Monday, December 15, 2008

Madoff's Victims

The impact of Bernie Madoff's Ponzi scheme on the Jewish community is going to be huge. Collecting from a bunch of different sources... (Bloomberg's link has some of the numbers for the hedge funds who were invested with Madoff - insane.) And the New York Times has a piece from Palm Beach which is just sad.
  • Two charities have shut their doors:
    The Robert I. Lappin Foundation in Salem, Mass., announced Dec. 12 that it would close after losing $8 million -- all of its money -- through investments with Madoff. And the Chais Family Foundation, which gives out some $12.5 million each year to Jewish causes in Israel, the former Soviet Union and Eastern Europe, announced Dec. 14 that it had closed after losing all of its money through investments with Madoff.
  • Yeshiva University has lost "tens of millions, if not more", which it had invested with Madoff - who was the Chairman at Sy Syms School of Business. Rumor has it that it's around $150 million, on top of the $400 million they'd announced they'd lost recently due to the market.
  • Lots of individual Jews around the country were invested with him:
    The investor was close to a number of prominent Jewish donors, both on Wall Street and elsewhere. The Wall Street Journal reported that members of the Boca Rio Golf Club in Boca Raton and the Palm Beach Country Club in Palm Beach were heavily invested with Madoff's firm. Both clubs are heavily Jewish.
  • During golf-course and cocktail-party banter, Mr. Madoff's name frequently surfaced as a money manager who could consistently deliver high returns. Older, Jewish investors called Mr. Madoff " 'the Jewish bond,' " says Ken Phillips, head of a Boulder, Colo., investment firm. "It paid 8% to 12%, every year, no matter what."
  • Merkin, who last week told investors in his hedge fund, Ascot Partners, that all of their money had been defrauded by Madoff, is of particular interest to the Jewish community. He has philanthropic ties to a number of Jewish organizations and institutions, serving as an investment adviser for many of them, including Y.U. Among other causes that he is said to be connected to are the SAR Academy -- a Jewish day school in the Bronx -- as well as State of Israel Bonds, The Jewish Campus Life Fund, Elaine Kaufman Cultural Center, The Ramaz School, Congregation Kehilath Jeshurun and the Fifth Avenue Synagogue.
  • North Shore - LIJ Health System lost $5 million.
  • There is no evidence that either Mr. Shapiro, who is 95 and joined the club in 1974, or his son-in-law, Mr. Jaffe, who is 64 and joined in 1992, knew of the fraud. Both men, who give millions every year to countless charities, are also said to have been duped of hundreds of millions of their own money, according to friends of their families.


  1. Now that the facts are coming out there is, indeed, a Jewish reason to be saddened, angered and worried.

  2. So many ruined lives. I hope he does some real jail time.

  3. He's 70. How much meaningful time is he going to do? The real suffering will be in Hell.

  4. ysh:

    Sucks for us atheists who don't believe in hell then, huh? ;-)

  5. JA - Only if you've been ripped off for a few hundred million. Otherwise, you may as well feel better that the hundreds of people who are screwed at least can be happy to note that the guy who caused it will be in a nice cushy cell for 5 years or so before they let him go to his home to serve the rest of his time there.

  6. I do feel bad for all these people, but at the same time... when it's too good to be true, it probably isn't.

  7. Apple - Agreed on the investors (to an extent). I do, however, feel bad for the people indirectly affected - people who received money from those charities, etc.

  8. The returns are reported to hover right around 10% which isn't particularly too good to be true. I'm listening to Michael Savage now and it is a real downer. This man really pulled off the "nice guy" so well. One man who called in became a customer because Madoff allowed him to invest only 100K instead of the usual 1 million and told him to try it and see if he liked it. I never heard about Madoff until it hit the front pages of every major newspaper. I think the fallout will be far worse than imagined, as you had to know someone to get into his funds and those who knew were primarily Jewish. VIN has a story that SAR has lost its entire endowment fund. Sad.

  9. SL - I said it to someone, I guess it must have been by e-mail... the 10% was quite smart. A good but not too good number. What was unrealistic was that it was 10-11 every year for 15 years. That just doesn't happen, especially the way he claimed to invest (which always raised eyebrows).

    The other thing that I'm shocked nobody looked at, though perhaps I'm biased as someone who did it for a living, is that people were fine with his auditors. A 3-person firm in an office barely bigger than my living room? It's just not realistic.

    Regarding SAR, it seems so. Someone sent me the following release: The Endowment is invested with several investment managers. Years ago, it invested in Ascot, a manager which, unbeknownst to us, had substantially all of its assets invested with Madoff. Over time, that investment grew to $1.3 million. We are obviously monitoring the situation and evaluating our alternatives; however, in light of the allegations, we are now valuing this investment at zero.

    (Personally, if you're putting all your stuff in one fund, you better be sure how that fund is investing and diversifying.)

  10. .....isnt this what you jewish guys are supposed to do ???....

    ......Leolom Tickach.....

    .....hes just following the rules you go by!!!