Saturday, December 13, 2008

Jewish Charities Are Victims of Madoff Wall Street Fraud

A number of Jewish charities find themselves among the victims of the massive Ponzi scheme carried out by Wall Street legend Bernie Madoff. Thursday's New York Times reports on the arrest of Madoff in a fraud scheme whose losses could reach $50 billion. Yesterday a New York federal district court appointed a receiver and froze all of Madoff's remaining assets. (Full text of court's order.) Today's Washington Post reports that the entire $8 million endowment of the Robert I. Lappin Charitable Foundation was invested with Madoff. The website of the Lappin Foundation carries the following notice on its home page:

The programs of the Robert I. Lappin Charitable Foundation and the Robert I. Lappin 1992 Supporting Foundation are discontinued, effectively immediately. This includes Youth to Israel and Teachers to Israel.

The money used to fund the programs of both Foundations was invested with Bernard L. Madoff Investment Securities and all the assets have been frozen by the federal courts..... The money needed to fund the programs of the Lappin Foundations is gone. The Foundation staff has been terminated today.

"It is with a heavy heart that I make this announcement," said Robert I. Lappin, Foundation trustee. "The Foundations' programs have touched thousands of lives over many years in our efforts to help keep our children Jewish."

In addition, the North Shore-Long Island Jewish Health System lost $5 million in the fraud. The Texas-based Julian J. Levitt Foundation that focuses on Jewish causes lost about $6 million. Yeshiva University, on whose board Madoff served, is still attempting to determine how much it had invested with him. Madoff's own foundation that contributed extensively to Jewish charities also is now gone. Haaretz reports that Madoff resigned from Yeshiva's board on Friday. It also suggests that a number of other Jewish philanthropists, in New York and Palm Beach, have likely lost significant amounts in the fraud.

UPDATE: The Los Angeles Jewish Community Foundation can be added to the list of victims. Luke reports that some $18 million of the Foundation's Common Investment Pool (currently valued as 11% of its assets) was invested with Madoff.

UPDATE 2: Monday's Wall Street Journal [subscription required] reports on additional investors who were victimized, including foundations of two well-known Jewish philanthropists: Elie Wiesel's Foundation for Humanity and Steven Spielberg's Wunderkinder Foundation (which received 70% of its 2006 income from Madoff investments).

UPDATE 3: Monday's Haaretz has more information on Jewish foundations that were impacted: including the Chais Family Foundation which contributes heavily to Jewish causes and the Gift of Life Foundation, a Jewish bone marrow registry that to which Madoff contributes substantial amounts.