Subscribe To our E-Newsletter
The fallout from the scandal surrounding the collapse of the Bernard L. Madoff Investment Securities firm is still being sorted out as the many victims of what appears to have been the biggest scam in history assess the damages. Yet as grievous as the losses are to both the individuals and philanthropies whose assets were wiped out, it must be admitted that the entire Jewish community must also consider itself to have been badly hurt by this episode.
Madoff reportedly confessed to the authorities that his investment of more than $50 billion was lost in his Ponzi scheme. A large chunk of that money consisted of funds invested by numerous Jewish philanthropies, including the Elie Wiesel Foundation for Humanity. Hadassah says that it lost as much as $90 million. Yeshiva University, which boasted Madoff as a prominent member of its board, may have lost even more. Some smaller Jewish charities, such as the Massachusetts-based Robert Lappin Foundation, were completely wiped out and must now shut down.
Jews were not the only dupes of Madoff. Indeed, among the biggest losers were some Persian Gulf investors, as well as a vast array of rich individuals and groups from around the globe. This is a particularly Jewish tragedy not because Madoff himself is Jewish, but because he used his connections in the community, especially the world of Jewish philanthropy, to both achieve respectability and to build a business network built on deception.
One result of this astounding crime is that the Anti-Defamation League is reporting a rise in Internet hate speech that seeks to revive the old canards about a villainous Jewish Wall Street elite preying on the savings of innocent Americans. But the real danger here is not the idea that Madoff will kick off a new era of anti-Semitism in America. This sort of behavior is loathsome and upsetting, yet such people constitute a tiny minority that has little influence over American society or culture.
Rather than worrying about anti-Semites, it would be far better for Jews to concern themselves with the flaws in our own world that Madoff has exposed.
First, this scandal should serve as a wake-up call to every Jewish organization and foundation; checks and balances must be put into place to guard their resources. Madoff was able to steal from so many philanthropies specifically because few of them were willing to ask questions about the unrealistic returns he promised. If such vast sums are entrusted to people only on the basis of personal associations and reputations, then we must expect that scandals such as this will inevitably follow.
Just as troubling is the realization that Madoff purchased some of his false reputation as a man of honor by giving generously to Jewish causes. Few, if any, Jewish institutions have the resources to vet donors. Given the need for funds, most prefer not to ask questions of those who are willing to give. In a philanthropic culture of continuing need and a shrinking donor base, the impulse is to look the other way about anyone who will become a donor.
In sum: When trust and respect are purchased only with money rather than good deeds, we cannot be surprised when some of those who are anointed as "Jewish leaders" in this way turn out to be scoundrels. At a time of such fiscal crisis, rather than being able to count on the organized Jewish world to help more people, we now discover that many of our most valued institutions have been looted by a thief who used his standing as a philanthropist to further his crimes.
The most tangible result of Madoff's treachery is that philanthropies and groups that have helped the needy and supported Jewish education can no longer do so. Still, as much as we may condemn this well-heeled scam artist for the suffering he has caused, we should not avert our eyes from the reality that a culture of honoring wealth above all other virtues was his most powerful enabler.