Many Jewish Charities Destroyed By Madoff Scam – Bush SEC Missed Clear Signs Of Trouble

Non-Jewish charities are also heavily hit. And this comes at a time when…

…the economic crisis has already caused hundreds of thousands of Americans of all backgrounds to seek out help from nonprofits.

The Washington Post reports on the mother of all Wall Street frauds, committed by a man who sat on the boards of Yeshiva University, its school of business, and the American jewish Congress:

'All Just One Big Lie'
Bernard Madoff was a Wall Street whiz with a golden reputation. Investors, including Jewish charities, entrusted him with billions. It's gone.
By Binyamin Appelbaum, David S. Hilzenrath and Amit R. Paley
Washington Post Staff Writers
Saturday, December 13, 2008; D01

Deborah Coltin learned yesterday morning that the $8 million foundation she has led for a decade, which supported a wide range of Jewish programs on the north shore of Massachusetts, did not actually exist.

The foundation had invested its endowment with Bernard L. Madoff, a storied name on Wall Street. Every year, Madoff paid out several hundred thousand dollars to the foundation. But on Thursday, Madoff was charged with securities fraud after confessing to his sons that his business was a Ponzi scheme, according to a complaint filed by the Securities and Exchange Commission. The returns paid to investors came from money invested by other people. And there was almost nothing left.

It may be the largest fraud in the history of Wall Street, authorities said. Madoff is charged with stealing as much as $50 billion, in part to cover a pattern of massive losses, even as he cultivated a reputation as a financial mastermind and prominent philanthropist.

Coltin, executive director of the Robert I. Lappin Charitable Foundation, said she spent the day at her office as a woman in mourning, taking condolence calls and trying to understand what happened.

"I laid off five people today," she said.

"Our foundation was the lifeblood of this community," she said.

"It's just very, very sad."

Madoff's investors included a number of prominent hedge funds and the firm of Fred Wilpon, the owner of the New York Mets. Several may have sustained billions of dollars in losses.

But the damage appears to be deepest in the small world of Jewish philanthropy, where Madoff was a leading figure. The North Shore-Long Island Jewish Health System said it lost $5 million. The Julian J. Levitt Foundation, based in Texas and focused on Jewish causes, lost about $6 million. Yeshiva University, a New York institution where Madoff served on the board, said it was examining how much money it invested with his firm.

Madoff's own $19 million foundation, which gave to a range of New York and Jewish causes, also was wiped out.

Ira Lee Sorkin, an attorney for Madoff, said Madoff's firm "is cooperating fully with the government."

"We're disturbed about these unfortunate events that have led to this," Sorkin said. He declined to say whether Madoff, who has been released on bail, will fight the charges.

Madoff, 70, made his fortune as a middleman between buyers and sellers of stock. He helped pioneer electronic trading as an alternative to the New York Stock Exchange, where buyers and sellers meet in person, and he eventually became chairman of Nasdaq, the first electronic stock exchange.

Madoff built himself into a brand. He came to Wall Street with money saved as a Long Island lifeguard and built a family business employing many relatives, including his sons, and refused to sell the business or take it public. He advertised his integrity.

"In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner's name is on the door," the company's Web site said. "Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm's hallmark."

By the late 1970s, and perhaps earlier, Madoff began managing money for investors, at least in part because he could require people to process trades through his firm. Madoff eventually attracted billions of dollars from investors. Some he knew personally. Others belonged to clubs he was a member of, including the Palm Beach Country Club in Florida and Glen Oaks Country Club in New York. Several large hedge funds invested with Madoff in part because he did not charge traditional fees, instead collecting money solely for processing trades.

The key attraction, however, was Madoff's remarkably successful track record. A hedge fund run by Madoff, which described its strategy as focused on shares in the Standard & Poor's 100-stock index, averaged a 10.5 percent annual return over the past 17 years.

This year, amid a general market collapse, the fund reported that it was up 5.6 percent through November, while the S&P 500-stock index fell 38 percent.

The SEC charged in its complaint that the returns were artificial. Madoff at some point started paying investors with money received from other investors, a Ponzi scheme, according to the SEC.

"Mr. Madoff lured investors to entrust him with substantial sums of money -- in some cases massive amounts of money -- with the false promise of great interest returns," said Mark S. Mulholland, a New York lawyer who filed a class-action lawsuit Thursday against Madoff. He said his firm has been approached by two dozen investors, who lost up to $90 million.

The SEC said it is not clear when Madoff started using new investments to create the appearance of profits. But the alleged ruse was finally exposed by the global financial crisis.

Madoff's investors had requested the return of about $7 billion by the end of the year, part of a broad trend in which investors are pulling massive sums from Wall Street. Madoff told one of his sons earlier this month that he was struggling to find the money. Then he told his other son that he was ready to pay annual bonuses to employees.

The sons confronted their father Wednesday, according to authorities, asking how the firm could pay bonuses if it couldn't pay investors.

Madoff asked them to come to his apartment, saying "he wasn't sure he would be able to hold it together" at the office, the SEC said. There he said he was "finished." The business was "a giant Ponzi scheme" -- "all just one big lie," the SEC documents said.

He estimated that his investors had lost $50 billion.

The sons reported Madoff to authorities. Yesterday, a federal judge placed the company in receivership at the SEC's request.

Outside analysts had raised concerns about Madoff's firm for years.

The company made its own trades and held the shares it bought, unusual practices that kept its activities hidden from view. Madoff also avoided filing disclosures of its holdings with the SEC; the firm said that at the end of every reporting period it sold its holdings and held only cash. Such a tactic is highly unusual because it exposes a fund to large losses by forcing it to sell assets without regard to price.

Madoff, though a pioneer of electronic trading, also refused to provide clients online access to their accounts.

"This was extremely secretive, even for the non-transparent world of hedge funds," said Jake Walthour Jr., head of advisory services for Aksia, a New York consulting firm that advised clients not to invest in Madoff's funds. "It was all done almost in fortress fashion to prevent anyone from knowing what was going on."

But a large number of investors apparently could not resist.

Robert Lappin started investing with Madoff in the early 1990s and eventually entrusted him with the entirety of his family foundation. The Lappin Foundation, created "to keep our children Jewish," gave about $1.5 million to Jewish groups in 2007, including a long-standing program that has paid for about 1,800 teenagers to visit Israel.

Coltin, the executive director, went to sleep Thursday night with an inkling of bad news and woke up at 6 a.m. yesterday, planning to call Lappin. Before she could, the phone rang.

"He said: 'I have to tell you this. Our funds are frozen,' " Coltin said

A little bit later, it became clear that the money had melted away.

The Wall Street Journal reports a litany of warning signs missed by both investors and regulators. First among the latter would be the Security and Exchange Commission chaired by Christopher Cox, the man many feel bears the most responsibility for our current worldwide financial crisis.

Under Cox, the Bush Administration's SEC did not do very much regulatory enforcement. (Kinda like the Bush Administration's USDA for those of you who closely followed Agriprocessors' earlier scandals.)

Here is the WSJ piece on the signs Cox and others missed:

Fees, Even Returns and Auditor All Raised Flags
By GREGORY ZUCKERMAN

Bernard L. Madoff is alleged to have pulled off one of the biggest frauds in Wall Street history. But there were multiple red flags along the way, including a series of accusations leveled against Mr. Madoff's operation. Now some are asking why regulators and investors didn't pick up on the alleged scheme long ago.

"There's no smoking gun, but if you added it all up you wonder why people either did not get it or chose to ignore the red flags," says Jim Vos, who runs Aksia LLC, a firm that advises investors and came away worried after examining Mr. Madoff's operation.

On Thursday, Mr. Madoff was arrested for what federal agents described as a massive Ponzi scheme, which could leave investors with billions in losses. A spokesman for Mr. Madoff said: "Bernie Madoff is a longstanding leader in the financial services industry and we are cooperating fully with the government and regulators investigations into this unfortunate set of events."

The first tip-off for some was the steady returns generated by the firm in every kind of market. Mr. Madoff would buy a basket of stocks resembling an S&P index while simultaneously selling options that pay off for the buyer if these stocks soar, while also buying options that pay off if the index tumbles. The supposed goal was to have smooth, steady returns.

Harry Markopolos, who years ago worked for a rival firm, researched Mr. Madoff's stock-options strategy and was convinced the results likely weren't real.

"Madoff Securities is the world's largest Ponzi Scheme," Mr. Markopolos, wrote in a letter to the U.S. Securities and Exchange Commission in 1999.

Mr. Markopolos pursued his accusations over the past nine years, dealing with both the New York and Boston bureaus of the SEC, according to documents he sent to the SEC reviewed by The Wall Street Journal.

In a statement late Friday, the SEC said "staff from the Division of Enforcement in New York completed an investigation in 2007, and did not refer the matter to the Commission for enforcement action." The SEC said it reopened the investigation Thursday. It's not clear what the focus of the 2007 investigation was, or why it was closed. A person familiar with the matter said it related to issues raised by Mr. Markopolos.

Also striking some as odd: Mr. Madoff operated as a broker dealer with an asset management division. Why not simply act as a hedge fund and pocket big gains, rather than profit from trading commissions as the firm seemed to be doing, they asked.

Joe Aaron, for long a hedge fund professional, found that structure suspicious and in 2003 warned a colleague to steer clear of the fund. "Why would a good businessman work his magic for pennies on the dollar?"

Conflicts of interest also proved a concern. "There was no independent custodian involved who could prove the existence of assets," says Chris Addy, founder of Montreal-based Castle Hall Alternatives, which vets hedge funds for clients seeking to invest money. "There's a clear and blatant conflict of interest with a manager using a related-party broker-dealer. Madoff is enormously unusual in that this is not a structure I've seen."

Some trading pros said Mr. Madoff's purported strategy couldn't be pulled off profitably while managing tens of billions of dollars.

"It seemed implausible that the S&P 100 options market that Madoff purported to trade could handle the size of the combined feeder funds' assets which we estimated to be $13 billion," Mr. Vos says.

Recent securities filings showed that the firm held less than $1 billion of shares, raising questions about where the rest of the money was. Some of Mr. Madoff's investors say they were told the firm put the bulk of its money in cash-equivalents at the end of each quarter, explaining why the public filings showed so few shares, but raising questions about where the proof was for all the cash.

Until at least November, 2006, the firm, which claimed to manage billions of dollars and be among the largest market makers in the stock market, used as its auditor Friehling & Horowitz, a small New City, New York firm.

Mr. Vos says his firm hired a private investigator and determined that the accounting firm had only three employees, one of whom was 78 and lived in Florida, and another was a secretary, and that it operated in a 13 foot by 18 foot office. His firm felt that was too small an operation to keep an eye on such a large firm operating a complicated trading strategy. A message left for the accounting firm was not returned.

Meanwhile, a series of media stories also raised questions about Madoff's operations, including a piece entitled "Madoff Tops Charts; Skeptics Ask How" in industry publication MAR/Hedge in May, 2001, and a subsequent story in Barron's. Mr. Madoff generally brushed off reporters' questions, citing the audited results and arguing that his business was too complicated for outsiders to understand.

—Kara Scannell and Jenny Strasburg contributed to this article

The images of the Aksia letter posted above can be clicked to enlarge.

As I exclusively reported Friday, YU sanitized its website in an unsuccessful move to remove all traces of a connection to Bernard L. Madoff.

YU did this without issuing any statement, without acknowledging the history, and without showing any responsibility for that history and the losses a connection to YU may have caused investors – and YU itself.

As I first reported, that led the NY Times to drop any mention of YU in its initial report on Madoff's fraud.

That Times error was (forcibly?) remedied Friday afternoon when, after being outed, YU gave the following statement to the Times. (The section in bold italics is the only actual quote from YU.)

Mr. Madoff has resigned from his positions at Yeshiva University, where he was treasurer for the university’s board and deeply involved in the business school.

“Our lawyers and accountants are investigating all aspects of his relationship to Yeshiva University,” said Hedy Shulman, a spokeswoman for the university.

The most recent tax filings for the university show that its endowment fund, a separate charity, was heavily invested in hedge funds and other nontraditional alternatives at the end of its fiscal year in 2006.

The school paper, the Yeshiva Commentator, recently reported that its endowment’s value had dropped to $1.4 billion from $1.8 billion — before the scandal broke.

Late Friday, the Times also published a piece that details Madoff's ties to various charities and the financial losses many of those charities seem to have taken:

Standing Accused: A Pillar of Finance and Charity
By ALAN FEUER and CHRISTINE HAUGHNEY

His company’s portfolio was ample: $17 billion. His address was appropriate: East 64th Street, a few blocks off the park. He golfed at the Atlantic in the Hamptons, at Old Oaks in Westchester County, at the sunny Boca Rio in Boca Raton. He was reported to have three homes and a yacht in the Bahamas.

For Bernard L. Madoff, there was also his multimillion-dollar private foundation that doled out money to hospitals and theaters. Indeed, through his charity work at places like the Gift of Life Bone Marrow Foundation or his public service at institutions like Yeshiva University, where he served on the board, Mr. Madoff seemed to have created a stainless persona of integrity and trust.

From the start, in fact, a motto of his business captured this image of simplicity and directness: “The owner’s name is on the door.”

But with his arrest on Thursday on federal charges of cheating investors of $50 billion in a fraud scheme, Mr. Madoff’s classic rise seemed to have had an equally spectacular fall.

“He was thought of as a great philanthropist, a pillar of the community, the chairman of Nasdaq — all of that stuff,” said one hedge fund executive who knew him.

“There was a joke around that Bernie was actually the Jewish T-bill,” the executive went on, referring to the ultrasecure investment of treasury bills. “He was that safe.”

Mr. Madoff had traveled far from his roots in eastern Queens, where as a young man he cobbled together a $5,000 grubstake from his earnings as a lifeguard and sprinkler installer to start the famed investment firm that eventually bore his name, Bernard L. Madoff Investment Securities.

He had come to move easily in the clubby Jewish world that iterates between New York City and its suburbs and southern satellites like Palm Beach.

Indeed, in the world of Jewish New York, where Mr. Madoff, 70, was raised and found success, he is largely still considered as a macher: a big-hearted big shot for whom philanthropy and family always intertwined with — and were equally as important as — finance.

Mr. Madoff, who attended but never finished law school, was already rich by his early 50s, largely due to his intuitive grasp of the centrality of computers to high finance, he once told Forbes magazine. In an era when many, if not most, transactions were conducted on the phone, he turned his company into a fully automated operation that could make trades in as little as four seconds flat.

And soon the Madoff name — if not quite the equal of the Tisch name, for example — carried a quiet power.

"The guy never flaunted anything,” said one longtime friend. “And that fit with his rate of return, which was never attention-grabbing, just solid 12-13 percent year in, year out."

The friend, a private investor who knows Mr. Madoff from the Palm Beach Country Club and from the Hamptons, said friends and investors had been calling nonstop since the arrest.

"The pain is just unbelievable,” the friend said. “He was part of the family for so many people. There was this quiet culture of people, slightly older-money, who maybe weren’t that interested in the market, who kept saying to each other, ‘Just give Bernie your money, you’ll be fine.’ "

That culture had perhaps its best expression at the half-dozen golf clubs he belonged to, ranging from the woody Old Oaks in Purchase, N.Y., to the Palm Beach Country Club in Florida.

“He and his wife were nice golfers,” said Denise Lefrak Calicchio, part of the Lefrak real estate family, who knew the Madoffs socially through several of their clubs. “He and his wife seemed lovely.”

With time, some wealthy investors even joined clubs in order to become part of Mr. Madoff’s investments, some who knew him said. It was considered a favor to be introduced to the man as a potential investor.

“There were people joining golf clubs just to get into his fund,” said one investor who declined to be named. “This guy was held in such high regard.”

A member of the Palm Beach club said the Madoffs did not socialize as much as other members did, nor did they fight as aggressively as others to keep up with the club’s more aerobic social climbers. They were well-liked, and did not appear to be part of the “blister pack,” as one club member put it, a term that refers to those who get blisters on their hands and feet from ascending social ladders.

“They seemed to stay apart from the herd,” the club member said. “They chose not to get into that social rat race.”

Mr. Madoff was, in fact, so popular with investors that he often turned away their money. After Barbara S. Fox, president of the Fox Residential Group in Manhattan, had sold his son, Andrew, an apartment, she pleaded with Mr. Madoff — unsuccessfully — to let her invest in the Madoff funds.

“I literally begged him,” she said. While Ms. Fox does not know why he turned her down, she called him “protective.”

Still, his refusal to take some investors added to his allure. Robert Ivanhoe, chairman of the real estate practice of the law firm Greenberg Traurig, said that he asked one of his clients who over two decades invested at least $50 million with Mr. Madoff to approach Mr. Madoff to see if he could invest with him. He knew Mr. Madoff as a major player in charitable groups.

Mr. Madoff declined. Mr. Ivanhoe said that the rejection made investing with Mr. Madoff even more appealing.

“He was turning people away all the time,” Mr. Ivanhoe said. “He didn’t need to be active in a charity to get more investors. People chased to invest in him.”

As Mr. Madoff’s success increased, so too did his interest in philanthropy, which was often handled, much like his business itself, as a family enterprise. He sits on the board of trustees for Yeshiva, whose officials issued a statement on Friday saying they were “shocked” at the news of Mr. Madoff’s arrest. And with his wife, Ruth, he runs the Madoff Family Foundation, a $19 million operation that last year gave money to Kav Lachayim, a volunteer group that works in Israeli schools and hospitals, and to the Public Theater in New York.

It is perhaps a testament to the family’s importance in Jewish philanthropic circles that when a nephew of Mr. Madoff’s, Roger Madoff, died of leukemia in April 2006, paid death notices appeared in newspapers from charitable organizations ranging from the Gurwin Jewish Geriatric Center to the Lauri Strauss Leukemia Foundation to the Lower East Side Tenement Museum.

Family, too, has always been of outsized importance to Mr. Madoff, evidenced by the number of relatives he has brought into his business. His brother, Peter, joined the firm as a senior managing director shortly after graduating from law school in the late 1960s, and both of Mr. Madoff’s sons, Mark and Andrew, joined the team after finishing their own educations. In 1978, Charles Weiner, a son of Mr. Madoff’s sister, joined the firm; 17 years later, Peter Madoff’s daughter, Shana, took a job with the company as a lawyer.

The family was so close that they even lived within blocks of each other on the Upper East Side.

“What makes it fun for all of us is to walk into the office in the morning and see the rest of your family sitting there,” Mark Madoff told Wall Street and Technology magazine in August 2000. “That’s a good feeling to have. To Bernie and Peter, that’s what it’s all about.”

And when Mr. Madoff finally told two senior executives of his problems, he chose to confide in his sons, who would notify the authorities and begin a quick countdown to his arrest.

Eric Konigsberg contributed reporting.

The Boston Globe published a similar piece today that focuses on Boston-area charities..

There are many wealthy people who are now insolvent, and there are foundations and nonprofits that have lost all or most of their endowments. And the news, I'm afraid, will only get worse.

Previous Posts: 1, 2.

[Hat Tips: Jason, JAG and The Other DK.]

Comments

[Un-Orthodox and Unimpressed]

It really bothers you if the media misses a chance to cast anything Orthodox in the worst light possible.

On the one hand, I suppose this should make me appreciate how fortunate I was to escape orthodoxy without taking it with me and becoming obssessed with the need to demonize all of orthodoxy to ease my sense of guilt.

On the other hand, it leaves me with an unresolved question that is beginning to nag at me, that is why have I developed so much dislike for the owner of this blog when everything I have come to believe as an adult has requires that I pity him?

[red]

Mr. Madoff is not and does not claim to be an Orthodox Jew.

[Un-Orthodox and Unimpressed]

Then we'll just have to get a little creative when pinning this on chabad and the haraidim!

[Noclue]

In 1999 Clinton, not Bush was president. Therefore it was the Clinton/Bush SEC that dropped the ball.

This is a case of failure by the professional staff, who presumably should have enough expertise to recognize a Ponzi scheme.

[Un-Orthodox and Unimpressed]

I suppose Ponzi himself was a Haraidi.

[Shmarya]

In 1999 Clinton, not Bush was president. Therefore it was the Clinton/Bush SEC that dropped the ball.

That was Markopolous' first complaint. There are 8 years of further complaints, all under Bush.

[Un-Orthodox and Unimpressed]

I suppose that means Bush is Haraidi too.

[critical_minyan]

as bad as this is, this is not as big as rubashkin. Rubashkin represented Jewish kosher business, with his big beard and fiddler on the roof accent. His crime is uniquely jewish and makes all Jews look bad.
There are Ponzi schemes all the time. Madoff was just the biggest so far.
one can even argue that the whole mortgage security business was a giant ponzi scheme. As soon as people started pulling out their investments the whole thing crashed.

[Choni Davidowitz]

The only way to keep our children (in America) Jewish is to instil a yearning to come home to EretzYisrael.
Not by big donations to Yeshivas and communities in the Diaspora.

[Choni Davidowitz]

Rubashkin and Madoff (and many others)
These are merely messengers that Hashem is using to warn the Jewish population in America that time is fast approaching for a Holocaust (Heaven forbid).
Just as Haman "made" an entire Jewish people do Teshuva, so will Obama "force" an entire People make Aliyah.

RABBIS AND RICH MEN - AN UNHOLY ALLIANCE.
The connection between relgious people and the massive fraud is glaringly obvious. Even the self-righteous defenders of orthodoxy and critics of Shmarya should be able to see this. This is just a mega example of what you see played out in your local shul over and over. The rabbanim have an uncontrollable urge to befriend and be associated with wealthy people. The wealthy man has an uncontrollable urge to be associated with the local rabbi. The rabbi's incentive for this alliance is financial gain. The rich man's motivation is that he can assuage his guilt by his association with the rabbi. So instead of the rabbi being a role model and someone who gives rebuke, he becomes someone whose role it is to boost other people's fragile egos. He wouldn't dare rebuke the wealthy man, because he could potentially endanger his source of funding if he pees off his rich buddy. The rich man can console himself about his criminal activities by giving tzedakka to his rabbi mate. And to all you frummers, don't bother to tell me that I'm a Jewish anti-semite. This is the way of the Jewish world today. Wake up and smell the coffee and pray that people like Shmarya continue to give rebuke, because the rabbis, who should be, are not.

[Sarah]

Interesting that NY Post had the YU connection in one of the articles covering this in its print edition but, like the NY Times, leaves it out of the online edition.

[holly roller]

I'm waiting fer the jerks at yu to create a heksher tzedek to evrsee themselves..

[Rowan Berkeley]

I'm sorry, Shmarya, but I have to contest your statement that "Non-Jewish charities are also heavily hit," because as it stands it will encourage the uninformed reader to think that Madoff (or for that matter any other 'Jewish philanthropist') give substantially to non-Jewish causes. If this were so, I think there would be some indication of it in the various articles you cite and link to. What you may be referring to is the fact that, simply because Madoff's operation was so big, quite a few non-Jewish charities may have entrusted him with their funds, which is quite different, is it not?

[Isa]

Regarding:
""""RABBIS AND RICH MEN - AN UNHOLY ALLIANCE."""
Yep, I seen it for my self

True story!!
Israeli, went to shul, said he needed money until his grant came thru,said he got a research job at the Univ of Minnesota.
So a bunch of people gave him money and he promptly disappeared.
To the people that got stung-somebody made the comment that experience of getting stung was worth a college education.
Later this Israeli was caught in California and was convicted.

I once saw a fraud in action-had this English accent-I knew he was a fraud but had to keep quiet cause we were going to research this fraud. I could have packed the shul with just saying"want to see a world class flim flam man in action?"

[Just a Goy]

> 'These are merely messengers that Hashem is using to warn the Jewish population in America that time is fast approaching for a Holocaust (Heaven forbid).' - Choni Davidowitz

Choni,

These are tough times, unbelievable times for all - no matter anyone's theology, politics, nationality - to make such a blanket assertion, regarding Jews in America, implying all American's are going to rise up against them, is displaced paranoid thought, simply crying wolf. You've been listening to and associating with, the wrong people...

Who was responsible for the last scam... Bush, Catholicism, Blagojevich (Serbian/Bosnian)...

If you feel that loathsome about yourself, your faith, your people, your country, as well as others around you, you need to seek the guidance and comradery of a new shul/rebbe.

One does not need to be a Jew, Catholic, Scientologist, etc... to merit culpability. Thieves come in every flavor.

Madoff bilked an unknown amount of people out of an estimated $50 Billion. Were you part of that? Were you personally responsible? If the answer is yes, then you personally have issues, but if the answer is no, stop thinking pogrom, holocaust, and anything else that is gotten you so worried.

שלום עליכם

[Shmarya]

I'm sorry, Shmarya, but I have to contest your statement that "Non-Jewish charities are also heavily hit," because as it stands it will encourage the uninformed reader to think that Madoff (or for that matter any other 'Jewish philanthropist') give substantially to non-Jewish causes. If this were so, I think there would be some indication of it in the various articles you cite and link to. What you may be referring to is the fact that, simply because Madoff's operation was so big, quite a few non-Jewish charities may have entrusted him with their funds, which is quite different, is it not?

Such ignorance you exhibit.

If, for example, you went to Lincoln Center in New York City, you would see a wall honoring donors – many of whom, perhaps most of whom, are Jews.

The same is true for hospitals and universities across the country,

Madoff, for example gave to many non-Jewish charities – including Hofstra University, where he sat on the board of governors.

But my intent in this post was clearly to note that some non-Jewish charities were heavily effected by Madoff's fraud, as well as Jewish charities.

[Just a Goy]

What all of this comes down to; lack of global economic oversight / accountability, from my perspective.

Q: Where was the World Bank?

Just a simple example of Neanderthal economics - roughly, about a decade and a half ago, US brokerage houses could only barrow up to $12 for every $1 it held. Today, that ratio has been pushed to an unsustainable, $40:$1.

Sub-prime defaults got the ball rolling with regard to the present situation, but there's a seemingly endless amount of unsustainable economic policies and practices we are all feeling, or about to feel, which has locked us up into our present situation, with more to come...

From my perspective, a first step -

Stabilize the housing market; refinance owners at 80% of current market value (the difference, the banks get to right off full valuation of losses, and bankroll / spread them out for up to 3 years from the initial contract), the US government would guarantee those loans refinanced (not to exceed $400K-$500K), for the entire life of the contract (no transfers), and the government is entitled to 35% of the net capitol gains from the sale of such property. Again, consider it only a start.

Why is this so imperative... cities base tax revenues on property owners - plain and simple, it's a domino affect.

This, opposed to throwing more money ($10 Billion) at AIG's mindless proposals (yes, these idiots are asking for $10 Billion more).

I know the aforementioned (housing proposal) has been pitched in a similar manner previously, but it's time to get serious, get a handle of depreciation and keep as many American's in their homes, as possible. It will assist America in a move help Her back on its feet - but it's not the only tact we must consider...

Another proposal - end all future commodity trading - It threatens our national security and global peace.

Nationalized universal healthcare.

Anyone who presently smokes, must prove they are addicted, have a prescription from their primary care physician, and are to be reexamined every 6 months with a new prescription. Cigarettes are only to be sold through pharmacies. Black market sales of prescriptions and cigarettes are to be equated on the same level as heroin. Eventually, cigarettes would phase themselves out over a number of decades. Bottom line, deep impact on healthcare costs.

I've many more, but not now...

[Noclue]

Actually, the first complaints were in 1992. Therefore, it is Clinton/Bush who were responsible, not the "Bush SEC." I accrately put the blame on both administrations. It is also Congress's SEC.

[steve]

George H.W. Bush was the president in 1992. So that should read Bush/Clinton/Bush who were responsible.

[Noclue]

Congress is supposed to oversee these agencies. There is an article in today's NYT that shows Schumer was a shill for the securities industry; after that he blamed everybody but himself.

[Yochanan Lavie]

I suppose that means Bush is Haraidi too.

Posted by: Un-Orthodox and Unimpressed | December 13, 2008 at 10:20 PM

The last time the Jews spoke to a Bush they wandered 40 years in the desert.

[NWS]

Yes, it is well known that Schumer, a Democrat, a wery wery important Democrat helped beat back SEC's own initiatives for more regulation to firm up what he viewed as a fundamental political and economic base for himself personally and his state generally. I don't know that anyone knows when Madoff turned to outright fraud or if he had been a confidence man from the start. Thomas Mann's Felix Krull or Lost's Sawyer is more useful here than us-them political bromides.

[NWS]

To paraphrase:

"Ernest, the rich are different from you and me."
"Yes Scott, they're more gullible."

[NWS]

and now, the European "fallout"

http://www.thebigmoney.com/features/todays-business-press/2008/12/15/madoff-fallout-pollutes-europe-asia

The Prince's New Clothes

[Yochanan Lavie]

NWS: As I have always said, both parties are corrupt. Charles Hines is also a Dem.

[NWS]

YL: Old debate on "the world" vs. "the spirit" -- we advance our purposes through worldly tools -- are we inevitably corrupted? Separation and withdrawal -- also nonviable? etc. But this guy was one piece of work, current clock at $20 billion and counting, including Mort Zuckerman etc etc etc

http://www.nytimes.com/2008/12/15/business/15madoff.html?_r=1&hp

[NWS]

This could be a tsunami to the federated communities.

He was trusted because he was "one of us":

from Jerusalem Post:

"At least $600 million in Jewish charitable funds have been wiped out by the collapse of Bernard Madoff's Wall Street investment firm, a partial review by The Jerusalem Post revealed Monday.

Yet much is still hidden about what may amount to the most spectacular financial disaster to hit Jewish life since the Great Depression, with unconfirmed losses totalling up to $1.5 billion.

Furthermore, the Post's figures do not include billions of dollars lost to individual and family investors, many of whom were the primary donors to Jewish schools, synagogues and communal charities."

[Un-Orthodox and Unimpressed]

DAMN! Too bad Madoff doesn't wear a kipah!

Shmarya would be sponsoring a huge kiddush this week. Or at least trying to raise money for one.

[Bilaam's Donkey]

It is really, really silly to blame this on Bush or Clinton. The SEC's everyday enforcement officers are career civil service, and its enforcement decisions are basically non-political. If anything, Bush would have had an incentive to go after Madoff because he was a big Democratic donor.

And, contrary to what you might hear, the SEC has been very vigilant during Bush's presidency. In fact, it's gotten bitch-slapped a bunch of times for trying to improperly extend the securities laws to cover all kinds of conduct that isn't securities fraud.

Sigh, another reason for people to hate Jews...

[NWS]

Naw, those charedi guys are pikers.

Here one lone hustler finagles his way into the creme de la creme of the Jewish elites, becomes their trustee, financial advisor, treasurer, and then, alone or with confederates or unknowing pawns, robs them blind. What did he see in the mirror when he shaved each morning? A master thief? An honorable man?

WTF?

If it's too good to be true, it *is* too good to be true--caveat emptor:
----

$600m in Jewish charitable funds lost

[Jerusalem Post]

At least $600 million in Jewish charitable funds have been wiped out by the collapse of Bernard Madoff's Wall Street investment firm, a partial review by The Jerusalem Post revealed Monday.

Yet much is still hidden about what may amount to the most spectacular financial disaster to hit Jewish life since the Great Depression, with unconfirmed losses totaling up to $1.5 billion.

Furthermore, the Post's figures do not include billions of dollars lost to individual and family investors, many of whom were the primary donors to Jewish schools, synagogues and communal charities.

The Madoff scandal erupted last Thursday when the 70-year-old financier was arrested on a single count of securities fraud at his Park Avenue home after being turned in by his sons.

Prosecutors contend that Madoff, who is free on a $10 million bond, told employees of Bernard L. Madoff Investment Securities that he had lost as much as $50 billion in investor funds and reportedly described his operation as "a giant Ponzi scheme."

For the worldwide Jewish community, the fact that the man at the heart of what may be Wall Street's worst-ever fraud was an active member of the community could be the worst news yet in a bad recession period. Not only could Madoff's alleged dishonesty increase anti-Semitic feeling in a time of worldwide economic downturn, said many Jewish leaders, but his close involvement with the Jewish community has exposed vast amounts of Jewish communal assets to his scheme."

apologies for quote material duplicated

FROM JTA:

AJCongress suffers significant loss but won’t close
By Jacob Berkman · December 16, 2008

-- The American Jewish Congress was severely hurt by the Bernard Madoff scandal but will not close, the organization announced.

The future of the Jewish advocacy group had been the source of speculation in Jewish communal circles since word leaked that it was among the organizations that had invested a large portion of its endowment with Madoff.

The AJCongress, which was founded in 1918 to fight anti-Semitism and protect civil rights, sent out a news release Tuesday saying that a trust left to the organization by Lillian and Martin Steinberg had been lost.

“For many years prior to their deaths, the Steinbergs entrusted their savings to Bernard Madoff. Sadly, Mr. Madoff did not return the trust they placed in him. It is our belief that all of the money that the Steinbergs left to the American Jewish Congress that was invested with Mr. Madoff has been lost,” the release said. “In addition, part of a second endowment fund was also invested with Mr. Madoff. We believe those funds to have been lost as well. Our losses appear to be limited to those two areas. Additional endowment funds and operating accounts were not managed by Mr. Madoff and are not impacted.”

According to the organization’s 990 tax filing from 2006, the most recent that is publicly available, the AJCongress had $17 million in assets. The money the Steinbergs left makes up a significant portion of that amount, according to the organization's acting executive director and longtime legal expert, Marc Stern.

JTA

that's G M A C...

The Merkin angle
By Ami Eden · December 16, 2008
The late businessman and philanthropist Hermann Merkin loved Yeshiva University so much, he endowed a chair that was held for decades by Modern Orthodox spiritual leader Rabbi Joseph Soloveitchik. Now his son, J. Ezra Merkin, the chairman of GMAC Financial Service, has cost the school $100 million.

That's the lead sentence in what might be the most compelling subplot in the Madoff scandal.

Merkin, the scion of a philanthropic family known for its support of Modern Orthodox causes (and brother of writer Daphne Merkin), has served on the board of many Jewish organizations and institutions, often playing a key role in overseeing how they invest their funds. As JTA's Jacob Berkman reported yesterday, several leading Modern Orthodox institutions -- including Y.U., and two Jewish day schools, Ramaz and SAR -- placed their money in one of Merkin's funds, Ascot Partners. Merkin in turn invested most of Ascot's assets with Madoff.

Now other media outlets are starting to focus in on this slice of the Madoff story.

[Jon]

"just a goy" needs to pick up an economics textbook before it is too late!

As for blaming Bush; Madoff was a heavily Democratic donor in the best of (American) Jewish tradition. Maybe Bush drove him to do it.

[skeptic]

Unfortunately, the investors chose to be mindless about this without taking the appropriate steps to review their investing strategies, with millions and even billions at stake. It appears many Jews invested with Madoff whether Orthodox or not. It is a shame if the main reason for trusting this crook was because he was Jewish, but it appears that was the case. The excuse that he was revered does not hold water as there were official SEC submissions and many advisors warning of Madoff's fund. Another shameful part of this was that Madoff, the sociopath that he is, openly accepted praise and spoke as an investing expert while he was perpetrating this scam.