A law firm with a large practice in class action suits related to securities fraud now represents some of the alleged victims of Bernard Madoff, who is accused of masterminding a $50 billion Ponzi scheme rip-off.
David Rosenfeld, a partner in Coughlin Stoia Geller Rudman & Robbins LLP, said the firm planned to pursue multiple lawsuits against Madoff, Bernard L. Madoff Investment Securities LLC, and the hedge funds that invested in Madoff’s fund.
The hedge funds did not perform due diligence and are therefore liable for the losses, Rosenfeld told The Jewish Star Monday night.
“The reason you pay the hedge funds the money they demand is you expect them to conduct proper due diligence of wherever they invest your money,” he said. He declined to identify the funds the lawsuits might target.
Investors in Madoff’s fund who withdrew their money before the alleged fraud was revealed could also be sued, Rosenfeld added.
Madoff, 70, admitted to his sons that his financial empire was “just one big lie” and that he ran a “giant Ponzi scheme” that bilked investors of over $50 billion, and that he was “finished,” according to a federal complaint filed last Thursday.
Madoff, who was once the chairman of NASDAQ, resigned on Friday as treasurer of Yeshiva University and chairman of its Sy Syms School of Business.
Yeshiva’s endowment fund has lost $100 million, the Chronicle of Philanthropy reported. Two sources told The Jewish Star on Monday that YU’s exposure to Madoff’s fund was significantly higher — as much as $150 million.
Just last week Yeshiva’s president, Richard Joel, announced that the university’s endowment had shrunk from $1.8 billion to $1.4 billion as a result of the ongoing financial crisis. His remarks were first reported in Yeshiva’s student newspaper, the Commentator.
Another possible target of lawsuits is J. Ezra Merkin, a Yeshiva University trustee, and founder of the $1.8 billion Ascot Partners LLP hedge fund, which invested significantly in Madoff’s fund. Merkin, who owns a home in Atlantic Beach, also resigned from YU’s board on Friday.
The fact that Madoff, who was managing hundreds of millions of dollars belonging to the university, was also its treasurer is raising eyebrows in the world of finance.
“People were so trusting of this guy,” said an investment banker who asked to not be identified. “He was part of their social fabric.”
Another investment banker, a Five Towns man who also asked to not be named, said, “The treasurer of the institution should in no way be profiting from the investments because ultimately the treasurer is the one who has a fiduciary responsibility on the disbursement of funds.”
“In the Modern Orthodox world we like to criticize the yeshiva world for being ‘too heimish,’” he noted, “but this is about the most heimish type of insider transaction you can imagine. It’s crazy.”
Yeshiva declined a request for comment about the propriety of Madoff’s role as treasurer.
“Our lawyers and accountants are investigating all aspects of his relationship to Yeshiva University. We reserve our comments until we complete our investigation,” said a spokeswoman, Hedy Shulman.
Banks and non-profits around the world have lost money to the alleged fraud; some smaller non-profits have been hard hit, as have some individual investors including a number of residents of the Five Towns.
The Elie Wiesel Foundation for Humanity, founded by the Nobel Laureate and famed Holocaust survivor, is reported to suffered heavy losses. A foundation belonging to Steven Spielberg had a significant portion of its assets invested with Madoff.
The Robert I. Lappin Foundation, which funded trips to Israel for Jewish youth, was worth $7.1 million as of 2006. The Chais Family Foundation, which funded a variety of Jewish projects, was worth a reported $178 million in 2007. Both were wiped out and have shut down.
SAR Academy, a yeshiva day school in Riverdale, had about a third of its endowment in Merkin’s Ascot fund, its president, Jack Bendheim, said in a letter to parents Monday. [sar-madoff-letter-12-14-08] Ascot placed the $1.3 million with Madoff, the letter said, and the school considers the money lost. The loss represents approximately $65,000 from the school’s annual cash flow, said Bendheim, a loss from which the institution will recover.
Rena Mosak, a Cedarhurst resident, said that an extended elderly family member who had their life savings with Madoff had been completely wiped out. “It’s kind of tragic that somebody so affiliated with Jewish charities and Jewish good could do such a thing,” she said.
At least two very charitable families have lost everything, a prominent fundraiser told The Jewish Star. “People who were giving hundreds of thousands in the last years to charity have put their homes on the market,” he said, “They’ve put their art up for sale and have moved in with their children.”
(Michael Orbach and Mayer Fertig for the Jewish Star – LINK)
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35 Responses
Beyond mention of YU, a few modern day schools, and a lot of non-frum Jewish charities, there’s been nothing written in the secular press about affected Jewish institutions. Were any frum (i.e. hareidi, yeshivish, hasidische, etc.) groups directly affected? From what I’ve seen in the New York Times and the Wall Street Journal, he moved in very non-orthodox circles and was only marginally involved with anything orthodox, and then only with the most liberal of the modern orthodox.
Word is coming out that Madoff could not do all this by himself and that he may be a fall guy. Time will tell. Horrible situation, nonetheless.
Rena Mosak, a Cedarhurst resident, said that an elderly family member who had their life savings with Madoff had been completely wiped out. “It’s kind of tragic that somebody so affiliated with Jewish charities and Jewish good could do such a thing,” she said.
At least two very charitable families have lost everything, a prominent fundraiser told The Jewish Star. “People who were giving hundreds of thousands in the last years to charity have put their homes on the market,” he said, “They’ve put their art up for sale and have moved in with their children.”
#1 – how do you know if some of the people who were wiped out by this shanda don’t give to “heimishe” or “yeshivish” mosdos? and what difference does it make – tzedaka is tzedaka!
#3 – a Jew giving to a non-frum charity, whether it be a non-orthodox Jewish charity or a worthy secular charity, doesn’t affect the survival of the Jewish community (and that includes YU, other than the small parts that are frum).
The critical factor for Jewish survival is whether tsadakas that support Torah learning, and support the needs of Bnei Torah. Jewish communties whose yeshivos fail, tend to die out within a short time. That has been our experience for centuries.
The fact that people have to sell suburban mansions (probably in neighborhoods frum people wouldn’t care for) and sell expensive art collections (I’m sure they weren’t pictures of rebbes) is sad, and tragic for their families, but has no impact on the survival of the Jewish people. Jewish survival is based on Torah and Mitsvos, and based on past experience, on the survival of yeshivos and similar institution. From what I can see, we can say “Baruch ha-Shem” we weren’t affected (and should learn from our cousin’s mistakes not to jump when offered a deal that seems too good to be true).
to #1 – according to you, our response to the mumbai tragedy (R”L) should be “well, they were only lubavitchers/chassidim…”
i truly feel sorry for you/your outlook on life.
What is amazing is the size of the YU endowments.
The large yeshivos should also learn and be proactive in trying to aleviate the tuition burden by creating and growing their own endowments. I guess that now would be a difficult time but the grass roots can start now.
Can someone define the word heimish to me and why does it have such a negative ring to it. I thought that being heimish was a good thing?
There is no question that the various hedge funds which invested with Madoff weere egregiously negligent in doing due diligence before investing and follow-up review after investing. A major investment manager such as Madoff purported to be should have been audited by one of the Big 4 CPA firms, such as Deloitte or KPMG, not some small regional firm located in New City. That alone should have been a red flag of doubt to any reputable hedge fund.
And Aliza tends to appreciate goyim more than yidden.
While Madoff is a first rate thief, I dont think Merkin was quilty of putting hi sfunds there.If someone I know for 40 years who was chairman of nasdaq etc.why is that not enough due diligence?where does dd start and end.third party administrator?they can be paid off.if you can buy a senate seat you can pay off a third party administartor ,even ernst and young,you dont have to pay off th ewhole fiem
as far as frum mosdos being affected,based on CNBC reports which may only be rumors,nonetheless there are modern gevirim who give millions to heimishe mosdos for whatever reasons.birthright isnt heimish but some of th ekids get snatched by kiruv orginazations and they seem to be likely affected.
the question we have to ask is mah hashem elokecha doresh?everything that happens in th eworld is for yisroel.sinath chinam doesnt bring financial loss,there is a disconnect in midah k’neged midah.maybe we have to tone down our extravagance.yes in lakewood where people spend 150 dollars for a 5 year old girl’s outfit.maybe thats a little out of hand.what about chasunas,evenn if you have the money.any ideas,i will be happy to look inward not outward.
Firstly, the vast majority of investors, invested via a feeder fund like Fairfield or Kingate, which were audited by a big 4 firm. Secondly, to say that the frum oilam weren’t affected by the YU losses is crazy. It is a lot of the YU graduates that are the big earners and consequently the philanthropists of the next generation. They give huge sums to both yeshivas and “chessed” causes. If these people do not go to YU, and as a result there connection to yiddishkeit is lessened, they will give less to jewish causes. The “black” yeshivas may not have been directly affected, but the consequences are very far reaching, and I think a bit of sensitivity is required.
WE’VE LOST EVERYTHING’
RUINED RETIREE’S TALE
By BETTE GREENFIELD
A lifelong New Jersey resident, Bette Greenfield retired in March and moved to Florida in July.
I’m not from a wealthy family living on a big estate in Palm Beach or in an Upper East Side apartment. I’m 71. I’ve worked hard and lived a quiet life – and have just lost my retire ment savings in the blink of an eye, thanks to Bernie Madoff.
When my brother told me the news, I said, “I guess I’m going to have to live in a refrigerator box now.”
I made jokes because it was the only thing I could do to not burst into tears.
How did this happen?
My father, a CPA, was smart and an extremely knowledgeable financial ad viser. As he aged, he wanted to have something where he could put his savings and live off the interest.
He was told by one of his wealthy Palm Beach friends that Bernie Madoff was a miracle worker with invest ments, and that he could pull strings to get Dad into a trust fund with Madoff Securities.
It was less than $400,000 – not a large amount by Madoff standards – but his friend helped him get into a fund. Dad was sure that he had made a wise investment and that he and his wife could be comfortable for the rest of their lives.
For 10 years, he did live off the interest and totally believed in the way the money was increasing.
Dad told me, “Bernie Madoff is brilliant. When I pass away, keep the money with him, and you and your brothers will always have something to fall back on.”
Dad passed away in 2003 and left the Madoff trust to my brothers and me, along with our stepsister.
And it did continue to grow. The trust continued to earn up to 16 percent each year, so we didn’t question it much. And then this year, we thought, how can he still be making 10 percent in this tumultuous market? We were amazed and thanked Dad’s memory every time we saw income and not a loss.
I’m glad my father isn’t around to find out the truth.
We have lost everything to help us through our golden years. How am I going to get a job when young people can’t even find work right now? I have my IRA from my years at Merrill Lynch, but it’s worth only half what it used to be. So I guess now Social Security is the only thing I have left to look at.
Bernie Madoff, in his selfishness and ego, left many people feeling pain and anguish about their futures. I’d like to see him punished, but none of that is going to bring the money back, and I have to go on with my life.
So, I am taking a philosophical approach to this terrible loss. At least I have my health – but for how long?
I remember about 35 years ago, YU was almost BANKRUPT. The Bowery Savings bank was foreclosing
on their mortgage on one of their buildings.
Dr. Norman Lamm turned things around and raised enough money to get out of debt and yes create an endowment fund.
It’s a real tragedy for this to happen to them.
By contrast, our yeshivos have an “endowment”
of Gmach loans and past due bills and salaries.
All of this at a terrible financial time. Many
yeshivas are in the worst financial situation than they ever have been. Parents that have lost
jobs have stopped paying tuition. People that lost in the stock market and real estate market
have stopped donating. The Miami Beach community
Kollel is qabout 3 months behind in paying the kollel members. There are retred people in Miami Beach that have lost money to Made-off.
It’s terrible
“…what difference does it make – tzedaka is tzedaka..!
It makes all the difference in the world. Secular, left-wing Jews consider funding of immoral organizations to be “Charity.”
We’re much better off without this kind of “Charity.” Perhaps we can say: “Gam Zu LeToVah!”
to joseph #9,
i fail to see how your comment is relevant (or true for that matter), but it seems to simply be an ad hominem attack on the poster ‘nevealiza’.
when bad fortune befalls any member of klal yisroel, we should all feel their pain. is it really constructive to sit and try to give ‘svoros’ why its really only ‘yenem’s problem and not mine? during the mumbai tragedy, it was beautiful to see how (most of) klal yisroel shared in the pain which affected but a few individuals/families, primarily of lubavich/chassidishe persuasion. few were quick to point out that the tragedy only befell lubavitch and not “us” (R”L). while this case is clearly not of the same magnitude (no one has lost their lives), the bottom line is that members of ‘acheinu b’nei yisroel’ and tzedakka organizations have suffered serious losses. this is reason enough for us to feel their pain as well. does it matter that some of us may not donate to these tzedakkos? how many people here had previously donated to chabad of mumbai??
with regard to ad hominem attacks (such as #9 above), it may be wise for all of us to consider whether what we write is an improvement over silence before pressing the ‘submit’ button.
To #4,
The strength of the total Jewish Community affects us all. When you discount the fate of those who are not as frum as you, you are heading down the path of those who met with the Iranian dictator and brought much disgrace.
FEDS DISCOVER ANOTHER SIDE BIZ
Bloomberg NEWS
Federal investigators working through the weekend to unravel Bernard Madoff’s alleged $50 billion Ponzi scheme found evidence he ran an unregistered money-management business alongside his firm’s brokerage and investment-advisory subsidiaries, two people with knowledge of the inquiry said.
Clients of the undisclosed unit may have included hedge funds, according to the people, who declined to be identified or to name the funds because the probe isn’t public.
Investigators from the Securities and Exchange Commission are looking for signs that others participated in the alleged fraud and are examining why Madoff’s wife’s name appeared on documents linked to transactions under scrutiny, the people said. His wife, Ruth Madoff, has not been accused of any wrongdoing.
Ira “Ike” Sorkin, a lawyer representing Madoff, declined to comment. Calls to residences listed in the Madoffs’ names in Manhattan, Montauk and Palm Beach, Fla., weren’t answered. John Heine, an SEC spokesman, also declined to comment.
More than a dozen SEC inspectors have been working around the clock examining records at Bernard L. Madoff Investment Securities LLC after his sons told authorities last Wednesday he’d confessed to orchestrating a Ponzi scheme with more than $50 billion in losses, the biggest in history.
Investigators are still trying to figure out where customers’ money went. Madoff, 70, told his sons last week he had as much as $300 million left, according to an SEC lawsuit filed in Manhattan federal court.
Details of the side business that the SEC is scrutinizing – including how much client money it held, who, besides Madoff, may have been involved in it, and how it was kept separate from the firm’s registered investment-advisory unit – couldn’t be determined.
zalmy/#15, You may need glasses then.
#11 is right on the money however the fact that students that would otherwise go to YU now now go to other colleges wich will lessen there connectoin to judisam is not a tragdey because they will donate less to “black” causes but rather that alone that they are less connected.
To #14: You are truly ignorant. So-called secular left wing Jewish charities give millions to Orthodox interests. The Federation funds hospitals where many frum people go and summer camps where thousands of frum children have gone over many years at prices far less than the private frum camps. The BJE (Board of Jewish Ed) which is secular also gives funds to Yeshivos. They also help the Jewish poor – yes there are Jewish poor.
Your comment shows an utter lack of knowledge, character and soul.
#20 – I 100% agree their reduced connection to yiddishkeit is a tragedy. Even if I or other posters here would not ideally choose to send our children to YU, they perform a massive function for a wide spectrum of yidden, from black “dropouts” who want to go to college, to baalei teshuva who want to get closer to their roots. So #14, is YU one of the immoral charities you are referring to?? Please tell me which kollel / yeshiva you are supposed to be studying in, and maybe I will redirect funding to places like YU.
I was thinking about all this “Kovod Ha Medumeh” YU had to shell out in order to collect all these millions.
I guess this “Kovod Ha Medumeh” went to pay for “Millions Ha Medumeh”.
Then I went to think of these 1.8 Billions endowment fund which “nebbach” shrank to a mere 1.4 Billion endowment fund, even before this evasive Madoff evaded with those billions.
Yidden in Eretz Yisroel are sending their children hungry to bed, while a “Yeshiva” has ONE POINT FOUR B-I-L-L-I-O-N D-O-L-L-A-R in their pocket.
What are they teaching in this Yeshiva about Tzedoko & Chessed? It this a purely academic topic to be discussed in an ivory tower only?
No Neshomo there?
Dear in-sane (no. 21):
You need to apply the Chofetz Chaim’s criterion–Does the benefit justify the damage?
The lion’s share of secular funds go to “Arts, Culture, immoral causes, politically-correct causes, etc.
A small pittance is allocated to the religious community’s needs.
I think we would be better off if they just went out of business.
If Hashem put all this money in the hands of YU and these givirim – maybe he agrees with what they are doing?
“Zevillun” (no. 22):
Thank you for being such a great philanthropist.
Yes, YU has, unfortunately, become a place of immorality. There are G-Y clubs there, where immorality openly preached to the student body, supported by funds from the College adminitration.
Rav Eliezer Silver, ZT”L, is no longer in charge there, nor is Rabbi Soloveichik. The man in charge is Richard Joel, a secular fundraiser.
whY-yoU has now become a question!
I am very interested to know about this “small part” of YU which is frum. They have seven Batei Medrosh for undergraduates, 21 shiurim, several kollelim including for Kodshim and Yadin Yadin, several of the greatest living Rabbis and Posekim on the faculty. If you come at night seder you will see a full Beis Medrosh until the latest hours of the night with hundreds of bochurim. Now there are also nighttime shiurim and chaburos, and different programs to encourage bekiyus at night seder. There might be one bigger yeshiva in the entire US, so if this “small part” is frum, then you people who are all frum have some answering to do.
I feel your website puts YU in a bad light, both in this incident as well as in at least one other incident that I recall. You are trying to smear YU in a guilt-by-association manner. Does your website have a posek?
Dear Chakira (no. 27):
It’s high time that the REITS Yeshiva was seaparated and liberated from the secular college.
This “sandwich system” (to quote fron a famous song by Yom-Tov Ehrlich) severely compromises the integrity of the Roshei Yeshiva in REITS.
Let the nuns and priests go to YU, and let the Yeshiva boys go to REITS. And never the twain shall meet.
Wow, why all the YU bashing. To “yidlmitnfidl”, YU teaches it’s talmidim the importance of going out and earning a living while still keeping true to a torah life so that our children don’t NEED to go to bed hungry b/c we can provide for them. Much of the $1.8 Billion is part of the medical school endowment which does research on cancer and other genetic diseases which effect the entire community. The less money YU has the less money there is for harbatzas ha torah. I know that many people reading and commenting on this site don’t regard YU as a “makom Torah” however it is probably the second largest torah institution on the country (after Lakewood). To discount that learning because it is not done in a black hat yeshiva is foolish and ignorant, elu v’ elu. Anyone who thinks that “frum” mosdos aren’t going to get hurt by this are dreming.
Deepthinker, you are dead wrong.
You dont know what you are talking about.
Too cryptic. Please explain.
Are you defending the immoral clubs that are officially recognized by YU, and which recive funds from the administration?
deepthinker,
Thank You for voicing the words of Gedolei Yisroel.
We have witnessed a terrible Chillul Hashem the likes we may have never seen. To now engage in finger pointing, character smears and “our way” is better than “your way” is an exercise in utter stupidity.
We have all suffered because if there is Chilul Hashem in the world, Klal Yisroel must work harder than ever to reverse it and create Kiddush Hashem. Nothing I have read here is towards that end. We are in serious trouble. Just one week ago, ONE WEEK ago we suffered the most painful event to our collective Klal in a very long time.
What happened to the Achdus?
Was it real or fake?
Have we learned nothing from it?
WE are all in this together. A JEW is A JEW period!
Stop! Enough already!
A huge financial disaster has hit the community in the guise of one Mr. M. The impact will be felt across the spectrum for years to come.
We need to take a deep breath and stick together. The rest of this bitter infighting is a distraction from our Achdus that we simply cannot afford at this time in history.
Before you smear or malign someone or something different then yourself, think- “does this make Kidush Hashem or not.” Be Don L’kav Z’chus- its all we have left.
How sad that the tremendous feelings of pain, of being nosei ol im bachaveiro have, while not been forgotten entirely, have certainly lessened considerably. Anyone who thinks we will just walk out of all of the world’s problems–that eventually we’ll just come out of it like has always happened before needs to do some deep thinking and learning. Chevlei Moshiach is not like any other time in history. I am not an expert on any of this. I just think it’s time for all of us to do some soul searching. To erase any sinas chinam we have in us and to remember the comment of Rabbi Rosenberg, father of Rivka Rosenberg,hy’d, who said (I believe it was at the funeral)that, through all his intense pain, if the deaths of these kedoshim could generate a sustained achdus in klall yisroel, then it would be worth it… What powerful words for a father to utter. It’s up to ALL of us to ensure that the kedoshim did NOT die in vain. That through the tremendous kiddush Hashem that they made klall yisroel will finally come together and moshiach can finally come. No, I am not Lubavitch. I just shudder to think that the satan could conceivably, chas vishalom, undo the kiddush Hashem of three short weeks ago.
DEEP THINKER:
I GUESS WHENEVER YOU OR SOMEONE IN YOUR FAMILY IS IN NEED OF A HOSPITAL, YOU DO NOT ATTEND ONE FUNDED BY THE FEDERATION, BUT ONE FUNDED BY CATHOLIC CHARITIES. HAVE A NICE TIME WITH THE YOIZELS ON THE WALLS.
with out going into detail any one who is going to come outright and condem the whole YU as an instition we would be better off without is missing seichel however anyone that agrees whole heartedly with all that goes on there is not frum its a necessary evil that if k”y were zocha would become unneccicary
Deepthinker,
In reply to your comment #26, you stated that:
“YU has, unfortunately, become a place of immorality. There are G-Y clubs there, where immorality openly preached to the student body, supported by funds from the College adminitration.”
You are of course, technically correct that these things do occur openly at YU, since YU receives state funding, it is legally obliged not to discriminate against these activities. Unfortunately, all institutions globally have this dilemma (I am not US based), whether to accept state / government funding, and abide by their rules, or be self-funding and have their own rules. I send my children to schools that are self funded for this very reason, and this is financially crippling for a large number of people. It is certainly not YU’s desire to have these activities taking place, and they have been involved in a number of court cases to try to prevent certain activities occuring at YU locations.
I also hate to be the one to break it to you, but certain unwelcome activities take place in “black” yeshivos also, it is just not occuring openly as these yeshivos would be able to exclude the individuals concerned.
The solution is for all yeshivos and schools to be self-funded, and for this reason, we need our ashirim to be doing well, and consequently, your rejoicing at current events, which have hit many of our ashirim either directly or indirectly, is very short-sighted.
The recent yom tefilla for the good of the philanthropists, was slightly misdirected, as the tefillos should have been aimed at helping all yidden financially (not just the philanthropists, so that everyone can join in the support of all Torah institutions. I am sure YU would love to be self-funded and therefore be able to remove these unwelcome elements from their midst, and this fraud was certainly a set-back to this end, and should not be seen as a simcha.