Madoff with the Monday: Impact of Financial Scandal Could Run Deep

Sunday, December 14th, 2008

James Besser in Washington

It’s the weekend, so official reaction from Jewish groups has been limited, but communal boardrooms will be buzzing on Monday as the devastation apparently wreaked by Bernard Madoff,  the onetime hedge fund mastermind, sinks in.

Madoff was arrested on Friday after admitting to colleagues that his hedge fund was a $50 billion sham – the biggest Ponzi scheme in history.

Concerns among Jewish leaders center on three issues.

Many affluent Jews – pillars of the community and major supporters of Jewish organizations – could face huge losses because they had invested so much of their money with a manager with a reputation for high returns, secrecy and an easy way with the Jewish country club set.

As givers tote up their losses, the Madoff scandal could be one more blow to Jewish groups that face big drops in contributions because of the worldwide financial meltdown.

Secondly, many Jewish groups entrusted some or most of their money to Madoff – money that essentially vanished.

Already, the Robert I. Lappin Charitable Foundation in Massachusetts, which funds various Jewish projects in New England, has  shut its doors because its endowment was invested with Madoff.

Yeshiva University – Madoff just resigned as treasurer of the YU board and from the board of its Sy Syms School of Business — says it is looking at its books to determine the impact of his fund’s downfall on the school.

Sources say YU’s $1.8 billion endowment is down about 30 percent overall — and that about $100 million of the losses are connected to its Madoff investments.

Over the weekend, the school apparently scoured its Web site of references to Madoff

On Sunday the Washington Post reported that the North Shore-Long Island Jewish Health System lost $5 million and the Julian J. Levitt Foundation lost six.  The Post said damage from the Madoff fraud “appears to be deepest in the small world of Jewish philanthropy, where Madoff was a leading figure.”

What other Jewish groups had money invested with Madoff, a former head of NASDAQ?  How will that impact Jewish groups already facing a financial emergency? A lot of that will become clearer in the next few days.

Finally, there’s the issue of anti-Semitic fallout.

It’s true that Madoff’s fund drew heavily from Jewish investors as clients.  But the image of one of the worst financial scams in history – and one that could have a huge impact on already unstable markets – has already produced an outpouring of anti-Semitic postings on Web sites around the world.  Madoff’s affiliation with Jewish groups and with wealthy Jews in New York and Palm Beach is routinely mentioned – not necessarily inappropriately — in news reports on the scandal.

Groups like the Anti-Defamation League have been worrying for months about what they say is the strong likelihood the worldwide financial meltdown, surging unemployment and the foreclosure epidemic will produce an uptick in anti-Semitism as people look for scapegoats (read an ADL press release on the issue here).

In the wake of the Madoff disclosures, “anti-Semites are having a field day on the Web,” said the leader of a major pro-Israel group over the weekend.  “It’s very bad.”

About the Author
Douglas M. Bloomfield is a syndicated columnist, Washington lobbyist and consultant. He spent nine years as the legislative director and chief lobbyist for AIPAC.