Bernard Madoff Arrest Stirs Worry Among Nonprofits

Date: Monday, December 15, 2008
Author: Philip Boroff, Bloomberg

From a Massachusetts charity that sends teenagers to Israel to the Manhattan theater that introduced “Hair” in 1967, nonprofits around the nation are bracing following the arrest of New York money manager Bernard Madoff.

The 70-year-old Madoff, whom the Securities and Exchange Commission accused of operating a Ponzi scheme, managed money for the foundations of such titans as Steven Spielberg, New York Mets owner Fred Wilpon and clothier Carl Shapiro, according to tax returns.

New York’s JEHT Foundation, dedicated to electoral reform and improving criminal justice and one of the largest foundations of its kind, said it’s closing in January 2009. It gave away $26.4 million in 2006, according to its last publicly available tax return.

Recipients include the Innocence Project, co-founded by Barry Scheck, and Human Rights Watch. Jeht’s funds were managed by Madoff.

“Everyone is shocked and saddened, no one more than me,” President Robert Crane said in an interview.

The Robert I. Lappin Charitable Foundation in Salem, Massachusetts discontinued operations on Friday because it invested with Madoff. This year the nonprofit sent 124 local teens to Israel.

Elie Wiesel’s Foundation

Madoff appeared to handle all the investments of the Elie Wiesel Foundation for Humanity, the foundation of the 80-year-old Nobel Prize winner and Auschwitz survivor, according its 2006 tax return. The foundation sponsors an annual ethics contest and after-school programs for Ethiopian Jews in Israel, among other programs. Treasurer Elisha Wiesel, Wiesel’s son, didn’t return a call.

The Madoff fiasco will pummel Jewish causes and education. Yet all nonprofit sectors may feel the strain. Last year, the $19 million Madoff Family Foundation donated $50,000 to New York’s Public Theater, where Madoff’s 44-year-old son, Mark, is a trustee. The year before, it gave $30,000 to the Robin Hood Foundation, a charity popular on Wall Street, according to the Madoff’s foundation tax return.

A Public Theater spokesman didn’t return an e-mail from Bloomberg News. Mark Madoff didn’t return a call or respond to an e-mail. Robin Hood Executive Director David Saltzman declined to comment.

Less to Give

“Will it affect my philanthropy?” said Joyce Z. Greenberg, a retired financial adviser in Houston who had money with Madoff for two decades. “It will.”

Greenberg is a donor to the Jewish Heritage Program of the World Monuments Fund, which has supported conservation in 20 countries. Greenberg and others are waiting for an accounting of how much, if any, of their investments they’ll salvage.

SAR Academy, an orthodox Jewish school in Riverdale, New York, which extends from kindergarten through high school, had over a third of its $3.7 million endowment with Madoff, according to an e-mail circulated by the school.

Madoff was among the money managers of Spielberg’s Wunderkinder Foundation, which disbursed about $5.2 million in 2006. The largest donations were $3.3 million to Los Angeles’s Cedars-Sinai Medical Center and $500,000 for the Ross School in East Hampton, New York.

Sterling Equities

Wilpon’s family foundation donated $50,000 to New York’s City Center and $10,000 to New York’s Jewish Museum in 2006, according to its most recent tax return posted on guidestar.org.

The foundation operates out of Sterling Equities Inc., the investment firm led by Wilpon. A call yesterday wasn’t returned, but Sterling said last week it has accounts at Bernard L. Madoff Securities and is “shocked” by its founder’s alleged confession to fraud.

The Boston Globe reported Madoff managed about 45 percent of the $324 million Carl and Ruth Shapiro Foundation, citing a spokeswoman. The foundation has been a major donor to Brandeis University and Boston’s Museum of Fine Arts. A call to the foundation wasn’t returned yesterday. Shapiro sold his Kay Windsor Inc. women’s clothing business to VF Corp., then Vanity Fair Corp., in 1971.

In 2006, Bernard Madoff’s foundation gave $77,500 to Lincoln Center Theater, where Mark Madoff was on the board. He has since resigned. A spokeswoman for Lincoln Center Theater declined to comment.

Sole Contributor

Bernard Madoff is listed as the sole contributor of the family foundation, and both he and his wife, Ruth, are named as managers.

Other beneficiaries of the foundation in 2006 were the anti- hunger program City Harvest ($15,000) and Prep for Prep ($25,000), which aids minority students in New York City independent schools.

The same year, the foundation gave $1 million to the Gift of Life Bone Marrow Foundation, a Boca Raton-based nonprofit that maintains a computerized public record of potential donors for bone marrow transplants.

Madoff’s nephew, Roger Madoff, a former Bloomberg News reporter, was diagnosed with leukemia in 2002 and died in 2006, at 32. A bone marrow transplant can cure many types of leukemia.

The gift made up more than one-third of the organization’s public support that year, according to its tax return.

The Madoffs’ support, which includes other gifts, “has certainly been very important,” said Jay Feinberg, the organization’s executive director. “The contributions resulted in 50,000 bone marrow donors joining us and 200 transplants.”

New York’s Yeshiva University said in a statement that it was “shocked at this revelation” about Madoff’s arrest. The school, North America’s oldest Jewish educational institution, said Madoff resigned from all involvement with the university. He was chairman of its Sy Syms School of Business.

Yeshiva said its lawyers “are investigating all aspects of his relationship to Yeshiva University.”

To contact the writer on the story: Philip Boroff in New York at pboroff@bloomberg.net.