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L.A. Story: More details on local losses

The L.A. Jewish Journal has a lengthy article with more details about how the city’s nonprofits have been impacted by the Madoff scandal:

The Jewish Community Foundation (JCF), which manages the endowments of some of the biggest Jewish social service agencies in town, had $18 million of its common-investment pool in Madoff’s fund. The JCF pool, which was diversified across several investment advisors and at the end of October listed assets of $238.6 million, handled the endowments of The Federation, JFS, Jewish Free Loan and a handful of other local nonprofits. By October, the Madoff investment had grown to $25.5 million – the balance on that portion is now zero. …

The Federation appears to have been the hardest hit by the loss in that common-investment pool. It suffered a $6.4 million hit. …

Culver City-based Beit T’Shuvah, a drug and alcohol rehabilitation clinic for Jews, contributed $8 million to the common-investment pool. Founder and CEO Harriet Rossetto said Monday she wasn’t sure exactly how much they had lost, but she was told the overall fund was down by 11 percent, which meant the organization may have lost almost $900,000. Those in need of help would feel any loss, she said.

"This is endowment money. It is our future," Rossetto said. "We work very hard for every penny we get. There is not an immediate crisis that the doors are going to close today, but my questions are just amazement at the number of supposedly savvy, sophisticated financial people – and I am not – who trusted a guy who should be a resident at Beit T’Shuvah, who managed to pull off an elaborate scam because he looked good."

Stanley Gold, chair of the federation, says he’s waiting for more details from the people who run the foundation. Meanwhile, the people at the foundation say they are lawyering up in the hopes of recovering some of the money that they handed over to Madoff:

The news caught up to Stanley Gold, chairman of The Federation, in London late last week. He responded by copying his board on a letter to Marvin Schotland, JCF president and CEO, asking for an explanation of what had happened to The Federation’s savings.

"Before I decide exactly what to do, I need to have the facts," Gold told The Journal in a phone interview this week. "There may be all kinds of opportunities to recover from institutions or insurance companies, but I don’t want to get the cart before the horse. I need to know the facts. I have asked the questions, and I intend to get the answers in four to five days. And they [JCF] have told me they intend to be fully cooperative."

JCF issued an open letter Monday that stated that less than 5 percent of the assets it manages were invested with Madoff and that none of its donor-advised funds, which the foundation manages for about 1,200 individuals and families, were affected.

"The loss, while unprecedented in the foundation’s 54-year history, does not threaten the foundation’s stability, its existing commitments or its ability to maintain its leading role in the Los Angeles philanthropic community," the letter, distributed via BusinessWire and signed by Schotland and Chair Cathy Siegel Weiss, stated.

JCF has retained legal counsel and is "aggressively pursuing every possible recovery and remedy," the letter said. However, an article in the Wall Street Journal Monday suggested that investors are unlikely to get any money back, and that those who cashed out profits from Madoff’s fund may have to give some back.

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