Monday, December 15, 2008
Jewish philanthropies wiped out by the Bernard Madoff "Ponzi scheme" are closing their doors, the latest victims of an alleged $50 billion investment scam whose fallout continues to shock investors.
The Chais Family Foundation, a California-based charity that distributed about $12.5 million annually, was forced to shut down after investing — and losing — all of its money with the one-time wizard of Wall Street.
"I can confirm that the Chais foundation has closed," its president, Avraham Infeld, told the Jewish Telegraphic Agency. "All of its funds were exposed with Mr. Madoff. We have made a decision regrettably and with much pain to close down the foundation."
The Chais Foundation, which fired its five staffers Sunday, became the second Jewish charity to go under since news broke of Madoff's arrest for alleged securities fraud. Madoff, the former chairman of Nasdaq, told the FBI Thursday that his investment plans were "all just one big lie" and "basically a giant Ponzi scheme."
The Boston-based Robert I. Lappin Charitable Foundation, which paid to send Jewish youths to Israel, fired its four staff members Friday and revealed that the money for its operations had also been invested with Madoff.
"It is with a heavy heart that I make this announcement," said Robert I. Lappin, the foundation's trustee. "The Foundation's programs have touched thousands of lives over many years in our efforts to help keep our children Jewish."
Many charities have been devastated by Madoff's unparalleled investment failure, which paid off false returns to investors and went unnoticed by many observers for more than a decade. Billionaire Mort Zuckerman, CEO of Boston Properties and owner of the New York Daily News, told FOX News that his charitable trust lost $30 million because of Madoff's mishandling.
"This money was provided to the charitable trust by me to be given out to charity, not to be wasted by some irresponsible fund manager" who handed over all of the investments to be managed by Madoff, Zuckerman said. "To put it all in the hands of one man, this man Madoff ... I find that astounding."
"There were a lot of very sophisticated people who were duped, and that happens a great deal when you've had somebody decide to be unscrupulous," said Harvey Pitt, a former chairman of the Securities and Exchange Commission, a regulatory agency in charge of monitoring investment funds like Madoff's.
The Wall Street Journal reported that Stephen Spielberg's charity, the Wunderkinder Foundation, had invested heavily with Madoff. The Elie Wiesel Foundation for Humanity, founded by the famed Holocaust survivor and writer, was also hard hit by losses, the paper said, according to two people familiar with the organization's investments.
The extent of the potential damage prompted a leading fund manager in London to lash out at U.S. regulators for failing to detect the fraud earlier.
"I think now it is very difficult for people to invest in things that are meant to be regulated in America, because they have fallen down in the job," Nicola Horlick, the manager of Bramdean Alternatives, which has 9 percent of its funds invested in Madoff's scheme, told the British Broadcasting Corp.
"All through the credit crunch this has been apparent," Horlick added. "This is the biggest financial scandal, probably, in the history of the markets."
New Jersey Sen. Frank Lautenberg, one of the wealthiest members of the Senate, entrusted his family's charitable foundation to Madoff. Lautenberg's attorney, Michael Griffinger, said they weren't yet sure the extent of the foundation's losses, but that the bulk of its investments had been handled by Madoff.
Lautenberg's foundation handed out more than $765,000 to at least 100 recipients in 2006, according to the most recent listing on Guidestar, which tracks charitable organization filings.
Some overseas institutions were even harder hit, revealing the scope of their losses Monday. Banco Santander, the largest bank in the euro zone by market capitalization, said its clients have $3.07 billion in exposure with Madoff, mostly through a fund called Optimal Strategic US Equity.
HSBC, Britain's largest bank, said a "small number" of its institutional clients had exposure totaling some $1 billion in Madoff funds.
It added that it has custody clients who have invested with Madoff, but it did not believe those "custodial arrangements should be a source of exposure to the group."
Royal Bank of Scotland — Britain's second-largest bank, which is now 58 percent owned by the British government — said it could lose around $600 million through exposure in trading and collateralized lending to funds of hedge funds invested with Bernard L Madoff Investment Securities LLC.
Man Group, the world's largest publicly traded fund manager that reported exposure of around $360 million on Monday, said "it appears that a systematic and comprehensive fraud may have been committed, evading a range of structural controls."
Japan's Nomura Holdings said it has $306 million in exposure, but added that any losses were likely to be limited compared to its capital base.
French banks foresee nearly 1 billion euros in potential losses as indirect victims of the alleged fraud.
The Associated Press contributed to this report.
Thursday, December 11, 2008
ROANOKE, Va. — A white supremacist leader has been indicted on federal changes for making threats to five individuals and attempting to intimidate witnesses in a federal housing discrimination lawsuit, the Justice Department announced Thursday.
William White, the self-proclaimed commander of the neo-Nazi group the American National Socialist Workers Party, was charged with five counts of communicating threats in interstate commerce, one count of communicating an extortionate threat in interstate commerce and one count of witness intimidation.
The 31-year-old was also recently indicted in the Northern District of Illinois for soliciting the murder of a former federal juror.
The new indictment alleges that, from late 2006 through mid 2008, White terrorized individuals with whom he disagreed on either racial or personal issues. He is accused of making late-night telephone calls to the victims' homes, writing victims threatening e-mails and posting victims' contact and personal information on neo-Nazi Web sites, sometimes accompanied by language advocating their murder.
He also allegedly sent letters to the homes of individuals involved in a federal housing discrimination lawsuit which included racial epithets and threatened consequences for their participation in the suit.
If found guilty, White faces a maximum of 55 years in prison as well as a potential fine of up to $250,000 for each charge.