What were the real losses?


While it has been repeatedly reported that Yeshiva University lost $110 million in the Madoff scheme, the school told Bloomberg News yesterday that its actual investment was only $14.5 million.

The school invested $14.5 million with Ascot Partners, a hedge fund owned by J. Ezra Merkin that put its money solely into Madoff’s scheme, and while the value of YU’s investment had risen to $110 million according to the statements the school received from Ascot, that increase was based on fictious profits.

From Bloomberg:

Yeshiva University said its previously reported profits in a fund tied to Bernard Madoff were ‘fictitious,’ underscoring how customers of the money manager may have been misled about the investment gains they had amassed.

The school said it had a net investment of $14.5 million tied to Madoff as of Dec. 11, the day he was arrested, according to an e-mail today from J. Michael Gower, the New York school’s vice president for business affairs and chief financial officer. Yeshiva said a financial statement from Ascot Partners, which fed to Madoff, valued the investment at $110 million as of Dec. 16.

Madoff was charged with operating a Ponzi scheme that may have bilked investors of $50 billion. Yeshiva’s endowment value fell to $1.2 billion, from $1.7 billion last Jan. 1, the school estimated five days after his arrest. Part of the decline was attributed to the collapse of Ascot. Yeshiva today said the Madoff-related loss assumed profits that weren’t real.

“Although the university has an estimated loss of approximately $110 million, it now appears that any ‘profits’ above the $14.5 million were fictitious,” Gower said in the statement.

The report again bears the question: What were the actual losses in Madoff?

The American Technion Society was the first organization to publicly separate out to the Fundermentalist what their actual losses were vs. their fictition loss — a $29 million initial investment along with $43 million in "profits" which totalled a $72 million loss.

Hadassah initially announced that it had lost $90 million, and later explained that its investments with Madoff totaled $40 million.

Hadassah, Y.U. and Technion were three of the major losers in terms of Jewish organizations and institutions. 

On paper, their total losses add up to $272 million. But their total investments were a combined $83.5 million — a large sum for sure, but nowhere near the more than a quarter of a billion dollars initially reported. And if one would want to put as positive a spin on this as possible, it is fair to say that a good 15-30 percent of that $83.5 million would have been lost over the past year if these organizations had invvested it with legit money managers.

Of course, paper or real, the losses mean that organizations and institutions will be looking at smaller annual allocations from their endowments to boost operating budgets — the hardest thing to raise money for — and will have less cash in the bank to count on when mapping out future plans.

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