Yeshiva University sharply lowered its estimated loss from investing with Bernard Madoff, saying it now appears to have had just $14.5 million tied up with the disgraced financier instead of $110 million.
The university attributed the vast difference to “fictitious” numbers provided to it by Ezra Merkin, the former chairman of Yeshiva’s investment committee who served as middleman between the school and Mr. Madoff.
The university said in a prepared statement that it had $14.5 million invested with Mr. Madoff at the time of his arrest. The administration had thought that figure had grown to $110 million, thanks to Mr. Madoff’s investing acumen. However, “it now appears that any ‘profits’ above the $14.5 million were fictitious,” said Yeshiva’s vice president for business affairs and chief financial offer, J. Michael Gower.
While the university faces a much less severe loss than previously estimated, it still doesn’t possess the $110 million administrators were counting on. The university will likely have to restate its $1.2 billion endowment, a person familiar with the matter said.
Two weeks ago, Moody’s Investors Service warned that it might cut Yeshiva’s credit rating. The ratings agency also raised concerns about governance at Yeshiva, where Mr. Madoff served as treasurer of the board of trustees and chairman of its business school until his alleged $50 billion Ponzi scheme came to light earlier this month.
Moody’s analyst Kimberly Tuby couldn’t be reached for comment on whether the new loss estimate would change her firm’s assessment of Yeshiva’s financial health.
The fact that Yeshiva’s losses appear to be much less severe than initially feared raises the possibility that other customers of Mr. Madoff are in the same situation. Conversely, investors who thought they had big investment gains may find those profits never really existed.
In the meantime, Mr. Merkin faces a date in court next week with another unhappy client, New York University, which says it lost $24 million investing in Mr. Madoff’s funds via Mr. Merkin and is seeking a temporary restraining order. A hearing is scheduled Tuesday afternoon in New York State Supreme Court.
(Source: Crains New York Business)
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7 Responses
This is so misleading and I think its mainly damage control. Acoording to the Crains article the investment was 14.5 million. If the profits over the years made it 110 million then they were making some return. That is a quite a few hundred percent. Also, bottom line their endowmwment value went down by 110 million.
Perhaps the ” $ 50 BILLION” will really be worth $ 50 million ,because people are using the fictitious profits as the right amount.However,the investors used the fictitious amounts in their budgets and did business with others based on this fraud.
What a load of garbage! Of course, they first tried to obliterate any mention of Madoff from their website, but unfortunately, people “found out” about their connection. A shame they couldn’t get rid of the google links as well.
How do we downgrade the ratings on Moody’s they messed up the whole ratings game for 2008,why are they still operating?
“Alice in Wonderland”
I’m not sure I get this. If there was an assumption that the $110 million constituted a part of the $1.2 billion endowment, then what difference does it make how that number got to be $110 million? What matters is that the endowment became $110 million less than they had thought it was. And if they thought all along that they had actually put in $110 million and lost it, wouldn’t that have meant that they thought they lost much more on top of that in false profits (no pun intended)?
how many years i was criticized that only the frumies make ‘chilul hashems’ with there scams and frauds perpetrated by frumies against their own people. well this madoff scam takes the cake.it adds up to all the scams that ever took place in the united states and probably the world and surpassed it by large numbers.50 billion dollars.with the help of educated, sophisticated collaberators affiliated with institutions of higher learning etc…etc….
madoff couldnt do this crime by himself. he had to have associates well positioned and knowledgeable to carry out such a sheme.