Monday, January 26, 2009
THE EROSION OF CONFIDENCE
I start my day by going to 1) Wall Street Journal; 2) The Daily Alert from Israel; 3) Philanthropy blogs. Most mornings, I shutter and look at the computer with one eye open. "Can all this really be happening?" Can sociopaths be so charismatic that they con their friends out of life-long savings? The shocking truth is "YES!"
Therefore, it should not surprise the nonprofit sector to have a 40 page Form 990 to fill out each and every year......the IRS is making strong recommendations for audit committes, conflict of interest statements, and whistleblower policies.
Are these recommendation or legal requirements?
The IRS is making strong recommendations, but these are not legal requirements. However, if your organization is political in nature (not a lobbying entitiy, obviously), or controversial in some way, I highly suggest you put your ducks in a row and follow the recommendations to the letter.
The last thing a nonprofit needs right now is to be side tracked by an IRS audit.
See the article below.
In the coming weeks, Picasso Strategic Solutions, LLC will be initiating a new endeavor to help fledging organizations through this economic turmoil.
Our mission is to make sure worthy causes have the tools to succeed.
Stay tuned for an announcement in the coming weeks.
FROM: PHILANTHROPY TODAY
January 26, 2009
Fireman: Adviser looted $25m
Suit says foundation, firm missing funds
By Beth Healy
Globe Staff / January 24, 2009
Paul Fireman, the former chief executive of Reebok International Ltd., says his longtime investment manager looted more than $25 million from his business and charitable foundation, according to a complaint filed yesterday in a Florida court.
Arnold Mullen, an accountant and investment adviser who worked for Fireman for 20 years, transferred millions of dollars from Fireman's business, PFP Associates, and the Paul & Phyllis Fireman Charitable Foundation to various partnerships and business entities for his own benefit, the complaint alleges.
The lawsuit, filed in Palm Beach County where Fireman's business and foundation are based, accuses Mullen of theft, racketeering, fraud, and other charges. Fireman is seeking unspecified damages, as well as interest and attorney's fees. Mullen could not be reached for comment late yesterday. He has paid some of the money back, according to the lawsuit.
A lawyer for Fireman said law enforcement officials were conducting a criminal investigation of the matter. The lawyer, G. Joseph Curley, said in a statement, "Arnold Mullen was seen as a trusted advisor and friend for almost 25 years while he systematically stole more than $25 million from the Fireman family and their charitable foundation. His brazen theft was a terrible betrayal of the trust Paul Fireman placed in him."
Fireman was not available for comment. The Brockton native sold Reebok for $3.8 billion to Adidas-Salomon AG in 2006. He and his wife, Phyllis, stood to make nearly $800 million for selling the Canton sneaker and apparel company.
According to the complaint, Fireman hired Mullen in 1985 to help manage PFP Associates, a company that oversees Fireman's "investments and business activities." Fireman said in the complaint that he hired Mullen, an experienced accountant and investment manager, on a referral from another wealthy South Florida family.
Over the years, Fireman placed increasing trust in Mullen, and Mullen ultimately advised him on investments, including private equity deals. Fireman paid him $800,000 a year, plus bonuses based on investment performance. However Mullen was not authorized to make any investments without Fireman's approval, the complaint says.
It appears that Mullen set up numerous business entities and partnerships through which he laundered funds wired from Fireman's business or foundation. In one case, Mullen allegedly created a partnership using his name and Fireman's, called Forum Partners. In December 2007, he moved $2.4 million of Fireman's money to the partnership, the complaint says. The next day, Mullen moved the money to an account of his own at Fidelity Investments, the complaint says.
In other instances, Mullen allegedly wired funds of Fireman's from Fidelity to entities controlled by Mullen. Fidelity spokeswoman Anne Crowley, reached late yesterday, said, "We have no knowledge of the matter or the lawsuit."
Fireman's foundation is based in Palm Beach Gardens, Fla., and had $228 million in assets at the end of 2006, according to its latest tax filing. The foundation gave $14 million to charities that year, mostly to Boston-area nonprofits. Grants included $5.5 million to Fidelity Investments' Charitable Gift Fund, $1 million to the Institute of Contemporary Art, and $300,000 to Massachusetts General Hospital.
News of another scandal in Palm Beach comes as that community is still reeling over Bernard L. Madoff's alleged $50 billion Ponzi scheme, which since December has wiped out hundreds of millions of charitable dollars - and billions in personal wealth - from Boston to Palm Beach and beyond.
The alleged fraud involving Fireman's foundation and business appeared to have continued into recent weeks. The Florida Department of State's Division of Corporations has on file an application for "registration of a fictitious name," made on Dec. 31, 2008, for a Waterfall Associates Group. According to the filing, the owner of that name is Paul Fireman. Waterfall is one of the entities to which Mullen allegedly transferred Fireman's money.
It wasn't until Nov. 12, 2008, that Fireman learned he had something to worry about. According to the complaint, a story in the South Florida Daily Business Review detailed a lawsuit filed against Mullen and others alleging a fraudulent land deal in Utah. According to that report, Mullen had defrauded several investors out of millions of dollars, by falsely promising he was raising funds to build a ski resort.
Fireman started an internal audit after that, according to the lawsuit, and began finding the improper money wires. Fireman confronted Mullen about a number of the instances; in some cases, Mullen repaid the money.
Also named in the lawsuit are Geoffrey Mullen, the son of Arnold Mullen; Waterfall Associates, a Florida company owned and controlled by Mullen's family; and another company, Esperanza, which is part-owned by Mullen and was also used in the alleged fraud. The complaint also names Lennard Kligler, a business partner of Arnold Mullen.
None of the named individuals could be reached for comment late yesterday.
Beth Healy can be reached at bhealy@globe.com. Jenn Abelson of
Wednesday, January 14, 2009
ACCOUNTABILITY MATTERS
When the Bernie Madoff scandal broke, I was one of the first fundraising professionals to call for the resignation of the trustees who were overseeing the millions of dollars for the charitable organizations who had invested with Madoff.
I was quite shocked to receive comments/emails in return telling me "it was not the fault of the trustees, they just look at the statements for favorable results on investment."
I kid you not; I did receive several emails with similar sentiments.
My response has been the following: 1) nonprofit organizations are held accountable by the Internal Revenue Service to have an investment committee that functions as the fiscal agents of the organization. In short order: The buck stops with the trustees; 2) trustees need to be held accountable both legally and by the organization(s).
Governance and Compliance are the basic tenants of any good running nonprofit. It is the public trust, after all. So, why should the trustees get away with not being held accountable?
THEY SHOULD NOT!
Please read the article (below) that appeared this morning on
BLOOMBERG.COM
I encourage discussion. My entire career has focused on building the endowments of nonprofit organizations. This sad story just makes me sick.
Cuomo Probing Charity Fraud Tied to Madoff Scandal (Update1)
By Andrew Harris and Karen Freifeld
Jan. 13 (Bloomberg) -- New York Attorney General Andrew Cuomo is investigating “people who defrauded charities” in connection with Bernard Madoff’s alleged $50 billion Ponzi scheme.
Cuomo, whose office oversees nonprofit entities in New York, said today “a number of charities” were defrauded by the alleged scam. “We are looking at frauds in charities and people who defrauded” them, Cuomo said after a press conference on an unrelated issue.
The attorney general said he isn’t investigating Madoff, 70, who was charged last month by federal prosecutors with bilking investors by using money from new investors to pay old ones. Madoff’s lawyer, Ira Sorkin, declined to comment on Cuomo’s statement.
Yeshiva University, a not-for-profit New York school, sustained about $110 million in losses related to the scandal, a spokesman has said. Most of those losses were allegedly invested through hedge funds controlled by J. Ezra Merkin, a Yeshiva trustee and chairman of the school’s investment committee, the spokesman, Bill Anderson, said last month. Merkin has denied any wrongdoing.
Private School
A 122-year-old private school that combines academic and religious education, Yeshiva has an endowment of about $1.2 billion remaining. Yeshiva spokesman William Burgos didn’t immediately return a call and e-mail seeking comment.
U.S. Senator Frank Lautenberg’s foundation was also among the charitable groups that invested with Madoff, who allegedly told his sons he committed a $50 billion fraud, according to an FBI criminal complaint.
The foundation run by Lautenberg, a New Jersey Democrat, invested $12.8 million of its $13.8 million in assets with Bernard L. Madoff Investment Securities at the end of 2006, according to a tax return for the organization.
Scott Mulhauser, a staff member for the senator, declined to comment on Cuomo’s announcement, referring calls to the senator’s attorney, Michael Griffinger of Newark, New Jersey’s Gibbons law firm. He didn’t immediately return a call seeking comment.
Brandeis University
The Carl and Ruth Shapiro Family Foundation had about 45 percent of its $345 million in assets invested with Madoff, a spokeswoman previously said. The foundation, a major donor to Brandeis University and Boston’s Museum of Fine Arts, was funded by Carl Shapiro, who sold his Kay Windsor Inc. women’s clothing business to VF Corp. in 1971.
Jean Whitney, executive director for the Boston-based charity, didn’t immediately return a call seeking comment.
The case is U.S. v. Madoff, 08-mag-2735, U.S. District Court, Southern District of New York (Manhattan).
I was quite shocked to receive comments/emails in return telling me "it was not the fault of the trustees, they just look at the statements for favorable results on investment."
I kid you not; I did receive several emails with similar sentiments.
My response has been the following: 1) nonprofit organizations are held accountable by the Internal Revenue Service to have an investment committee that functions as the fiscal agents of the organization. In short order: The buck stops with the trustees; 2) trustees need to be held accountable both legally and by the organization(s).
Governance and Compliance are the basic tenants of any good running nonprofit. It is the public trust, after all. So, why should the trustees get away with not being held accountable?
THEY SHOULD NOT!
Please read the article (below) that appeared this morning on
BLOOMBERG.COM
I encourage discussion. My entire career has focused on building the endowments of nonprofit organizations. This sad story just makes me sick.
Cuomo Probing Charity Fraud Tied to Madoff Scandal (Update1)
By Andrew Harris and Karen Freifeld
Jan. 13 (Bloomberg) -- New York Attorney General Andrew Cuomo is investigating “people who defrauded charities” in connection with Bernard Madoff’s alleged $50 billion Ponzi scheme.
Cuomo, whose office oversees nonprofit entities in New York, said today “a number of charities” were defrauded by the alleged scam. “We are looking at frauds in charities and people who defrauded” them, Cuomo said after a press conference on an unrelated issue.
The attorney general said he isn’t investigating Madoff, 70, who was charged last month by federal prosecutors with bilking investors by using money from new investors to pay old ones. Madoff’s lawyer, Ira Sorkin, declined to comment on Cuomo’s statement.
Yeshiva University, a not-for-profit New York school, sustained about $110 million in losses related to the scandal, a spokesman has said. Most of those losses were allegedly invested through hedge funds controlled by J. Ezra Merkin, a Yeshiva trustee and chairman of the school’s investment committee, the spokesman, Bill Anderson, said last month. Merkin has denied any wrongdoing.
Private School
A 122-year-old private school that combines academic and religious education, Yeshiva has an endowment of about $1.2 billion remaining. Yeshiva spokesman William Burgos didn’t immediately return a call and e-mail seeking comment.
U.S. Senator Frank Lautenberg’s foundation was also among the charitable groups that invested with Madoff, who allegedly told his sons he committed a $50 billion fraud, according to an FBI criminal complaint.
The foundation run by Lautenberg, a New Jersey Democrat, invested $12.8 million of its $13.8 million in assets with Bernard L. Madoff Investment Securities at the end of 2006, according to a tax return for the organization.
Scott Mulhauser, a staff member for the senator, declined to comment on Cuomo’s announcement, referring calls to the senator’s attorney, Michael Griffinger of Newark, New Jersey’s Gibbons law firm. He didn’t immediately return a call seeking comment.
Brandeis University
The Carl and Ruth Shapiro Family Foundation had about 45 percent of its $345 million in assets invested with Madoff, a spokeswoman previously said. The foundation, a major donor to Brandeis University and Boston’s Museum of Fine Arts, was funded by Carl Shapiro, who sold his Kay Windsor Inc. women’s clothing business to VF Corp. in 1971.
Jean Whitney, executive director for the Boston-based charity, didn’t immediately return a call seeking comment.
The case is U.S. v. Madoff, 08-mag-2735, U.S. District Court, Southern District of New York (Manhattan).
Tuesday, January 13, 2009
Social Networking Not So Social....A Place For Post and Passion
Facebook Users Go to War Over Gaza
FROM: www. TIME.COM
January 13, 2009
By Deena Guzder Tuesday, Jan. 13, 2009
While Hamas rockets pummel southern Israel and Israeli bombs decimate Gaza, a parallel war is being fought in virtual communities. On Dec. 27, two hours after Israel began its military operation, Joel Leyden created a Facebook group called "I Support the Israel Defense Forces in Preventing Terror Attacks from Gaza." Leyden, an American who served with the Israeli military, says he has since received dozens of death threats via his Facebook inbox. "People were not just saying 'I hope you die!' but also asking 'How do you want to die?' " says Leyden, who uses Facebook to alert people about potential attacks on synagogues.
Meanwhile, Hamzeh Abu-Abed, who created a Facebook group titled "Let's collect 500,000 signatures to support the Palestinians in Gaza," says he has received similar hate mail. "They said I am a terrorist who should die," says Abu-Abed, an accountant from Jordan. "We have been harassed by Zionists who hacked our group and called themselves the Jewish Internet Defense Force."
Of course, Internet users have complained for years that the anonymity of electronic communication breeds incivility. But some say the Gaza conflict is a lightning rod for particularly vitriolic exchanges. An example from one group forum on Facebook: "Israel = killers" wrote one contributor. That drew a response from another user: "Maybe I'll wrap a towel around my head and beat my wife for peace in the name of Allah." Rahel Aima, an undergraduate student at Columbia University who frequents several social-networking sites, says she has been "shocked by some of the hyper-distilled hatred and racism that I've seen in the past few days. I've only really seen such a flurry of polarizing sentiments with this current Gaza situation."
The online debate merely reflects real-world hostility and passion. The Gaza conflict has sparked heated and sometimes violent demonstrations around the world. But for site operators, the war of words is raising fresh questions about free speech and censorship online. Facebook, which has 150 million active users, does not remove members or groups that speak out against countries, political entities, or ideas. "Our goal is to strike a very delicate balance between giving Facebook users the freedom to express their opinions and beliefs, while also ensuring that individuals and groups of people do not feel threatened or endangered," says Facebook spokeswoman Elizabeth Linder. "We've taken action on groups promoting both sides of the current conflict, but do not typically provide details on such instances."
Rita King, who studies online communities as a Senior Fellow at the Carnegie Council for Ethics in International Affairs, says the heightened level of hostility since Israel began its military operation is troubling. "Learning how to navigate this potentially dangerous new twist in human interaction is complicated, particularly with regard to issues of security," King says. According to Lea Bishop Shaver, a lecturer at Yale Law School, threatening to kill someone through an online forum "can land you in jail for assault, even if you never touch the person." But she added that making empty threats over the Internet rarely results in prosecution. "To trigger criminal prosecution, the threat has to be a serious one," Shaver says.
In fact, because online forum participants rarely know each other and often live on different continents, threats are rarely serious. Partly for that reason, King maintains online exchanges — even ugly ones — facilitate communication and understanding. "The Internet removes the threat of physical harm and thus offers an unprecedented opportunity for the development of new ideas for conflict mediation," says King.
Certainly governments see value in talking directly to the public through online communities. On Dec. 30, The Israeli consulate in New York hosted a press conference on Twitter, a social-messaging service, to respond to questions from the public about Gaza. For Facebook and other social networks, "the struggle ... is to find ways to create an environment that encourages truly meaningful dialogue," says Amy Bruckman, an Associate Professor at the College of Computing at Georgia Tech. Until that happens, there will likely be no ceasefire in the virtual world.
FROM: www. TIME.COM
January 13, 2009
By Deena Guzder Tuesday, Jan. 13, 2009
While Hamas rockets pummel southern Israel and Israeli bombs decimate Gaza, a parallel war is being fought in virtual communities. On Dec. 27, two hours after Israel began its military operation, Joel Leyden created a Facebook group called "I Support the Israel Defense Forces in Preventing Terror Attacks from Gaza." Leyden, an American who served with the Israeli military, says he has since received dozens of death threats via his Facebook inbox. "People were not just saying 'I hope you die!' but also asking 'How do you want to die?' " says Leyden, who uses Facebook to alert people about potential attacks on synagogues.
Meanwhile, Hamzeh Abu-Abed, who created a Facebook group titled "Let's collect 500,000 signatures to support the Palestinians in Gaza," says he has received similar hate mail. "They said I am a terrorist who should die," says Abu-Abed, an accountant from Jordan. "We have been harassed by Zionists who hacked our group and called themselves the Jewish Internet Defense Force."
Of course, Internet users have complained for years that the anonymity of electronic communication breeds incivility. But some say the Gaza conflict is a lightning rod for particularly vitriolic exchanges. An example from one group forum on Facebook: "Israel = killers" wrote one contributor. That drew a response from another user: "Maybe I'll wrap a towel around my head and beat my wife for peace in the name of Allah." Rahel Aima, an undergraduate student at Columbia University who frequents several social-networking sites, says she has been "shocked by some of the hyper-distilled hatred and racism that I've seen in the past few days. I've only really seen such a flurry of polarizing sentiments with this current Gaza situation."
The online debate merely reflects real-world hostility and passion. The Gaza conflict has sparked heated and sometimes violent demonstrations around the world. But for site operators, the war of words is raising fresh questions about free speech and censorship online. Facebook, which has 150 million active users, does not remove members or groups that speak out against countries, political entities, or ideas. "Our goal is to strike a very delicate balance between giving Facebook users the freedom to express their opinions and beliefs, while also ensuring that individuals and groups of people do not feel threatened or endangered," says Facebook spokeswoman Elizabeth Linder. "We've taken action on groups promoting both sides of the current conflict, but do not typically provide details on such instances."
Rita King, who studies online communities as a Senior Fellow at the Carnegie Council for Ethics in International Affairs, says the heightened level of hostility since Israel began its military operation is troubling. "Learning how to navigate this potentially dangerous new twist in human interaction is complicated, particularly with regard to issues of security," King says. According to Lea Bishop Shaver, a lecturer at Yale Law School, threatening to kill someone through an online forum "can land you in jail for assault, even if you never touch the person." But she added that making empty threats over the Internet rarely results in prosecution. "To trigger criminal prosecution, the threat has to be a serious one," Shaver says.
In fact, because online forum participants rarely know each other and often live on different continents, threats are rarely serious. Partly for that reason, King maintains online exchanges — even ugly ones — facilitate communication and understanding. "The Internet removes the threat of physical harm and thus offers an unprecedented opportunity for the development of new ideas for conflict mediation," says King.
Certainly governments see value in talking directly to the public through online communities. On Dec. 30, The Israeli consulate in New York hosted a press conference on Twitter, a social-messaging service, to respond to questions from the public about Gaza. For Facebook and other social networks, "the struggle ... is to find ways to create an environment that encourages truly meaningful dialogue," says Amy Bruckman, an Associate Professor at the College of Computing at Georgia Tech. Until that happens, there will likely be no ceasefire in the virtual world.
Monday, January 12, 2009
FEELING THE SQUEEZE....BRUSHSTROKES REPORT
FROM: Chronicle of Philanthropy
Special Report
January 15, 2009
Charities Brace for a Tough Year and Seek Role in Recovery Plan
advertisement
Perhaps no other year-end fund-raising season has been watched as carefully and nervously as the one that just closed. While the last quarter is always important for filling charity coffers, it was perhaps even more important in 2008 as a bellwether of just how difficult the coming year will be for the nation's charities.
The anxiety about the year ahead was clear in a new poll that found a record-setting decline in confidence about fund raisers' ability to succeed over the next six months. More than one-third of fund raisers say they do not expect fund raising to fare well over the next six months, far more than have reported such pessimism since Indiana University's Center on Philanthropy started conducting the poll in 1998.
While most charities have yet to tally their results for December, it's clear that the record was mixed. The most notable successes were achieved at social-service groups, as donors responded to charities' aggressive efforts to seek aid to meet rising needs of poor and middle-class people.
Still, most social-service groups said the increases were not large enough to meet surging requests for aid. At the Salvation Army, in Syracuse, N.Y., donations were running 20 percent higher in December than at the same time a year ago. But demand for food from its pantry doubled in the past year, and it is housing 50 percent more people than its shelters were built to accommodate. To top it off, the charity, which relies on government grants and contracts for 70 percent of its operating budget, has just learned that New York State, facing a $15-billion shortfall, will cut support for many programs, starting in April.
Even at organizations that achieved better fund-raising results than expected, the overall financial picture is so bleak that many charities have started to lay off workers.
Big Brothers Big Sisters of Colorado, in Denver, saw contributions rise last year but still decided to dismiss nine of its 48 employees. The charity says it expects a 10-percent decline in corporate donations, which account for more than a quarter of the group's revenue.
As a new year opens, many charities are hoping that President-elect Obama and Congress will take heed of their money woes and channel money from an economic-stimulus plan to nonprofit organizations.
In the following pages, The Chronicle looks at how charities did in the search for year-end gifts from recession-weary donors, and what they are doing to drum up help from private and government sources.
Copyright © 2009 The Chronicle of Philanthropy
Special Report
January 15, 2009
Charities Brace for a Tough Year and Seek Role in Recovery Plan
advertisement
Perhaps no other year-end fund-raising season has been watched as carefully and nervously as the one that just closed. While the last quarter is always important for filling charity coffers, it was perhaps even more important in 2008 as a bellwether of just how difficult the coming year will be for the nation's charities.
The anxiety about the year ahead was clear in a new poll that found a record-setting decline in confidence about fund raisers' ability to succeed over the next six months. More than one-third of fund raisers say they do not expect fund raising to fare well over the next six months, far more than have reported such pessimism since Indiana University's Center on Philanthropy started conducting the poll in 1998.
While most charities have yet to tally their results for December, it's clear that the record was mixed. The most notable successes were achieved at social-service groups, as donors responded to charities' aggressive efforts to seek aid to meet rising needs of poor and middle-class people.
Still, most social-service groups said the increases were not large enough to meet surging requests for aid. At the Salvation Army, in Syracuse, N.Y., donations were running 20 percent higher in December than at the same time a year ago. But demand for food from its pantry doubled in the past year, and it is housing 50 percent more people than its shelters were built to accommodate. To top it off, the charity, which relies on government grants and contracts for 70 percent of its operating budget, has just learned that New York State, facing a $15-billion shortfall, will cut support for many programs, starting in April.
Even at organizations that achieved better fund-raising results than expected, the overall financial picture is so bleak that many charities have started to lay off workers.
Big Brothers Big Sisters of Colorado, in Denver, saw contributions rise last year but still decided to dismiss nine of its 48 employees. The charity says it expects a 10-percent decline in corporate donations, which account for more than a quarter of the group's revenue.
As a new year opens, many charities are hoping that President-elect Obama and Congress will take heed of their money woes and channel money from an economic-stimulus plan to nonprofit organizations.
In the following pages, The Chronicle looks at how charities did in the search for year-end gifts from recession-weary donors, and what they are doing to drum up help from private and government sources.
Copyright © 2009 The Chronicle of Philanthropy
Here Comes The Judge...More on Madoff
From: eJewish Philanthropy
January 12, 2009
The Madoff Loss - How Large Might it Grow
Last week, the court appointed trustee for Bernard L. Madoff Investment Securities LLC mailed claim forms to more than 8,000 potential victims - both individuals and institutions with open accounts in the 12 months preceding the collapse. This mailing did not include potential secondary victims (i.e. those invested through Merkin's Ascot Partners). Advertisements were also published in various U.S. and Israeli newspapers.
Jeffrey Katzenberg's loss has now been put at $20 million (approximately 90% of his foundations' value); Katzenberg indicates this will cause "extraordinary damage" to his philanthropic efforts.
Mark Rich (of Clinton pardon fame) lost $15 million. Despite the negative PR, Rich supported a new wing of the Tel Aviv Art Museum and played a part in assisting aliyah from Ethiopia, Iran, the former Soviet Union and Yemen.
While we have discussed losses to the Jewish world through Madoff and related investments, as evidenced by the trustee's mailing, the broader international fallout is much larger. For those interested, here are the latest lists (January 7th) from both The New York Times and The Wall Street Journalof individuals, banks, charities and investment firms exposed to losses in Madoff's various investment funds.
In related news, Ezra Merkin finally resigned as chairman of GMAC, the troubled financial arm of General Motors. Merkin has also recently resigned from leadership roles in several Jewish organizations, including Yeshiva University and UJA Federation New York; we understand he will not be resigning as president of Fifth Avenue Synagogue (where individual congregants have losses estimated at $2 billion through
January 12, 2009
The Madoff Loss - How Large Might it Grow
Last week, the court appointed trustee for Bernard L. Madoff Investment Securities LLC mailed claim forms to more than 8,000 potential victims - both individuals and institutions with open accounts in the 12 months preceding the collapse. This mailing did not include potential secondary victims (i.e. those invested through Merkin's Ascot Partners). Advertisements were also published in various U.S. and Israeli newspapers.
Jeffrey Katzenberg's loss has now been put at $20 million (approximately 90% of his foundations' value); Katzenberg indicates this will cause "extraordinary damage" to his philanthropic efforts.
Mark Rich (of Clinton pardon fame) lost $15 million. Despite the negative PR, Rich supported a new wing of the Tel Aviv Art Museum and played a part in assisting aliyah from Ethiopia, Iran, the former Soviet Union and Yemen.
While we have discussed losses to the Jewish world through Madoff and related investments, as evidenced by the trustee's mailing, the broader international fallout is much larger. For those interested, here are the latest lists (January 7th) from both The New York Times and The Wall Street Journalof individuals, banks, charities and investment firms exposed to losses in Madoff's various investment funds.
In related news, Ezra Merkin finally resigned as chairman of GMAC, the troubled financial arm of General Motors. Merkin has also recently resigned from leadership roles in several Jewish organizations, including Yeshiva University and UJA Federation New York; we understand he will not be resigning as president of Fifth Avenue Synagogue (where individual congregants have losses estimated at $2 billion through
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