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Madoff scheme hits Jewish charities hard
Question of the Day
The collapse of Wall Street legend Bernard L. Madoff’s investment empire has generated scandal, bankruptcy, financial panic - and some socially awkward situations.
Ruined Madoff investors confront a prominent Madoff supporter at a tony Florida golf course built by Donald Trump. Yeshiva University hosts its gala Hanukkah dinner at New York’s Waldorf Astoria the day after announcing huge losses and Mr. Madoff’s abrupt resignation as a member of the board of trustees. And foundations and charities scramble for new donations as they try to calculate the hit to their bottom line.
“It’s been a very surreal few days,” said Jay Feinberg, founder and executive director of the Gift of Life Bone Marrow Foundation of Boca Raton, Fla., which maintains a computerized public record of potential donors for bone marrow transplants.
The foundation did not deal directly with Madoff Investment Securities, which federal regulators say was a giant Ponzi scheme that may have bilked investors of as much as $50 billion. But it has relied heavily on a network of largely Jewish donors who did employ Mr. Madoff’s services. The nonprofit group already has issued an emergency appeal for $1.8 million in “alternative support,” and Mr. Feinberg said in an interview that his group was tightening its belt for 2009.
“As soon as I heard the name Madoff on the news reports, I had a strong feeling we were going to get some calls,” he said.
With the list of suspected victims growing almost by the hour, the 70-year-old Mr. Madoff could be back in a New York federal court as early as Wednesday if he does not meet conditions to guarantee a $10 million bond. He faces a prison term of up to 20 years and a fine of $5 million if convicted of criminal securities fraud.
On Tuesday, Securities and Exchange Commission Chairman Christopher Cox said his agency tried unsuccessfully for at least 10 years to pursue complaints about Mr. Madoff.
“I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them,” Mr. Cox said.
The SEC’s inspector general is looking into the collapse.
Giant hedge funds, Washington politicians, Hollywood celebrities such as director Steven Spielberg, charities and wealthy private individuals have all been caught up in the Madoff scandal.
Sens. Charles E. Schumer of New York and Frank R. Lautenberg of New Jersey, both Democrats, have said they will return political contributions from Mr. Madoff and his relatives. A foundation set up by Mr. Lautenberg reportedly has lost nearly all of its funding after having invested with Mr. Madoff.
But the scandal is creating anguish at a more personal level as well.
“People around here are pretty devastated. Everybody either is directly affected or knows a lot of people who are in trouble because of this,” said Richard Rampell, principal of a leading accounting firm in Palm Beach, Fla., where Mr. Madoff lived part of the year.
“This is a very wealthy area, a place where there are a lot of philanthropic people. The fact that a lot of charity money has been lost is maybe the hardest thing for people to swallow,” he said.
About the Author
Raised in Northern Virginia, David R. Sands received an undergraduate degree from the University of Virginia and a master’s degree from the Fletcher School of Law and Diplomacy at Tufts University. He worked as a reporter for several Washington-area business publications before joining The Washington Times.
At The Times, Mr. Sands has covered numerous beats, including international trade, banking, politics ...
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