Science Careers Blog

December 16, 2008

Madoff Scandal Hits Philanthropies and Institutions

The arrest of financier Bernard Madoff on 11 December on investment fraud charges has sent waves crashing into scientific institutions and philanthropies that invested in Madoff-backed schemes. Madoff contributed widely to and served on boards of various Jewish and Israeli charities and institutions, many of which invested in his hedge fund. Prosecutors say Madoff's fund was a $50 billion scam.

Yeshiva University in New York, home to the Albert Einstein School of Medicine, has apparently taken a significant hit. The Albert Einstein school is a major research facility, as well as a medical training institution. Sources at Yeshiva told the JTA news service that the school has lost at least $100 million from its endowment because of Madoff investments. Madoff served as treasurer of Yeshiva's board of trustees.

Technion-Israel Institute of Technology, in Haifa, Israel, invested in Madoff's securities, according to the Israeli daily Ha'aretz, which estimates its losses at about NIS 25 million ($6.5 million).

Victims of Madoff's apparent fraud include foundations headed by household names such as Nobel laureate Elie Weisel, Senator Frank Lautenberg, and film director Steven Spielberg, as well as many smaller family foundations and institutions that serve Jewish communities in North America, Europe, and Israel. Madoff managed most of the investment income of Spielberg's Wunderkinder Foundation, which donated some $3.3 million for medical research to Cedars-Sinai Medical Center in Los Angeles.

Charities with larger exposure to Madoff's schemes were less fortunate. The Robert I. Lappin Charitable Foundation of Salem, Mass., which supports exchanges of teachers and students between Israel and the United States, invested all of its $8 million in Madoff's fund and has shut down.

The Madoff scandal has further shaken an already nervous environment for philanthropies. John Ruskay, executive vice president and CEO of the UJA-Federation of New York told JTA, "Already in the context of a very challenging economic environment this will present another significant difficulty. We don’t know yet the extent of the wreckage."

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