Jewish Charities Shut Down Following Madoff 'Ponzi Scheme' Wipeout
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.
Internet Hate describes the rapidly expanding practice utilized by racists and extremists to place anti-Semitic, racist, and other hateful material on the World Wide Web. The growth of the Internet has enabled bigoted and sometimes violent messages to reach a much wider and broader audience than ever before. Consequently, these messages of hate have become widely accessible online - in homes, offices, schools, and libraries.
For years extremists have used printing of every kind -- books, pamphlets, posters, newspapers, magazines -- to get their message out. They have also tried to use modern inventions such as movies. radio, television, recorded audio and video tape and even telephone messages to spread their beliefs. So it is not surprising that they have decided to take their hate to the Internet. The Internet lets them reach millions with a click of a mouse.
Haters use the World Wide Web with its colorful web pages, sounds, and images to push propaganda attacking their enemies. Some of these pages suggest that violent action is needed. Old lies are reprinted and new ones are created. Neo-Nazi Skinheads try to sell the latest CDs filled with calls for "racial holy war."
It is fairly easy to create a simple Web page. Many bigots have. They often try to create the false impression that many people are involved in their activities. This frightens their targets and encourages supporters.
The number of racists and anti-Semites is small compared to the rest of the population; in addition, they are fairly spread out. Yet, on the Internet, they can find people who think like them, which strengthens their beliefs and makes them feel less isolate.
Because extremists on the Internet can hide their real identity behind screen names and addresses (like anyone else), they feel free to attack those they hate. They realize there is no way for anyone to know who they are.
This blog was created to shine a light on who these haters are, where they hang out on the web, and the methods they employ to try and intimidate their victims.