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Madoff's Web Stretches as Far as Philadelphia

February 12, 2009 By:
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Disgraced financier Bernard Madoff is escorted by a U.S. Marshall as he departs U.S. Federal Court after a hearing in New York in early January. RNS Photo/Reuters
While the Philadelphia region was not hit nearly as hard by Bernard Madoff's alleged $50 billion Ponzi scheme as other regions -- New York City, say, or Palm Beach, Fla. -- several dozen area individuals, estates and family trusts turned up on a court document, released last week, that painted a fuller picture of those who fell victim to the investor's deceptions.

In the weeks after Dec. 11 -- when the 70-year-old Madoff, the former NASDAQ chair, apparently confessed his scheme to authorities -- it came to light that major Jewish institutions and foundations had suffered devastating financial losses: Hadassah, Yeshiva University, the American Technion Society, the American Jewish Congress, to name just a few.

By and large, Philadelphia-based Jewish organizations were not among Madoff's clients.

In fact, several weeks after the scandal came to light, the Jewish Federation of Greater Philadelphia sent a letter to members of its board of trustees stating that it had no assets in any Madoff funds.

Of course, Hadassah -- which reportedly lost more than $100 million and laid off 80 people, a quarter of its employees nationwide -- maintains an active Philadelphia office.

But perhaps the affected Jewish organization with the strongest local ties is the Jewish Funds for Justice -- which finances a wide array of projects related to social and economic justice.

While the organization is based in New York, its financial operations are housed in Philadelphia. The more than 160-page Madoff court document listed the fund under a Philadelphia address.

Three years ago, the New York-based Jewish Fund for Justice merged with the Philadelphia-based Shefa Fund to form the Jewish Funds for Justice. The Shefa Fund also made the Madoff list because the investment predated the merger.

The organization lost $3.9 million in one of more than 50 donor-directed funds it holds, according to spokeswoman Sheila Webb-Halpern.

Last year, Jewish Funds for Justice dipped into the Madoff fund to the tune of $487,000 for grant-making (in total, they disbursed $2.5 million in grants).

Webb-Halpern stressed that the loss has not affected the organization's ability to make loans and grants, or to run programs.

"Rather than look at it as a somber moment -- Oy, Madoff, what do we do? -- we're looking at it like we have big challenges, and we've got to step up," said Simon Greer, president and CEO of the organization.

"It is tragic that $50 billion disappeared," he added. "But there is still money in this community, and we still have the capacity to serve those in need.

"The challenge for the Jewish philanthropist is managing this complexity," said Greer. "You had less resources than you had, but more opportunities."

While Madoff's ties did not run as deep in Philadelphia, a number of private individuals watched at least part of their investments disappear as well.

Now, they have to contend with the reality that their names can be found on the Madoff list with the simple click of a mouse -- the bankruptcy court document is now widely available on the Web.

"I couldn't believe it, I thought it was a bad dream," said Gilbert Grossman, a well-known cardiologist who lives in Elkins Park and practices in Philadelphia. (The Joan Grossman Center for Chaplaincy and Healing is named for his late wife.)

Grossman had been investing with Madoff since 1988. While this represented his largest investment, Grossman stressed that he does have other holdings.

However, he would not reveal any figures, and they were not provided in the court documents. He recalled speaking to Madoff twice on the phone and described him as very pleasant.

"You thought you were worth a certain amount, and you're not. It was just paper," said Grossman.

He added that his accountant never picked up that anything was wrong; Madoff's firm sent detailed monthly financial statements.

There were "zero, zero red flags. This was a safe, boring, successful investment," said Grossman, 76, noting that he has no plans to retire any time soon.

Betsy R. Sheerr, a local philanthropist, political activist and communications consultant, also acknowledged that her family's trust fund was hit by the Madoff scheme -- although she, too, would not discuss figures.

Sheerr sits on the board of the Jewish Publishing Group.

She noted that her father had befriended Madoff at a Florida country club and was persuaded to invest with him.

Sheerr said that while it's too soon to tell, she's hopeful that the losses will not inhibit her family's ability to give to Jewish and secular causes.

She added that, in addition to the Madoff affair, the overall financial meltdown has caused numerous investors to lose 30 percent to 40 percent of their holdings.

Said Sheerr: "The whole thing is going to affect people's philanthropic giving."

Staff writer Michelle Mostovy- Eisenberg contributed to this report.


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