Jewish charities suffer from fraud case
American Jewish philanthropists, charity foundations hit hard following former NASDAQ chairman Bernard Madoff's arrest for $50 billion fraud. Lappin Charitable Foundation shuts down
WASHINGTON - Days after the arrest of former NASDAQ chairman, Jewish-American Bernard Madoff, for fraud charges involving $50 billion, the effects of the financial disaster have begun to show.
On Sunday it was clear that Jewish charities in the United States suffered the most from the scandal.
The $8 million Lappin Charitable Foundation based in Massachusetts that had most of its money invested in Bernard L. Madoff Investment Securities had to close its doors and its five staff members were laid off following the affair.
The Washington Post reported other victims of Madoff's alleged Ponzi scheme included North Shore-Long Island Jewish Health System, that lost $5 million, and the Texas-based Julian J. Levitt Foundation that lost about $6 million.
The New York-based Yeshiva University, where Madoff sat on the board of directors is still trying to figure out how much money it lost to Madoff.
Madoff himself also ran a $19 million private foundation that donated money to hospitals and theatres, and was also completely shut down.
Federal agents arrested Madoff at his apartment on Thursday after prosecutors said he told senior employees that his money management operations were "all just one big lie" and "a giant Ponzi scheme."
A Ponzi scheme is an illegal investment vehicle that pays off old investors with money from new ones and is dependent on a constant stream of new investment. Because the invested capital is not earning a sufficient return on its own, such schemes eventually collapse under their own weight.
Madoff is the founder of Bernard L. Madoff Investment Securities LLC, a market-making firm he launched in 1960. His separate investment advisory business had $17.1 billion of assets under management.
US prosecutors charged Madoff, 70, with a single count of securities fraud. They said he faces up to 20 years in prison and a fine of up to $5 million.
Reuters contributed to this report
