Nonprofit organizations are a form of legalized tax evasion. Sure there are some that go further and engage in outright illegal tax evasion, but the vast majority of nonprofits that have significant money to invest are either totally legitimate (like Yeshiva University and the Fairfiled County pension fund, to name a couple of Madoff investors), or are taking legal advantage of the tax laws to fund their favorite activities (theater, museums, symphonies, art galleries featuring the “works” of rich bored housewives, etc). A lot of these pet charities are engaged in circular giving, with a particular social crowd all donating to each others charities, getting tax deductions for the money they spend having their favorite kinds of fun. This is totally, completely legal.
However, just because there are quite a few nonprofits that are engaging in illegal tax evasion activities, does not imply that investment vehicles where they invest large chunks of their assets are involved in their illegal activities. If an organization has all the right paperwork showing it’s a tax-exempt non-profit, then virtually any investment vehicle catering to non-profits (basically all unleveraged investment vehicles) will accept their investment as long as they can meet the vehicle’s minimum investment amount.
I don’t understand why you think the Madoff scam was run to support its investors’ tax evasion activities. All the evidence suggests that it was a massive SELF-enrichment scheme run by Bernie Madoff with the help of at least a couple of family members and a crooked accountant, all of whom were enriching themSELVES at the expense of the investors in the fraudulent vehicles. Madoff played off his tremendous success in building a legitimate broker-dealer, and his credibility from being the Chair of NASD Board of Governors, to rake money from investors into his Ponzi scheme. With such a huge number of his investors, and especially the largest ones, being very clearly NOT tax evading scammers, obviously the “investment opportunity” was attractive to legitimate institutional and high net worth investors. Where’s the evidence that there were also a lot of investors who were in league with Madoff, who was helping them run some money-laundering or tax evasion scam?
If there was any designed-for-tax-evasion or designed-for-money-laundering activity going on in this mess, it was most likely at the level of some of the smaller feeder funds, and not anything Madoff and his cronies were directly involved in. Madoff had a brilliant and awesomely lucrative scheme going — why endanger it by deliberately dabbling in aiding and abetting tax evasion or money laundering, when that would greatly increase the risk of a serious law enforcement investigation of one of those investors that would end up including some close scrutiny of the Madoff operation and exposing it as a scam?
THIS JUST IN: Bernard Madoff’s lawyer told a judge his client will plead guilty later this week to 11 counts including money laundering, perjury, securities fraud, mail fraud, wire fraud and——————international money laundering.
The buzz is Madoff has money hidden all over the world-—may involve $170 billion from theft, and other crimes.
Madoff’s Mellon bank accounts are being scrutinized-—show signs of offshore activity. Accounts in Madoff family members’ names are also under scrutiny.