Jewish Journal

More mini-Madoffs? Valley Jew accused of massive real estate fraud *

by Brad A. Greenberg

March 5, 2009 | 6:50 pm

Swinder’s List has more bad news for the Jews:

Sherman Oaks-based mortgage banker Bruce Friedman, whose Friedman Charitable Foundation committed $10 million to the Children’s Museum of Los Angeles and $1 million to Brandon’s Village, a special-needs park in Calabasas, was indicted on securities fraud charges today by the Securities and Exchange Commission.

The SEC alleges Freidman, along with his two companies—Diversified Lending Group (DLG) and Applied Equities, Inc. (AEI)—perpetrated a $216 million real estate investment fraud, raising money from hundreds of investors nationwide, many of whom are seniors, promising guaranteed high returns via real estate investments.

The complaint alleges that Friedman diverted substantial investor money to ventures unrelated to real estate, and misappropriated at least $17 million to support his lavish lifestyle, including purchases of a luxury home, cars, vacations, jewelry, and designer clothing for himself and an alleged girlfriend.

The SEC has frozen DLG’s, AEI’s and Friedman’s assets.

So instead of allegedly working over the Jewish country club circuit, Friedman is accused of stealing from your bubbe and zadie. Oy. I don’t think I need to explain why this is bad for not just those who lost money but all Jews.

The charges against Friedman come three months after Bernard Madoff, a big macher who sat on the board of Yeshiva University, reportedly admitted to running a $50 billion Ponzi scheme—and that followed a collapse of the global financial markets that many, including 31 percent of western Europeans, blame on Jews.

I thought those numbers held true only for Europe, but I spoke Monday with Neil Malhotra, an associate professor at Stanford Graduate School of Business, and he told me his recent research yielded similar rate of Jewish blame here in the United States.

Last week I wrote:

Time magazine’s list this month of the “25 People to Blame for the Financial Crisis” includes, by my count, six Jews – which means that more than 75 percent of the culpable were not Jewish. Among the blameworthy were former President Bush, disgraced subprime lender Angelo Mozilo and, ahem, the american consumer. There is little Jews can do to kill this old canard. But they can learn from the mistakes that enabled one of their own to use the communal bonds in American Jewry to orchestrate the biggest con in US history.

Though some Jewish money managers have proved to be scoundrels at best, like Shylock, it is not because they are Jewish – just as Christianity did not inspire Ken Lay to cheat Enron’s shareholders. Indeed, Jews may be the easy historical target, but scapegoating misses the moral of our own failures. The real responsibility lies with all of us.

And that is true. But the more Jewish names are connected with bad news and accused of financial misdoings, the harder it is to remind people that there isn’t some genetic or cultural connection.

I called Friedman’s office but could not reach him, or anyone. I really hope he’s innocent. Only that would be good for the Jews.

* Updated: Former KB Home chief Bruce Karatz also was indicted today too.

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