JERUSALEM – Bernie Madoff’s stunning US$50-billion alleged ripoff of investors has cut a huge, devastating swathe through the ranks of the super-wealthy of New York, Hollywood and Palm Beach, some of whom have had their entire fortunes wiped out or seriously compromised.
Among those individuals whose charities were said to have lost millions in Mr. Madoff’s alleged Ponzi scheme were Steven Spielberg, the film director, Mortimer Zuckerman, the Montreal-born publisher and real estate developer, and Elie Wiesel, the Nobel laureate author, activist and Holocaust survivor, whose foundation helps Ethiopian Jews in Israel.
But the alleged colossal swindle, which was first reported to U. S. regulators by Mr. Madoff’s own sons earlier this month, has also caused deep tremors 10,000 kilometres away in Israel, where Jewish organizations are dependent on earnings from funds that were heavily invested for decades by U. S.-based Jewish charities with Bernard L. Madoff Investment Securities.
The collapse of Mr. Madoff’s family-run Wall Street firm — which produced an extraordinarily steady annual return of more than 10% for investors for years, no matter how good or bad the general economy –has come as a harsh second blow to charities here already reeling from a steep drop in donations caused by the global economic crisis.
Even before Mr. Madoff’s alleged pyramid scheme collapsed, the Israeli media were chronicling the dire state of some Israeli charities. The Jewish Agency for Israel, which helps diaspora Jews settle in Israel and also operates educational programs here for overseas Jews, slashed its 2009 budget by $45-million to $310-million in late October.
Sheldon Adelson, a Jewish American billionaire whose casinos reportedly lost more than half of its $28-billion value this year, was reported by the Jewish weekly Forward in September to be cutting by more than 50% the $70-million in donations he had made over the past two years to Birthright Israel, which sponsors trips to Israel for young diaspora Jews.
Among those in Israel particularly hurt by the decline in donations from abroad are ultra-Orthodox men. They have reportedly been having to go out and find jobs because economic support from U. S.-based ultra-Orthodox charities that had allowed them to devote themselves exclusively to religious study are drying up.
The New York-based Forward, which has done some of the best reporting on the Madoff affair, devoted much of the front page of its current edition to the spreading scandal and the previously revered businessman responsible for it, who is now free on a $10-million bail bond while awaiting trial on what will be a mountain of securities fraud charges.
“It’s like finding out that your father is a felon — this is bad news for the family,” Gary Tobin, president of the Institute for Jewish and Community Research, told Forward.
Mark Charendoff of the Jewish Funders Network spoke in even more alarmist terms to Forward, describing the debacle as “an atomic bomb in the world of Jewish philanthropy. There is going to be fallout from this for years.”
A rough guess by the Jerusalem Post was that Jewish charities lost at least $600-million when Mr. Madoff’s company collapsed. These calculations did not take into account individual investors who have made large private donations to Jewish schools, synagogues and charities.
“The cutbacks are expected to hit educational and Israel programs first as (U. S. Jewish) federations work to keep their local charity efforts going,” the Israeli daily said.
Forward published a list of 24 Jewish charities which it said had lost large sums of money by investing with Mr. Madoff. Yeshiva University, where Mr. Madoff served as treasurer on the board of trustees, confirmed that it lost $110-million that it had invested with Mr. Madoff’s firm. Hadassah (the Women’s Zionist Organization of America), which supports the highly regarded Hadassah Medical Organization in Jerusalem as well as outreach programs for youths in Israel and the United States, lost $90-million.
At least two books are in the works about how Mr. Madoff was allegedly able to pull this off while regulators slept. Perhaps Mr. Spielberg, himself, will direct the inevitable Hollywood film about this tragic saga.
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