Despite a published report to the contrary, the president of the American Jewish Congress told The Fundermentalist Monday that his struggling organization is not facing a so-called clawback attempt by the trustee of Bernard Madoff’s estate in an attempt to re-coup money.
On Friday, eJewishPhilanthropy posted a report stating that the embattled organization was in settlement talks with Irving Picard, who has filed about 1,000 lawsuits seeking money from individuals who actually made money in Madoff’s multi-billion dollar scheme. Any money won in the lawsuits would be returned to those who lost money in the scheme. Among those being sued are about two dozen nonprofits, according to The Chronicle of Philanthropy.
A number of those in Picard’s crossfire have struck deals with the lawyer to avoid court, requiring them to pay back millions of dollars voluntarily. Hadassah: The Women’s Zionist Organization of America is the most notable nonprofit to have reached a deal, after agreeing to return to Picard $45 million of the estimated $90 million the organization actually made on its Madoff investments, as we old you last week.
Striking a deal with Picard could have been a difficult proposition for AJCongress, which has been teetering on the brink of extinction for the past two years, and was reportedly all but shut down this summer.
According to Bruce Buechler, the attorney representing AJCongress, “We are in the final stages of hopefully reaching an agreement. The reality is we have a deal in place with Picard’s people. Simply put, we just need a little more time to get our boards’ approval.”
AJCongress, which pretty much closed up back in July, had previously stated they lost $21 million of their $24 million endowment in the collapse of Madoff’s firm. One must wonder how they will actually pay any settlement arrangement.
But, according to the AJCongress’ Gordon, the organization was working on an agreement, but it was about how much the organization would receive from Picard, not how much it would pay him.
“There is no talk of a clawback from us with the trustee,” Gordon told The Fundermentalist. “We, like most organizations, are in discussion with how to settle this and are trying to move toward a solution. There has never been any serious meaningful discussion about a clawback. I don’t want the trustee to pick up these comments and feel I have broken his trust…. But Madoff stole approximately $23 million from us. There has been no discussion about [the American Jewish Congress] paying back money.”
The AJCongress, according to multiple sources with knowledge of the situation, had between $16 million and $18 million in two accounts bequeathed to the organization by two long-standing supporters, Martin and Lillian Steinberg. The money was left to the AJCongress in a Madoff account.
The organizations subsequently invested another $7 million of its own in another Madoff account.
All of that money, Gordon said, was lost, and whatever money was withdrawn from the accounts was far less than the original investments. In comparison, Hadassah began investing with Bernard Madoff Securities in 1988 with a $7 million gift, and then deposited another $33 million into its Madoff accounts. By April 2007, it had withdrawn $137 million.
“Hadassah signed for a completely different reason,” Gordon said. “I can in all honestly say [a clawback] never seriously crossed my mind once.”
Gordon added that despite laying off most of its staff in late July, AJCongress is continuing to run and is now contemplating its future.
"We are operating and working on a number of different projects," he said. "Obviously we are in a period of evaluating how to move forward…. the nature of how we go forward has not been determined yet."