The American Jewish Congress, a national advocacy group that has argued for church-state separation on prayer in public schools, has laid off most employees and suspended operations.
The 92-year-old organization lost $21 million of its $24 million endowment to Bernard Madoff’s Ponzi scheme, which devastated a range of Jewish groups, including Yeshiva University. As with other nonprofits, the economic downturn has also hobbled fundraising efforts, officials said.
The new exhibits consist of 6,157 pages of interviews, letters, e-mail messages, telephone records and other background material gathered during Mr. [David] Kotz’s 10-month investigation of how the commission handled, and mishandled, numerous tips and warnings it received about Mr. Madoff over the years. His full report,released last month, found the agency had received six substantive complaints since 1992 ”” and botched the investigation of every one of them. He found no evidence of any bribery, collusion or deliberate sabotage of those investigations.
In fact, Mr. Madoff said in the jailhouse interview that, on two occasions, he was certain it was only a matter of days or even hours before he would be caught. The first time, in 2004, he assumed the investigators would check his clearinghouse account. He said he was “astonished” that they did not, and theorized that they might have decided against doing so because of his stature in the industry.
In Dante’s frightful underworld, sinners face a descending funnel of worsening torments keyed to their sins. The lustful are blown about in a whirlwind; the violent boil in a river of blood. But betrayers, alone at the bottom, are savaged by the one called emperor of the realm of grief, in person.
“You’re buried in ice, because you’ve buried yourself in ice,” Mr. Pinsky, the nation’s poet laureate from 1997 to 2000 and a Dante scholar, said in an interview on Thursday.
Poetic justice, indeed.
It is fitting, Mr. Pinsky says. Betrayal destroys the trust that binds humanity, and with it, the betrayer himself. Dante was consumed by the sadness and mystery of sin ”” and what it did to the sinner:
How is it that we choose to sin and wither?
Like waves above Charybdis, each crashing apart
Against the one it rushes to meet …
“It’s not a poem about ”˜you did this, you get this,’ ” Mr. Pinsky says. “It’s about the mystery of how you hurt yourself. It’s like the Talmud says: the evils others do to me are as nothing compared to the evils I do to myself.”
Even with Bernard L. Madoff heading to prison Thursday after confessing to an epic Ponzi scheme, the intrigue over his case deepened as embittered victims pressed the government to find out who may have helped him and where the money went.
At a 75-minute court hearing, he pleaded guilty to 11 securities-related fraud counts and said he was “so deeply sorry and ashamed.”
“I realized that my arrest and this day would inevitably come,” Madoff told a packed courtroom in his first public comments since his scheme was revealed in December. “I am painfully aware that I have hurt many, many people.”
That was little consolation to the more than two dozen investors who squeezed into federal court for a glimpse of the man who bilked many out of their life savings while assuring his clients only last fall that their investments were worth $65 billion.
Bernard Madoff, the disgraced financier accused of the biggest fraud in corporate history, was accused of having ”˜blood on his hands’ after a former soldier killed himself over the loss of his family’s life savings.
The son of William Foxton, 65, said his father was so distraught after losing his family’s entire savings in the alleged Ponzi scheme that he shot himself in a park in Southampton on Tuesday with a handgun.
Mr Madoff, 70, is under penthouse arrest and 24-hour surveillance after being arrested on December 11. He was accused of one count of securities fraud after authorities said he admitted to running a scheme over many years with losses of $50 billion.
Until the markets collapsed, the now-disgraced fund manager Bernard L. Madoff also did what his clients expected him to do, producing mysteriously high returns on their investments. Neither his investors nor the Securities and Exchange Commission seemed to care very much how he did it. In this sense, Madoff is to Wall Street as Governor Rod Blagojevich (apparently) is to Illinois machine politics: an egregious emblem rather than a mere anomaly. Just as it is hard to imagine how a politician so mediocre and unscrupulous could have flourished in a healthy political environment, it seems unlikely that Madoff’s scam could have gone undetected for so long in a healthy-and properly regulated-financial industry. (Of course, most investment managers did not commit fraud, and some of them were no doubt as surprised as their clients by the market’s precipitous decline; there has been incompetence to rival the corruption.)
The credit crisis was caused partly by a lack of due caution, both on Wall Street and in Washington. Paradoxically, it is now excessive caution that may keep us from adequately addressing it. The problem is too big to be solved by minor adjustments or executive temporizing. The Obama administration will need to undertake several large-scale reforms, which are bound to be unpopular with the banking industry and devotees of laissez-faire economics. Credit-rating agencies, for example, must no longer be allowed to work for the companies whose bonds they rate. Credit-default swaps, which were originally designed as a kind of insurance but later turned into an instrument for high-stakes gambling, need to be regulated. Investment firms and banks with financial divisions should be required to hold more capital, so that when things go bad they can cover their own losses instead of cadging a government bailout.
Above all, Congress and the new administration should steer Wall Street back toward its principal function, which is to direct capital to the productive part of the economy, not to peddle complex derivatives or place high-risk bets with other people’s money.
Bernard Madoff will remain free on a $10 million bond, a federal judge ruled, denying a request by U.S. prosecutors that he be jailed while awaiting trial on a federal securities fraud charge.
U.S. Magistrate Judge Ronald Ellis in Manhattan today said Madoff, arrested last month for running an alleged $50 billion Ponzi scheme, may continue to live under house arrest in his Manhattan apartment on the Upper East Side. Ellis imposed new conditions, ordering Madoff to compile an inventory of all items in his home and barring him from transferring property.
“Because the government has failed to meet its legal burden, the motion is denied,” Ellis wrote in the order. “The government has failed to articulate any flaw in the current conditions of release.”
Federal prosecutors in Manhattan today asked a court to place alleged $50 billion Ponzi scheme operator Bernard Madoff in jail while they continue developing their case against him. Meanwhile, in Washington a Congressional panel was asking what the SEC could have done to prevent the scandal.
A federal judge, perhaps predictably, questioned the validity of the government’s request to put Madoff in custody considering that Madoff’s current bail terms — home confinement in his posh Manhattan penthouse — had earlier been agreed upon by the government.
A federal prosecutor argued that cufflinks, watches, and other personal property purportedly worth $1 million had been shipped by Madoff and his wife to relatives and friends during the holiday season, and that this constituted a violation of the terms of bail because the “dissipation of assets” could potentially harm investors seeking to recoup any of their losses from investing with Madoff.
Americans enter the New Year in a strange new role: financial lunatics. We’ve been viewed by the wider world with mistrust and suspicion on other matters, but on the subject of money even our harshest critics had been inclined to believe that we knew what we were doing. They watched our investment bankers and emulated them: For a long time now half the planet’s college graduates seemed to want nothing more out of life than a job on Wall Street.
This is one reason the collapse of our financial system has inspired not merely a national but a global crisis of confidence.
Good God, the world seems to be saying, if they don’t know what they are doing with money, who does?” Incredibly, intelligent people the world over remain willing to lend us money and even listen to our advice; they appear not to have realized the full extent of our madness. We have at least a brief chance to cure ourselves. But first we need to ask: of what?
It is the Bernard Madoff Debacle which brings this to mind at present, but the broader topic is worth pondering also–KSH.
Affinity fraud refers to investment scams that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups. The fraudsters who promote affinity scams frequently are – or pretend to be – members of the group. They often enlist respected community or religious leaders from within the group to spread the word about the scheme, by convincing those people that a fraudulent investment is legitimate and worthwhile. Many times, those leaders become unwitting victims of the fraudster’s ruse.
These scams exploit the trust and friendship that exist in groups of people who have something in common. Because of the tight-knit structure of many groups, it can be difficult for regulators or law enforcement officials to detect an affinity scam. Victims often fail to notify authorities or pursue their legal remedies, and instead try to work things out within the group. This is particularly true where the fraudsters have used respected community or religious leaders to convince others to join the investment.
Read it all and take special note of the examples listed.
Update: There is a good NPR segment on this subject there.
Another update: Ronald Cass’ WSJ article mentioned in the NPR interview is here.
Back then, instead of relying on a few megadonors, the Jewish community relied on donors like my dad. He favored charities in Jerusalem, and regularly would dispense two-figure checks of $10 or $20 to his pet causes — orphanages, trade schools, even a bride’s fund designed to help orphaned girls obtain wedding dresses and veils for their big day.
It would be lovely to see the return of little checks — the donations everyone could afford to give and often did. Neither they nor the pushkes require the fund-raising galas and the elaborate administrative structures that have become the norm across the Jewish charitable world.
Some Jewish leaders may blanch at my words. Prof. Wertheimer notes that “Jewish organizational life has become much more expensive — nickels, dimes and pushkes aren’t going to do it.” Though Mr. Kane at the UJA and others now hint at new strategies to broaden the donor base, some Jewish leaders are ready to return to business as usual, sending the message that we must get in some big checks to replace the money that was lost. But this scandal makes me wish we could remember the values of our shtetl and think small again.
One by one, the students in Rabbi Norman Linzer’s class last week wrestled with the headlines and their emotions. Some said Mr. Madoff’s religious affiliation was irrelevant; others worried that his Judaism might tarnish their own, that outside eyes would not be able to see past his faith.
Since Mr. Madoff was charged by federal prosecutors with orchestrating a $50 billion fraud, each day has brought new pain to the nation’s best-known Jewish institution of higher education ”” word that another familiar charity tied to Jewish causes had been thrust into financial uncertainty, another university family’s savings depleted.
Yeshiva, a campus of about 7,000 students in Upper Manhattan, is grappling with a sense of personal betrayal that extends beyond the $110 million it says it lost in investments with Mr. Madoff, who had been on the board of trustees since 1996. There is resentment; fear of the revival of ugly, old stereotypes; and, after the fall of a favorite son, uncertainty about how Jewish institutions like theirs should choose role models.
At a school that aims to inculcate ethics and interpersonal morals in its students along with academics ”” to train future doctors, lawyers, educators and financiers to not just be good at their jobs but to perform them in accordance with traditional Jewish ideals ”” the story of Mr. Madoff has turned into the consummate teaching moment.
There is a teaching in the Talmud that says an individual who comes before God after death will be asked a series of questions, the first one of which is, “Were you honest in your business dealings?” But it is the Ten Commandments that have weighed most heavily on the mind of Rabbi David Wolpe of Sinai Temple in Los Angeles in light of the sins for which Bernard L. Madoff stands accused.
“You shouldn’t steal,” Rabbi Wolpe said. “And this is theft on a global scale.”
The full scope of the misdeeds to which Mr. Madoff has confessed in swindling individuals and charitable groups has yet to be calculated, and he is far from being convicted. But Jews all over the country are already sending up something of a communal cry over a cost they say goes beyond the financial to the theological and the personal.
This is a really big deal. I was chatting online with a Jewish friend in New York today and he said “It’s shaken the community like nothing I’ve ever seen” with the possible exception of 9/11. Read it all.
From here (La Tribune, in french):
Rene-Thierry Magon de la Villehuchet, the co-founder of hedge fund Access International Advisors, was discovered to be dead by his own hand early Tuesday in his office in Manhattan after losing as much as $1.4 billion in the alleged fraud of Bernard L. Madoff.
Like some of Bernard Madoff’s clients, a Florida restaurant owner was lucky enough to withdraw part of his investment before the money manager allegedly confessed to a $50 billion Ponzi scheme. Now he’s worried he might be asked to give it back.
53-year-old investor, who asked not to be identified to protect his stake, took out about $600,000 this year from his $1.5 million account, using some of it to pay down a mortgage. He and other Madoff clients who withdrew funds as long as six years ago may be sued on behalf of other victims to return profits and even principal, securities and bankruptcy lawyers say.
“Right now there are Madoff winners and Madoff losers,” said Lynn LoPucki, who teaches bankruptcy law at Harvard University. “Before this is over there will be nothing but Madoff losers.”
The case is still viewed more with mystery than clarity, and Mr. Madoff’s version of events can only be drawn from statements attributed to him by federal prosecutors and regulators as he has not commented publicly on the case.
But whatever else Mr. Madoff’s game was, it was certainly this: The first worldwide Ponzi scheme ”” a fraud that lasted longer, reached wider and cut deeper than any similar scheme in history, entirely eclipsing the puny regional ambitions of Charles Ponzi, the Boston swindler who gave his name to the scheme nearly a century ago.
“Absolutely ”” there has been nothing like this, nothing that we could call truly global,” said Mitchell Zuckoff, the author of “Ponzi’s Scheme: The True Story of a Financial Legend” and a professor at Boston University. These classic schemes typically prey on local trust, he added. “So this says what we increasingly know to be true about the world: The barriers have come down; money knows no borders, no limits.”