Trust and Exploitation in a Close-Knit World (Madoff)

The New York Times ^ | December 27, 2008 | SAMUEL G. FREEDMAN

[Mamzelle]

....Now the damage is certain to be intense among the Modern Orthodox. While a variety of Jewish charities and foundations suffered large losses with Mr. Madoff, and while the ripple effect of that vanished wealth will be felt throughout American Jewry, the conspicuous fact remains that no institutions explicitly, or even implicitly, affiliated with Reform, Conservative or Reconstructionist Judaism had investments with Mr. Madoff.....

[Mamzelle]

Very good article for those following the fascinating Madoff scandal. The damage Madoff did in particular to observant Jews is devastating.

[Mamzelle]

ping

[240B]

Yeah but talk about raising the...

He’s a Jew He’s a Jew He’s a Jew flag, they have outdone themselves.

They could have done the exact same story about how he was a hugh Liberal Democrat. Instead, they focus that he Jewish.

You have to wonder if the pigblood drinking aholes at NYT would have done the same story had he been Catholic?

(Glad to hear that highway story is still around. Heard it the first time 25 years ago.)

[the invisib1e hand]

heartbreaking.

[the invisib1e hand]

They could have done the exact same story about how he was a hugh Liberal Democrat. Instead, they focus that he Jewish.

Nope, I don't think you could.

[Lorianne]

According to some people here at FR just posting this story is evidence enough that the poster is anti-semitic.

Why the double standard with articles posted about observant Muslims?

I don’t know the answer but I suspect there are people quick to project their own insecurities and prejudices onto others.

[240B]

I understand spiritually but disagree practically.

How many “green” organizations were wiped out by this. They could have taken that angle.

[yefragetuwrabrumuy]

Madoff is an interesting psychology. He is like the good son, who everyone in his family, and his friends, loves and admires. Who then butchers his family and friends in a rampage of hate.

How he did it is also interesting. He sought out others to become dependent on his, both among orthodox Jews and the left. It didn’t matter if they already had support. He would give them more. If they had none, he would promise them support to go beyond their modest aspirations. But everyone would look forward to his support.

What makes it stranger is that he seems to have known that it was all a fraud, which would eventually backfire and harm those he wished to help. Had he wanted to help them nevertheless, he would have arranged for them to receive and spend their money before it could be recovered.

And finally, the point made by the article. Why prey on the orthodox when he is not orthodox? Was it because he knew they were vulnerable in ways other Jews were not? Was he perhaps one of the Jews that bitterly hate other Jews?

If so, what does that say about his parallel support for the left? His particular interest seems to be caring about juvenile delinquents, helping organizations that sought to help them avoid punishment.

Some psychiatrist(s) are going to make a career out of Madoff.

[Mamzelle]

I don't quite know how this is antisemitic. Unless just noticing that a list of names contains 98% Jewish names somehow makes the " noticer" antisemitic. Not allowed to notice?

Madoff ripped off Jews, prominent and important Jews. How he garnered the trust is important to understand.

Seems to me that Madoff not only targeted Jews, but seems also to have targeted those Jews most likely to be Israel supporters.

[Mamzelle]

I think Madoff’s psychology would be simple to explain. He is a classic Narcisstic Personality Disorder. Pathological narcissists are addicts of what’s called Narcisstic Supply. (wiki has a pretty good summary) He wanted more than money, I believe he wanted acclaim for being the Smartest Jew of Them All, the one who provided them all with income with his brilliant manipulations of the market. It’s like any feedback addiction—”You’re so smart, Bernie.” “You’re so good, Bernie! You provide my (vanity) foundation with solid income!”

[stockpirate]

Not only that he is a Jew hater by raising the question. end sarcasm

[240B]

AAAAAHH..whoneedju

All of you’s should go and eat lakes...eat um till u puke, I tell u.

Till u puke...u heard me

AAAHH,(dismissive wave of my hand) Go and get rich...all of u’s.

Hunbug

[PasorBob]

I think people are missing the point. The people who are now “victims” were members of an exclusive, apparently racist club. If this was a highly profitable WASP investment vehicle where you met the fund manager at a WASP club, or a white’s only investment vehicle that was set up at a white’s only golf club.

This stinks. It would stink if it was whites, or WASPSs or Nazi’s, but it happened to be fabulously wealthy secular Jews.

[PasorBob]

I think people are missing the point. The people who are now “victims” were members of an exclusive, apparently racist club. If this was a highly profitable WASP investment vehicle where you met the fund manager at a WASP club, or a white’s only investment vehicle that was set up at a white’s only golf club.

This stinks. It would stink if it was whites, or WASPSs or Nazi’s, but it happened to be fabulously wealthy secular Jews.

[Liz]

Thanks for the headsup. Interesting that Orthodox were investing mega-millions w/ Madoff.

The average "anti-Semite" might ask: How can Orthodox be designated "disadvantaged minorities" when they are investing hundreds of millions of dollars w/ Madoff?

Orthodox Judaism was designated a "disadvantaged minority" under Lyndon Johnson's "Great Society." This meant that Orthodox became beneficiaries of millions upon millions of tax dollars----federal community development funds. Federal and city assistance received over the years include CETA (Comprehensive Employment Training Act) monies, Section 8 housing assistance, school meal funds, Headstart, HUD grants, and low interest loans. In 1984, federal aid was expanded when the federal government included Orthodox in a priority group of six disadvantaged minorities recognized by all federal agencies.

Might be time to check some tax returns.

Ira Rennert, Fifth Avenue Synagogue board chair invested some $200 million w/Madoff. Rennert is also GMAC chairman. Hamptonites complain this astoundingly palatial mansion in the posh Hamptons is actually a "synagogue-residence-yeshiva" for Orthodox Judaism students.

It was built by Fifth Avenue Synagogue board chair Ira Rennert---rivals Versailles and Buckingham Palace.

It is believed that J. Ezra Merkin, Fifth Avenue Synagogue president, through Mr Merkin‘ s Ascot Partners fund, had about $1.8 billion invested w/ Madofff. Members of the Fifth Avenue Synagogue, located on the wealthy Upper East Side of Manhattan, are estimated to have lost about $2 billion. Mr Merkin was also Chairman of Yeshiva University Investment Committee, He introduced clients to Madoff and gave him access to prominent Jewish charities and universities.

REFERENCE Yeshiva University is a huge complex and Orthodox stronghold---it maintains four campuses in New York City and a campus in Israel: along with dormitories, a library, a hospital and other medical facilities; several Graduate and Professional Schools, rabbinical schools, a museum, academic centers and institutes for high school level students, and centers for Israeli studies in New York, and in Israel, etc, etc, etc.

[Liz]

Keep in mind Bernie‘s investors were savvy, astute successful business people, accustomed to picking apart and analyzing financial statements. One investor who spoke to reporters was a stockbroker (her family invested with Bernie for generations---the family's patriarch founded the wildly successful Stop and Shop supermarket chain).

ORGANIZING LEGAL PRINCIPLE The following should foreclose any cockamamie ideas that taxpayers are gonna bailout these mega-millionaires with money stashed offshore. The compelling legal principle of “condonation” is operating here---implied forgiveness for certain behavior. Meaning investors implicitly “condoned” Madoff’s actions over a period of time--sometimes decades.

His investors willingly acquiesced to Madoff's activities in several ways:

(1) Sending Madoff enormous sums of money, sums that were spread out over time (some families invested for generations), even AFTER they had the opportunity to assess their investments;

(2) Referring other investors to Madoff (if the investment was so bad, why did they bring in other investors?);

(3) Taking profits out of the investment, rolling it over, or putting more money in;

(4) Writing PERSONAL checks to Madoff's subrosa spinoff vehicle that was not listed on the Securities Exchange (tax evasion modus);

(5) Accepting, without question, Madoff’s obviously flawed monthly statements.

============================================

REFERENCE BY Ronald D. Orol, a MarketWatch reporter, based in Washington.

EXCERPT There were several things that alerted some in the hedge-fund industry that an investment with Madoff may not have been as safe as it initially appeared. Aksia LLC, which researches hedge funds and advises institutions about investing in the industry, said that it never recommended that clients put money in some of the "feeder funds" that allocated their capital to Madoff. On the surface, these feeder funds looked like institutional-quality vehicles, but there were "a host of red flags," Aksia Chief Executive Jim Vos and colleague Jake Walthour wrote in a letter to clients after the Madoff scandal erupted last week.

The funds were marketed as using a "split-strike conversion" investment strategy that is "remarkably" simple, but the returns it purportedly generated could not be replicated by Aksia's quantitative analyst, Vos and Walthour wrote.

The Madoff funds supposedly traded in the Standard & Poor's 100 index options market, but that market is relatively small and may not have been able to handle trading by vehicles with roughly $13 billion in assets, they said. The feeder funds had almost all their assets custodied with Madoff Securities, the brokerage unit of Madoff's firm.

Aksia checked into the auditor of Madoff Securities and discovered it was a firm called Friehling & Horowitz, which had three employees -- one of whom was 78 years old and another was a secretary. The firm's office in upstate New York was 13 feet by 18 feet. Madoff's Web site claimed the firm was technologically-advanced, but it sent paper confirmations of trades via US mail at the end of each day, rather than providing electronic access to this important information. Paper copies provide a hedge-fund manager with the end-of-the-day ability to manufacture trade tickets that confirm the investment results.