enough to keep folks happy but not so good that they grew suspicious.
The Jewish Community Foundation, like, I imagine, thousands of others, has retained counsel and is weighing its options. However, the Wall Street Journal reports that investors are unlikely to recover their losses—and that those who got their money back from Madoff previously may have to surrender any gains they received.
It seems we’ve only scratched the surface of the shake out in—or better yet, shakedown of—the Jewish community.