Bernie Madoff Scam, Fires and Fraud Cost Jewish Non-Profits Dearly

Every Big Loss Has Own Tale of Woe

Big Loss: Yeshiva U. and other Jewish groups lost heavily in the Bernard Madoff scam.
getty images
Big Loss: Yeshiva U. and other Jewish groups lost heavily in the Bernard Madoff scam.

By Ron Kampeas

Published October 29, 2013.
  • Print
  • Share Share

(JTA) — Bernard Madoff. An unscrupulous contractor. Art that disappeared or was destroyed by fire – it’s not clear which. Bad, bad bookkeepers. And did we mention Bernard Madoff?

These were among the causes of “material diversion” of assets – tax-speak for lost funds or property totaling $250,000 or 5 percent – reported by Jewish organizations on their tax returns.

Since 2008, the IRS has asked nonprofit organizations to indicate on their tax returns whether they have become aware of such losses in the past year. According to an investigation of 1,000 nonprofits published Sunday in the Washington Post, 21 Jewish organizations answered yes.

The year 2008 happened to be when Madoff’s massive Ponzi scheme came to light. In the two years that followed, at least 13 Jewish organizations that were victims of Madoff answered yes to the question on their tax returns.

Several of the organizations provided explanations of the losses.

Yeshiva University’s 2008 return noted that Madoff was a former university trustee and described how multiple investments wended their way into Madoff’s portfolio, eventually adding up to a $95 million loss. The return also described the steps taken by Y.U. in response.

“The university enhanced its conflict of interest policy,” the university reported. “Under the enhanced conflict of interest policy, members of the university board of trustees may not be engaged in business with the university.”

Other Madoff victims are terser in describing their relationships with the swindler, in some cases not even naming him. The America Israel Cultural Foundation’s explanation of how it lost $14 million to Madoff amounted to this: “The custodian of the investment pool did not invest the funds and stole the remaining moneys under his custody.”

Some were hit indirectly by Madoff. The Jewish Federation of Greater Los Angeles and at least three California family foundations reported millions of dollars in losses through investments made through the Jewish Community Foundation, which reported in its 2008 return an overall loss of more than $23 million to the Ponzi scheme.

One of the filers, the American Jewish Congress, reported $18.2 million in losses to Madoff in its 2008 return. Missing is the poignant follow-up: The American Jewish Congress has largely ceased operations, but it has continued to operate in a mostly nominal fashion under the leadership of philanthropist Jack Rosen.

Madoff does not account for all of the 21 Jewish organizations reporting losses. The Conference on Jewish Material Claims Against Germany in 2009 reported $42.5 million in losses from fraudulent claims orchestrated by former staffers.

“Because the nature of irregularities is outside the scope of the Claims Conference, it is limited in its ability to investigate such matters,” the return says, concluding: “In the opinion of legal counsel, the Claims Conference has acted with appropriate business diligence in the disbursements of these funds.”

Touro College, a Jewish-affiliated school based in New York, disclosed in 2009 that a “former construction manager” had used a “sophisticated kickback scheme to defraud” the school.

Hedy Shulman, a Touro spokeswoman, declined to elaborate or say how much was lost, adding that the matter was subject to further litigation. Shulman noted, however, that the loss was related to the development at Touro’s facility on 125th Street in Manhattan.

The Jewish Community Center of Dutchess County, in Poughkeepsie, N.Y., reported in 2009 that its bookkeeper was “involved in an embezzlement scheme and has stolen company assets.” Officials did not reply to requests for comment.

Other reports are harder to comprehend. American Friends of the Tel Aviv Museum of Art reported in 2009 that “certain works of art were stolen and destroyed by fire in the current year.” The group’s director, Enid Shapiro, was in Paris and unavailable for immediate comment, a staffer said.

Colorado-based Chessed Rifka, which raises money for yeshivas in Israel, answered yes to the diversion question but did not provide any explanation of what monies were lost.

One Jewish group reported a happy ending – kind of. Advancing Women Professionals and the Jewish Community recovered $62,000 and legal fees from an independent contractor in 2011 after having reported its loss in 2010.

Shifra Bronznick, the group’s president, said the settlement with the contractor, who was terminated, kept her from adding information, but she said she was satisfied with the outcome.

“It’s not something you would want to happen,” Bronznick said, “but the restitution is the best possible scenario.”


The Jewish Daily Forward welcomes reader comments in order to promote thoughtful discussion on issues of importance to the Jewish community. In the interest of maintaining a civil forum, The Jewish Daily Forwardrequires that all commenters be appropriately respectful toward our writers, other commenters and the subjects of the articles. Vigorous debate and reasoned critique are welcome; name-calling and personal invective are not. While we generally do not seek to edit or actively moderate comments, our spam filter prevents most links and certain key words from being posted and The Jewish Daily Forward reserves the right to remove comments for any reason.





Find us on Facebook!
  • What does the Israel-Hamas war look like through Haredi eyes?
  • Was Israel really shocked to find there are networks of tunnels under Gaza?
  • “Going to Berlin, I had a sense of something waiting there for me. I was searching for something and felt I could unlock it by walking the streets where my grandfather walked and where my father grew up.”
  • How can 3 contradictory theories of Yiddish co-exist? Share this with Yiddish lovers!
  • "We must answer truthfully: Has a drop of all this bloodshed really helped bring us to a better place?”
  • "There are two roads. We have repeatedly taken the one more traveled, and that has made all the difference." Dahlia Scheindlin looks at the roots of Israel's conflict with Gaza.
  • Shalom, Cooperstown! Cooperstown Jewish mayor Jeff Katz and Jeff Idelson, director of the National Baseball Hall of Fame, work together to oversee induction weekend.
  • A boost for morale, if not morals.
  • Mixed marriages in Israel are tough in times of peace. So, how do you maintain a family bubble in the midst of war? http://jd.fo/f4VeG
  • Despite the escalating violence in Israel, more and more Jews are leaving their homes in Alaska to make aliyah: http://jd.fo/g4SIa
  • The Workmen's Circle is hosting New York’s first Jewish street fair on Sunday. Bring on the nouveau deli!
  • Novelist Sayed Kashua finds it hard to write about the heartbreak of Gaza from the plush confines of Debra Winger's Manhattan pad. Tough to argue with that, whichever side of the conflict you are on.
  • "I’ve never bought illegal drugs, but I imagine a small-time drug deal to feel a bit like buying hummus underground in Brooklyn."
  • We try to show things that get less exposed to the public here. We don’t look to document things that are nice or that people would like. We don’t try to show this place as a beautiful place.”
  • A new Gallup poll shows that only 25% of Americans under 35 support the war in #Gaza. Does this statistic worry you?
  • from-cache

Would you like to receive updates about new stories?




















We will not share your e-mail address or other personal information.

Already subscribed? Manage your subscription.