Clear85° WeatherClear85° Weather

Jewish charities brace for Madoff fallout

NEW YORK — The Hebrew word for charity is tzedakah. But it means something more, too: doing the righteous thing.

Many of the investors allegedly swindled by Wall Street money manager Bernard Madoff are, like him, Jewish, and for many of them contributing to Jewish causes is a crucial part of their culture. Shock has rippled through the community since news broke that Madoff, once chairman of the Nasdaq Stock Market, was at the center of a $50-billion scheme to defraud investors.

"It's the biggest scandal in philanthropic life in, well, as long as anyone can remember," said Gary Tobin, president of the Institute for Jewish and Community Research. "We don't know yet how big it is. There are foundations that have lost major assets, donors that have lost their ability to give, and organizations whose investments have disappeared."

The names of organizations and individuals allegedly affected read like a Who's Who of the rich and famous: a charity of director Steven Spielberg; a trust tied to real estate magnate and New York Daily News owner Mortimer Zuckerman. Spielberg's Dreamworks partner Jeffrey Katzenberg and the foundation of Nobel laureate Elie Wiesel also reportedly were hit.

Countless family foundations have been devastated, among them the Shapiro Family Foundation in Boston, said to have lost $145-million.

Many don't know yet if they were affected. "I don't think we'll know the scope of this for a year," said Mark Charendoff, president of the Jewish Funders Network, an umbrella body of family foundations.

"There were people who woke up and said, 'Thank God, I wasn't involved,' " Charendoff noted. "And then they find out that somehow they were, through a secondary fund."

The loss to Jewish philanthropy as a whole has been estimated between $600-million and $1-billion. "I consider that, if anything, a conservative estimate," said Jonathan Sarna of Brandeis University, one of the nation's leading authorities on American Jewish history.

Madoff was a member of the exclusive Palm Beach Country Club, and he recruited many investors from its ranks. Club members are required to not only have money, but to make hefty annual contributions to charity, perhaps even hundreds of thousands of dollars.

To Sarna, that points to the importance of charity in Jewish circles. "That's what it costs to be a part of that club," said Sarna. "It's a statement that you're a responsible member of the Jewish community. Tzedakah — doing what's righteous. It's very much in the value system."

Books falsified to hide losses?

Investigators poring over Bernard Madoff's books have discovered the money manager falsified documents to hide massive losses. One set of books kept track of the losses at Bernard L. Madoff Investment Securities LLC's investment advisory arm, while the other was what investors were shown, said Stephen Harbeck, chief executive of the nonprofit Securities Investor Protection Corp., which is overseeing the liquidation of Madoff's company. SIPC, which was created by Congress and funded by the securities industry, can give customers up to $500,000 if it is determined their money was stolen. SIPC has about $1.6-billion to make payouts, which could quickly be depleted.

SEC concerns: Securities and Exchange Commission chairman Christopher Cox said Tuesday that he is "gravely concerned by the apparent multiple failures" of the SEC and has asked the agency's inspector general to conduct a full review in the case.

More victims: Names announced Tuesday included Rye Investment Management of Rye, N.Y., which lost $3.1-billion, almost all of its clients' funds, and Austria's Bank Medici, which had two funds with $2.1-billion invested with Madoff.

Times wires

Jewish charities brace for Madoff fallout 12/16/08 [Last modified: Thursday, November 4, 2010 12:59pm]

    

Join the discussion: Click to view comments, add yours

Loading...