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August 29, 2014 / 3 Elul, 5774
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Posts Tagged ‘Bernard Madoff’

Madoff Says His Scheme Was Not Betrayal of Jews

Thursday, March 20th, 2014

Ponzi schemer Bernie Madoff said in a prison interview that he does not feel he “betrayed the Jews.”

Madoff, 70, is serving a 150-year sentence at the medium-security federal prison in Butner, N.C., for a scheme believed to be the largest of its kind in U.S. history — one that affected a disproportionate number of Jewish individuals and organizations.

“Religion had nothing to do with it,” Madoff told Politico in an interview published Thursday.

“I don’t feel that I betrayed the Jews, I betrayed people. I betrayed people that put trust in me — certainly the Jewish community. I’ve made more money for Jewish people and charities than I’ve lost.”

Madoff told Politico that he attempted to recover money for his victims, and it has largely gone unacknowledged.

He said the information he shared with Irving Picard, the trustee charged with overseeing the recovery and distribution of money lost in the Ponzi scheme, has been critical to Picard’s ability to collect the money.

“Everybody thinks the worst of me,” Madoff said. “The only thing I’m happy about is I was able to help people recover.”

The investment advice he offers is not to invest in the stock market.

Madoff, who sees a prison psychiatrist once a week, said he has “nothing to repent for. I already knew what I did was wrong.”

He also said, “I don’t believe I’m a bad person.”

Madoff said the loss of his family, who have had nearly nothing to do with him since the scheme became public, is “more punishment than being incarcerated.” His son Mark committed suicide in December 2010 at 46.

He said he suffers from kidney disease and not cancer, as has been reported, and takes about 14 medications, which he did not do before entering prison. Madoff had a heart attack over the winter; and a stent was inserted to open a blocked artery.

Madoff Recovering from Heart Attack

Thursday, January 23rd, 2014

Bernard Madoff suffered a heart attack in prison last month and was hospitalized, CNBC revealed Wednesday after receiving an email from the 75-year-old Ponzi scheme rip-off artist. Madoff also is suffering from stage four kidney disease.

He former stockbroker wrote that he spent most of last month in the Duke University Medical Center and that he now is back in his Butner, N.C. prison, where he was sentenced to 150 years.

Madoff victim Norma Hill, 73, who had $2 million stolen from her, told the New York Daily News on Wednesday. “I don’t wish any ill on people. . . . I don’t like to hear of anybody being sick. But I don’t have any real sympathy for him.”

His wife Sondra, 80, was quoted as saying, “I care as much about him as he cared about us.”

JP Morgan to Pay $1.7 Billion to Madoff Fraud Victims

Tuesday, January 7th, 2014

J.P. Morgan Chase will pay $1.7 billion to victims of the Bernard Madoff Ponzi fraud scheme, according to deal announced by the Justice Department’s prosecutors, who agreed to delay criminal charges against the bank.

The financial institution is charged with violating the Bank Secrecy Act, and charges will be delayed for two years pending the payments and changes in the bank’s policies to stop prevent money laundering, which is how Madoff got away with his fraud until finally getting caught.

Madoff is serving a sentence of 150 years in prison for raking billions of dollars from investor’s accounts. One of those hardest hit was yeshiva University.

The Wall Street Journal reported Tuesday that the bank failed to send U.S. regulators a formal report on Madoff’s activities even though it had informed Britain in 2008 that Madoff’s returns on investments were “too good to be true.”

Report: At Least 18 Jewish Groups Reported ‘Diverted’ Funds

Tuesday, October 29th, 2013

At least 18 Jewish non-profit groups and non-profit groups that support Israeli institutions have notified tax authorities of likely illegal “diversions” of funds in the past five years.

The Washington Post on Sunday published its review of more than 1,000 non-profit organizations that have reported such anomalies since 2008, when the Internal Revenue Service began requiring the reporting of “diversions” of over $250,000 or 5 percent of a group’s gross receipts and assets.

Most such reporting is related to fraud, although a small number have to do with “financial restructurings, mergers and other types of financial losses” that are not illegal.

A JTA review of a handful of states with large Jewish populations turned up 18 Jewish non-profits and non-profits that support Israeli institutions recording diversions. The most widely-known losses were the widely-known fraudulent claims in the Conference on Jewish Material Claims Against Germany and the $95 million Yeshiva University’s loss from scams associated with Ponzi schemer Bernard Madoff,

Other cases include the  American Friends of the Tel Aviv Museum of Art reported, which reported in 2009 that “certain works of art were stolen or destroyed by fire”; The Jewish Community Center of Dutchess County, N.Y., which reported in 2010 that its bookkeeper had embezzled funds; and the Advancing Women Professionals and The Jewish Community Inc., which reported that an independent contractor in 2010 and 2011 had diverted $62,000 in funds.

FBI Arrested Peter Madoff

Saturday, June 30th, 2012

Peter Madoff, the younger brother of jailed Ponzi scheme operator Bernard Madoff, has been taken into custody by the FBI.

Peter Madoff, 66, surrendered himself Friday morning at his lawyer’s office in midtown Manhattan ahead of an expected guilty plea to criminal charges related to the Ponzi scheme, according to the Wall Street Journal.

He is the eighth person to plead guilty to criminal charges in the government’s investigation into the collapse of Bernard L. Madoff Investment Securities since December 2008. Numerous Jewish foundations and individuals had invested with the firm. Among the victims were Hadassah, the American Jewish Congress and Nobel laureate Elie Wiesel.

The former chief compliance officer is expected to plead guilty to falsifying the records of an investment adviser, and conspiracy to commit securities fraud, make false filings and commit other crimes. He has agreed to serve 10-year-prison term and forfeit all of his assets, the Wall Street Journal reported.

Bernard Madoff is serving a 150-year sentence in a North Carolina federal prison for crimes associated with the Ponzi scheme.

Earlier this week former Madoff money manager J. Ezra Merkin agreed to turn over $405 million to duped investors in the scheme. That was the first settlement resulting from a government action against Merkin.

The Media’s Madoff Moment

Wednesday, November 10th, 2010

On the evening of December 11, 1995, businessman Aaron Feuerstein was with family and friends at a restaurant in Boston. It was his seventieth birthday, and a group of well-wishers had gathered to throw him a surprise party.

In the midst of the festivities, someone walked in with horrifying news. “It’s the factory. A boiler exploded. People are hurt, and the buildings are on fire.”

No one had to ask, “What factory?” Everyone understood the man was referring to Malden Mills, the textile plant Aaron Feuerstein’s grandfather had built in 1906 and that Aaron himself had managed for almost thirty years.

Within the hour, Feuerstein and his friends were part of a large crowd of onlookers, watching firefighters battle the blaze. It had grown into a six-alarm conflagration, drawing 200 firefighters.

The 1995 fire at Malden Mills wasn’t just bad news for Feuerstein’s company – it was a potentially devastating blow to an already depressed post-industrial community.

Malden Mills employed 2,400 people, many of them recent immigrants from countries ranging from Italy, Portugal, and Israel to the Dominican Republic. Thousands of people relied on the textile business for their survival. Now, many of them had rushed to the scene and were watching their dreams of the future literally going up in smoke.

When the flames finally subsided, three of the four factory buildings had been destroyed. Thirty-three employees had been injured, though thankfully none had died. The damage was estimated at some $500 million. Families throughout northeastern Massachusetts were in despair, wondering where their next paycheck was coming from.

Many people in Aaron Feuerstein’s position would have broken down under the shock. But Feuerstein refused to shed a tear. He bolstered his spirits by recalling a favorite passage from Shakespeare’s King Lear, in which the distraught monarch vows not to weep although his heart should “break into a hundred thousand flaws.”Feuerstein was marshalling his strength for the biggest challenge of his business career – figuring out a way to save Malden Mills and the families who depended upon it.

His response to the fire began two days later, when paychecks were due to his workers. No one would have been shocked if the checks had been late. But Feuerstein ordered not only that every check be delivered in full and on time, but that a planned Christmas bonus of $275 be included in each envelope. (He also added a note for each worker: “Do not despair. God bless each of you.”)

Then, on the evening of December 14, Feuerstein rose to address over a thousand Malden Mills employees who had gathered in the gym of Central Catholic High School to learn what their future would be.

“I will get right to my announcement,” he said. “For the next 30 days – and it might be more – all our employees will be paid their full salaries. But over and above the money, the most important thing Malden Mills can do for our workers is to get you back to work. By January 2, we will restart operations, and within ninety days we will be fully operational.”

The news stunned the crowd. After a moment of shocked silence, they broke into cheers.

Later that same night, Feuerstein made the rounds of Lawrence’s leading charitable organizations, delivering donations as he did every holiday season. In all, he disbursed $80,000 in gifts to groups like the Salvation Army and the local soup kitchen.

Feuerstein kept his word to the workers. He ended up paying full wages to his idled employees for up to four months while the plant was rebuilt and new machinery was purchased and installed. The total cost of those salaries was around $25 million. In addition to the $300 million insurance settlement, Malden Mills invested another $100 million in rebuilding the plant, creating a state-of-the-art textile factory that was the first to be built in New England in more than a century.

By February, more than 70 percent of the workers were back at their jobs.

It would be wonderful to close the story of Aaron Feuerstein and his remarkable company right here. Unfortunately, life doesn’t always provide a fairy-tale ending.

The enormous debt Feuerstein assumed in order to finance the rebuilding of the Lawrence factory eventually caught up with the company. After a business slump in 2001, Malden Mills was forced into Chapter 11 bankruptcy. The company went through several reorganizations during the next eight years, eventually emerging under a new name (Polartec, LLC) and a modernized business model. Feuerstein – by now in his late seventies – lost control of the business in 2004 and was forced to step down by the creditors who held majority shares.

In the years since 1995, many people have come to know part of the story of Aaron Feuerstein and Malden Mills. President Bill Clinton honored Feuerstein during his 1996 State of the Union address, and the CBS news magazine “60 Minutes”ran a feature about him in 2003, dubbing him “The Mensch of Malden Mills.”

But not everyone who admires Aaron Feuerstein knows about the source of his powerful personal morality. Feuerstein happens to be an Orthodox Jew, who draws his guidance on all ethical matters from Jewish tradition, religious teachings, and ultimately the Hebrew scriptures. And this aspect of Feuerstein’s story – so central to his life, yet largely neglected in the mainstream accounts – is the one I want to emphasize here.

In applying biblical teachings to practical business questions, Feuerstein is following a family tradition. In a speech on “The People and the Community” at MIT, he recalled his grandfather’s practice of distributing paychecks to the workers at Malden Mills before sunset, citing the book of Deuteronomy (24:14-15) as justification: “Do not take advantage of a hired man who is poor and needy, whether he is a brother Israelite or an alien living in one of your towns. Pay him his wages each day before sunset, because he is poor and is counting on it. Otherwise he may cry to the Lord against you, and you will be guilty of sin.”

And by “alien,” Feuerstein emphasized, “they meant all people, all faiths, all races.”

Because he viewed the workers at his textile plant as his equals in the eyes of God, Feuerstein had no other option than to do what he could to keep them whole, to prevent them and their families from suffering privation as a result of the tragic fire.

And because he was deeply rooted in a lifetime of Jewish practice, worship, study, and prayer, the notion of doing what was easy and self-serving – simply pocketing the insurance payments – never even occurred to him. As Feuerstein remarked when a reporter asked about the money, “And what would I do with it? Eat more? Buy another suit? Retire and die? No, that did not go into my mind.”

* * * * *

 

Feuerstein’s dark counterpart in the business arena may be another man who has garnered far more publicity and attention for his very different behavior – the fraudulent investment manager Bernard Madoff.

The outlines of the Madoff saga are well known – in fact, judging by the volume of coverage his case received, probably far more widely known than the heroic story of Aaron Feuerstein. And this disparity itself is one reason why I find the contrasting stories of Feuerstein and Madoff so revealing.

Beginning as a penny-stock trader, Madoff gradually developed a wide-ranging network of clients for whom he bought and sold stocks as well as providing investment advice. His company also developed innovative computer technology to disseminate stock prices, which helped lead to the creation of the automated stock-trading system known as NASDAQ. In time, Madoff become a prominent leader among NASDAQ dealers, even serving as the organization’s non-executive chairman.

For more than forty years, Madoff cultivated a reputation as an outstanding citizen and an astute businessman. So exceptional were the financial returns reported on Madoff’s accounts that the number of individuals and institutions vying to become his clients grew steadily. Well-known organizations, including universities and nonprofits, gave Madoff Securities portions of their endowments to manage; in prominent social circles, Madoff clients bragged about their financial success and considered themselves lucky to be among the favored circle of people who benefited from Madoff’s talents.

All in all, it was the image of a charmed life – a dedicated family man, an industry leader, a consummate professional – until the whole thing was exposed as a horrendous fraud.

Using the techniques of the classic Ponzi scheme, his company had been distributing funds from new investors to older clients, identifying them as “profits” on investment accounts. But as we now know, the profits weren’t real because in most accounts there were no investments at all. The money had been used to pay fake dividends to other victims and also to support Bernard Madoff’s lavish lifestyle – including his homes in Manhattan, Montauk, Palm Beach, and southern France – while Madoff shuffled cash around and doctored financial reports in an increasingly desperate effort to hide what was happening.

By the first week of December, with the stock market reeling from the global financial meltdown, Madoff’s Ponzi scheme was collapsing. He confessed to his sons not only that he didn’t have the money to cover some $7 billion in redemptions requested by anxious clients, but also that the entire business had been run in a fraudulent manner for years. It was “just one big lie,” he told them.

Madoff’s sons reported the confession to federal authorities, and by December 11, Madoff was under arrest. Almost $65 billion supposedly held in client accounts, including both actual investment funds and fabricated gains, had disappeared.

By June 29, 2009, when Madoff was sentenced to the maximum possible term of 150 years in prison on multiple counts of fraud and perjury, he had become one of the world’s most famous – and most hated – individuals.

At a time when millions of ordinary investors were watching their savings dwindle under the impact of the financial meltdown of 2008-2009, it was probably inevitable that the spectacular tale of Bernie Madoff, replete with celebrity victims and page-six lifestyles, should capture the world’s attention as the embodiment of all that’s worst in the world of high finance.

Far more disturbing, however, is another aspect of the Madoff saga. I’m referring to the way in which Bernard Madoff has, for many people, come to symbolize not just the dangers of greed and dishonesty, but something much more specific, questionable, and troubling – namely, the supposed role of the Jew in the world of money.

There’s no evidence that Madoff read the Torah nightly or devoted himself to ethical study as Aaron Feuerstein did. In that sense (and leaving aside the evidence of their respective business behaviors), we might assume that Feuerstein is more personally devoted to Jewish tradition and teachings than Madoff. But there’s no denying that, in ethnic, social, and cultural terms, Bernard Madoff is Jewish – just like Aaron Feuerstein.

And unfortunately, Madoff’s “Jewishness” became, for some people, the central story of the Madoff scandal.

At the Anti-Defamation League, one of our jobs is to monitor signs of evolving attitudes among religious, ethnic, and racial groups. In the wake of the Bernard Madoff scandal, we knew we would see an outpouring of rage against this man whose criminal behavior had harmed so many innocent victims – and indeed we did. But we wondered how much of that rage would focus on Madoff’s ethnic and religious heritage.

The intolerant ones did not pass up this opportunity.

During the months between Madoff’s arrest and his sentencing, hundreds of news sites, blogs, and financial message boards that ran stories about the Madoff scandal were inundated with responses that focused not on the villainy of one man but on the supposed propensity of all Jews to commit fraud in pursuit of profit.

Was Bernie Madoff Jewish? Undoubtedly. But was his faith the single most salient fact about him? Judging by the news coverage of his story, you might think so.

A profile of the scamster in the New York Postplayed the “Jewish angle” for all it was worth; similarly, a profile of Madoff published in The New York Timesjust two days after his arrest managed to use the word “Jewish” three times in its first nine paragraphs.

* * * * *

 

These two stories are not directly related. But a comparison of the ways these stories have been covered in the mainstream media reveals something important – and disturbing – about our society and its attitudes.

In the case of Aaron Feuerstein, one of the most unusual and admirable business figures of our time, his religious heritage was treated, in most media coverage, as an interesting but distinctly secondary theme – despite the fact that being a devout Jew profoundly shaped the very ethical behavior that made Feuerstein newsworthy in the first place.

By contrast, in the case of Bernard Madoff, story after story emphasized his Jewish background – despite the fact that it was basically irrelevant to the history of fraud and deception that placed Madoff in the spotlight.

Why this difference? I don’t believe most of the writers and editors who covered these two stories had any religious or ethnic animus toward Jews. But I do think it’s easy for all of us – including media professionals who should be especially sensitive to this danger – to fall back on familiar images, themes, and stereotypes.

It’s a form of lazy thinking that is difficult to avoid, especially when society is so deeply permeated by a particular pattern of ideas that many people aren’t even fully aware of its ubiquity. And the pattern of stereotypes that the Madoff story activated in the minds of many people is a particularly deep-seated and pernicious one – the age-old pattern of false and slanderous beliefs about Jews and money.

With the United States and the world still struggling to overcome the impact of what many have called the Great Recession of 2008-2009, this is an especially dangerous time for these bigoted beliefs to reemerge.

Abraham Foxman is national director of the Anti-Defamation League. This essay was adapted from his new book (released earlier this week), “Jews and Money.” 

Madoff Scandal Rocks Jewish Philanthropic World

Wednesday, December 17th, 2008

  The securities fraud of Bernard Madoff has rocked the Jewish nonprofit world – and the worst may be yet to come.

  Madoff, the founder of Bernard L. Madoff Investment Securities LLC, was arrested Dec. 11 after admitting to his board that a hedge fund he ran was essentially a $50 billion Ponzi scheme.

  At least two foundations have been forced to close because they had invested their funds with Madoff.

  The Robert I. Lappin Foundation in Salem, Mass., announced Dec. 12 that it would shut down after losing $8 million – all of its money. (See story, page 12.) And the Chais Family Foundation, which gives out some $12.5 million each year to Jewish causes in Israel, the former Soviet Union and Eastern Europe, announced its closing Dec. 14.

  At least one nonprofit is calling out for help in the wake of Madoff’s collapse. The Gift of Life Foundation, a Jewish bone marrow registry that relied heavily on Madoff as a benefactor, announced on its website Sunday that it would immediately need to raise $1.8 million to make up for recent losses.

  Sources close to Yeshiva University, where Madoff served as treasurer of the board of trustees and board chairman of the university’s Sy Syms School of Business until he resigned last week, said the school has lost at least $100 million. University officials declined to offer any specifics.

  Just as the reverberations of the subprime mortgage collapse are still seen as contributing to the nation’s wider economic meltdown, philanthropic insiders say the fallout from Madoff’s scheme could be even greater. The insiders note that Madoff and others heavily invested in his fraudulent fund were major supporters of a plethora of nonprofit organizations, served on their boards or advised those organizations on how to invest their money – in some cases placing large sums of the groups’ capital in Madoff’s hands.

  Reflecting this sense that the full extent of the damage is still unclear, the executive vice president and CEO of the UJA-Federation of New York said that even though its endowments were not exposed, the organization still could be hurt if donors lost money in the scheme.

  “We do not yet know the full extent of the losses that supporters of UJA-Federation and other Jewish institutions have had,” John Ruskay said. “But we have already heard that many major institutions had substantial funds invested, as did foundations. Already in the context of a very challenging economic environment this will present another significant difficulty. We don’t know yet the extent of the wreckage.”

  Reports are trickling out in the national media about prominent businessmen from across the country who lost money in Madoff’s scheme.

  New York Mets owner Fred Wilpon, GMAC Financial Services chairman J. Ezra Merkin and former Philadelphia Eagles owner Norman Braman all were reported to have taken significant hits due to their dealings with Madoff, who reportedly would not accept any investment in his fund below $10 million.

  Reports have surfaced also that media magnate Mortimer Zuckerman was significantly hurt by investing with Madoff.

  In Los Angeles, the Jewish Community Foundation’s $238 million Common Investment Pool lost $18 million it had invested with Madoff, according to a letter sent out by the foundation.

  Among other Jewish institutions and foundations believed to be hit by the Madoff scandal: the American Jewish Congress, the Technion-Israel Institute of Technology, Steven Spielberg’s Wunderkinder Foundation, Elie Wiesel’s Foundation for Humanity and Carl Shapiro’s charitable foundation.

  But Merkin, who last week told investors in his hedge fund, Ascot Partners, that all of their money had been defrauded by Madoff, is of particular interest to the Jewish community. He has philanthropic ties to a number of Jewish organizations and institutions, serving as a volunteer investment adviser for many of them, including Yeshiva University. Among other causes with which he is said to be connected are the SAR Academy, a Jewish day school in the Bronx, as well as State of Israel Bonds, The Jewish Campus Life Fund, Elaine Kaufman Cultural Center, the Ramaz School, Congregation Kehilath Jeshurun and the Fifth Avenue Synagogue.

  Sources say that several of these entities had money in Ascot, which they now stand to lose because of Merkin’s decision to invest so heavily in Madoff’s fund. According to Orthodox communal insiders, Ramaz and SAR lost millions between them.

  An official at one major Jewish foundation told JTA that it had been advised to invest with Madoff, but decided against it after concluding that his return-on-investment forecasts seemed too good to be true.

  Certainly the extent of the damage to the philanthropic world could become clearer as details emerge in coming days and weeks of just who was invested with Madoff.

  With each day since news of the fraud broke, new organizations and funders have emerged as victims. Yad Sarah in Israel, the Maimonides School in Boston, the Charles I. and Mary Kaplan Foundation in Rockville, Maryland, and the Julian J. Levitt Foundation are among those who have announced losses.

  One philanthropic official said there is a lesson to be learned here for the philanthropy world, where Jewish businessmen and philanthropists directed their own private funds and the funds of institutions that they help oversee toward Madoff.

  “What really emerges out of this,” said Jeffrey Solomon, the president of the Andrea and Charles Bronfman Philanthropies, is that “people sometimes forget to conduct the due diligence when dealing with others with social prominence – and especially in the hedge-fund area where people think you have to be really smart to be in hedge funds. In many ways for all investments something like this is tragic, but for nonprofits where boards have the fiduciary responsibility of acting with great prudence, it is even more tragic.”

  According to a fund-raiser who has been scouring recent 990 tax filings to see how this might affect his nonprofit, several other major philanthropists have put money in Madoff’s hands: As of the end of 2007, Sandy Gottesman had $20 million of his foundation’s $144 million invested with Madoff and Robert Beren had two foundations with more than that in endowments invested with Ascot. U.S. Sen. Frank Lautenberg (D-N.J.) says his foundation has about $15 million invested with Madoff.

  Yeshiva University issued a statement via e-mail to JTA on Sunday.

  “We are shocked at this revelation,” the university said. “Bernard Madoff has tendered his resignation from all positions affiliated with the university and involvement with the university. Our lawyers and accountants are investigating all aspects of his relationship to Yeshiva University. We reserve our comments until we complete our investigation.”

(JTA)

Printed from: http://www.jewishpress.com/news/global//2008/12/17/

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