The Madoff Scheme

I am stunned this morning to learn of the sweeping fraud that investor Bernard Madoff undertook. The Boston Globe does an excellent job of showing the damage Madoff caused here locally. Local institutions, such as the Beth Israel Deaconess Hospital, the Brigham and Women’s Hospital and the Museum of Fine Arts, could all potentially be hurt by Madoff’s deception.

It seems that Madoff, a member, until recently, of Yeshiva University’s Board of Trustees, leveraged his connections in the organized Jewish world to target Jewish institutions and family foundations. His victims include Carl and Ruth Shapiro, Avram and Carol Goldberg, the family who ran Stop & Shop, and the Robert I. Lappin Charitable Foundation, which, according to the Globe, “financed trips for Jewish youth to Israel” and subsequently had to close after losing its entire endowment.

The New York Post captures the scene in the lobby of the so-called “Lipstick Building” where Madoff had his office.  It describes panicked investors storming the building demanding to learn about their investments. The paper quoted one anonymous lawyer on Madoff’s scheme: “The guy was totally respected. He was a heymishe Jewish guy…This guy was dealing with all the rich Jews in Roslyn and the rich Jews in Palm Beach. This was passed down from family member to family member.”

The paper also catches up with a pair of unlikely victims, New Jersey Senator Frank Lautenberg and the Dean of the Massachusetts School of Law, Lawrence Velvel. When last encountered Velvel, he was hosting a conference at his school in Andover to determine whether President Bush could be prosecuted for war crimes. He sounds like he’s got his ire up about somebody else now. “This is a major disaster for a lot of people…You work all your life, you finally manage to save up something, and somebody who’s entrusted with it, it turns out suddenly he’s a crook.” You’ve got to feel for Velvel.

This story has a lot of resonance for me. Back when I worked at the Forward, I was the first reporter to be given the beat of the Jewish philanthropic world. I wrote the first special section on Jewish family foundations and a profile of Yeshiva University. (Here’s the Forward’s report — and the Wall Street Journal’s.) During my time as a lawyer, I worked two buildings down from the “Lipstick Building” on Third Avenue. Throughout all that work, during which I lived in a tiny rent-controlled apartment on the Upper East Side, I observed the rich and the powerful. How immune they seemed from the daily struggles I faced as an energetic but relatively-impoverished Manhattanite on the make. Rather than taking any schadenfreude in the fact that these people can be hurt too, my entire reaction is disgust and revulsion at the pain one man can cause.

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5 Responses to “The Madoff Scheme”

  1. Security Says:

    Is Wall St. Just One Big Ponzi Scheme ?

    With a $50 Billion Fraud,
    it could be one of the largest fraud schemes in Wall Street history.

    So Where is the Money?

    Madoff told his employees. “It’s all just one big lie”

    But didn’t anyone, including the SEC,
    wonder why this fund wasn’t audited by a known firm?

    That’s why I recommend to verify the people before doing any business.
    You can use any free services to prevent scams
    just looking in his public records.

    You can prevent some frauds just using:

    to make some background check to anybody before any serious deal.
    Get free information and don’t lose your money without research first.

    Hope that this helps someone!


  2. Good Says:

    I lived in Roslyn and as far as I’m concerned this is Karma and these pieces of crap got just what they deserved!

  3. “All the rational people” | Says:

    […] recommend Seth Gitell’s entry on the Madoff-scandal. The best bits are in second half of it so be sure to read the whole […]

  4. Tony trump Says:

    . Drop deád bérnie and take your mishpuchah with you.

  5. Mark Sanders Says:

    Follow the money with your friend the Dean. Did he have the school’s endwoment wrapped up with Madoff?

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