12/31/08

Business Week: Publicly Crucified J. Ezra Merkin Will Leave GMAC and Yeshiva University May Sue Him

Business Week sends clear signals that J. Ezra Merkin is out of his GMAC job. The story cites an industry maven, who used a poorly chosen metaphor to describe his predicament, "You can't be chairman of a finance company when you have been publicly crucified for not doing due diligence." Regardless of the choice of words, we think that characterization seriously understates the predicament that Merkin is in.

BW also suggests based on a "source close to Yeshiva University's board of trustees" that Yeshiva University may sue Merkin, following the lead of NYU.
GMAC Chairman Merkin: On the Way Out
A board shakeup by GMAC's new biggest shareholder, the Treasury Dept., is likely to dislodge Merkin from the top spot, as well as several other board members
By David Welch

GMAC Financial Services (GKM) Chairman J. Ezra Merkin, whose ties to disgraced financier Bernard Madoff have led to several lawsuits, is expected to leave the finance company in a board shakeup that will nearly cut in half the number of directors.

Now that the federal government has stepped in with a $6 billion bailout package, the Treasury Dept. will become GMAC's biggest shareholder. As a result, the government will have a big hand in restructuring the GMAC board.

A Clean Sweep
That means there will be a clean sweep that will likely push out Merkin, along with most of the executives who were appointed to the board by owners General Motors (GM) and Cerberus Capital Management, say sources involved with the changeover. Day-to-day management, however, may stay in place.

GMAC's 12-member board of directors, of which Merkin is chairman, is expected to be clipped to seven directors. Cerberus has four executives on the current board, but will get only one voting director on the new board, says a source with direct knowledge of the new setup. GM will go from having four voting executives on the board to just one, nonvoting executive. It likely will be GM President and Chief Operating Officer Frederick A. "Fritz" Henderson or GM Treasurer Walter Borst, sources say.

Merkin is unlikely to remain under the new board structure. One source says that even before Merkin's links to Madoff's fraud case became public, he had decided that he was not going to stay after the Treasury Dept. took a bigger hand in GMAC.

NYU Sues Merkin
Earlier this week, Merkin was sued by New York University for feeding funds from the college to Madoff's investment firm, which is accused of defrauding investors. NYU also accused Merkin of concealing Madoff's fraudulent practices from the university. One source close to Yeshiva University's board of trustees says the college could sue Merkin as well. As a university trustee and chairman of its investment committee, Merkin steered funds to Madoff. An attorney for Merkin did not return several calls.

Even if the government didn't order up a new board for GMAC, "Merkin would have left anyway," says Maryann N. Keller, an independent auto industry analyst who sits on the board of Dollar/Thrifty Rental Cars (DTG). "You can t be chairman of a finance company when you have been publicly crucified for not doing due diligence." ...more

Bloomberg: How the Unholy Alliance of Merkin, Millstein and Madoff Robbed Millions from Yeshiva University

Today Bloomberg tells yet another chapter of the story. J. Ezra Merkin wanted the money. Ira Millstein said it was kosher to give it to him. Bernie Madoff took it from him, under the table, and poof, it disappeared.

That's what happened to $110 million or $14.5 million of their endowment, depending on when you ask Yeshiva honchos how much they lost in the World's biggest and most Jewish Ponzi scheme.

Principle Violated

There are few greater sins than to use your position of voluntary power on a non-profit board to reap a profit for yourself. When you agree to serve on a board you say by social contract that you are there to help, to give, to build the agency or school.

To the anti-social personality (i.e., the crook), serving on a board is just another opportunity to make a buck, to take, to help yourself.

How then did Merkin and Madoff get on the board of Yeshiva University, get their fingers into the funds and walk off with millions? How they got on is a story that we eagerly wish to hear. We know now that once there, they got a kosher seal of approval from a lawyer named Ira Milstein, to take the money from the endowment, an approval that was not worth the paper on which it was written.

That's surprising because according to Bloomberg, Millstein is a serious authority in management and law, a senior partner of Weil, Gotshal & Manges and a senior associate dean for corporate governance and a visiting professor at the Yale University School of Management in New Haven, Connecticut. But then again until a few weeks ago both Madoff and Merkin were highly regarded financiers.

In the core of the latest article that chronicles this "3M" alliance that cost Yeshiva its money and its reputation, Bloomberg hits the ball out of the park with this appallingly obvious universal assessment, directly at odds with what Millstein sanctioned:
It generally isn’t wise for a school to do business with its own advisers, said Alice Handy, founder of Investure LLC, which manages about $5 billion for 10 schools and foundations.

“It’s preferable never to have a business relationship with a board member,” said Handy, whose company is based in Charlottesville, Virginia, in a Dec. 30 interview.
Understated but elegant. It just is not done. It is treif. But they did it anyhow and now they have a mess.

WSJ: Lesson from Madoff Ripoff Crumbles Under Talmudic Scrutiny

The WSJ writer JAMES B. STEWART says in his Common Sense column, "The Lessons to Be Learned From the Madoff Scandal",
If you had the good fortune never to have invested in what may end up being the biggest Ponzi scheme in history, count your blessings. An alleged fraud like this could have happened to any of us, as it did to some of the world's most sophisticated investors. There are lessons here, though not necessarily the ones that have been touted by much of the media.
He concludes, after some of the most obvious platitudes, with this grand flourish,
At the same time, don't lose your faith in human nature. I spoke last week to a money manager with an unblemished reputation who had just spent four hours defending herself to a client who said she couldn't trust anyone in the wake of the Madoff scandal. Mr. Madoff is an especially shocking example, but he is an aberration. The vast majority of money managers are honest, hard-working professionals with their clients' best interests at heart. The financial system operates on trust backed up by regulation. Both failed in Mr. Madoff's case, but that doesn't mean everyone is a crook.
We subjected this paragraph to Talmudic scrutiny and came up with a big zero. The idea that a person making money from your investing activity in various instruments has "your best interests at heart" just flies in the face of Talmudic logic.

The financial advisor has his or her own interests at heart. He or she will please you and make money for you as long as that serves his or her interests.

The Talmud teaches: If I am not for myself than who is for me?

You and you alone have your best interests at heart. Your FA will never tell you to pull all your money out of the markets and put it into cash. If he did he indeed would be the "aberration" and the "shocking example." That's why you lost all that money this past year.

In October 2007 the big banks knew that you should be cashing out. Did they tell you then? Did they ever tell you?

The WSJ in this article just does not compute. It fails Talmudic scrutiny.

Bergen Record: Loretta Weinberg - a hero of common sense after her Madoff losses

We wish good luck to our local politician Loretta Weinberg and all those who lost money to crooks like Madoff and Merkin and to those who lost in general in the stock market tsunami of the past year. Whether it was 50% or 100% of your investments, it's difficult sure, but it's only money. Loretta says it plainly and honestly in today's paper and we agree. She is a bit modest though. She has her sterling accomplishments in a career of self sacrifice to public service. That's one fine example for us all.
Weinberg: Despite setbacks, life goes on after Madoff scandal
BY LORETTA WEINBERG

AS I CONTEMPLATE the shocking news about my financial losses connected with the Madoff scheme, it has been an unsettling experience.

I appreciate the gentle words of encouragement and admiration from friends, colleagues and even some folks I've never met. And I try to ignore the mean and vicious (and sometimes anti-Semitic) comments made by the crazies who blog anonymously to spew their own hostilities about the world around them. I worry about my larger family, and think about the fallout from the many charities that will no longer help those less fortunate. How can someone try to ruin the Elie Wiesel Foundation? Yes, definitely shocking.

And it is painful to realize that all that I planned to use for my grandkids' college education or to take them on a trip to Disneyland no longer exists.

I was hesitant to talk about all this publicly before I gave that first interview to a reporter from The Wall Street Journal, who seemed to want to get to the bottom of it all. I wish him luck. My hesitancy arose from the fact that my life (and that of my extended family) has never been defined by how big we thought our IRAs were growing. And I certainly don't intend my future life to be defined in that way either.

Pride

I love the work I do as a state legislator. I am particularly proud of the part I've played in trying to help clean up a corrupting political environment. I intend to continue in these roles. I also hope to play a future part in getting our federal government to make sure that the so-called regulators actually do their jobs.

I hope that my decision to publicly discuss being victimized in a scheme that has taken so many innocent folks along the way is not a cause of shame. Life as a public official is more or less an open book, and, for me, this is a footnote in that book.

I know that I am more fortunate than most. I can pay my mortgage and other minimum daily expenses of my life. I have work that I love and that is important.

I have a family rising to the challenge of making their own way in the world. Friends and colleagues are particularly appreciated. And my annual Super Bowl Party will go on with folks bringing some of the pizza.

And, no, there will be no new flat-screen television, which I promised everyone last time, but the Giants will still be cheered on by all of us.

We have much to do to help our economy stabilize and then grow, both nationally and in our state. We have to debate the alternatives and then come together to decide solutions and ways to improve.

We have to remember the families who can't pay their mortgages and are facing foreclosures. We have to figure out how to face ballooning deficits both nationally and in our state.

No easy answers

I know there are no easy answers to this bumpy future road. But each of us, along with each member of our respective families, must travel that road individually and collectively. I know it is scary, but I will try to do it with a little fortitude and appreciation for all I do have.

Together we will face a new year filled with trepidation, but also with many new promises. I look forward to the challenges facing us.

My prayers are with our new president and with each of us. May we share a happy New Year!

Loretta Weinberg of Teaneck is a state senator serving the 37th District. She was reported to have lost her life savings as a result of the alleged Ponzi scheme by Bernard Madoff. Authorities say total losses for all victims stemming from this scandal may top $50 billion.

12/30/08

Crain's: Yeshiva University Now Claims it did not lose Merkin's Fictitious $95.5 Million

Talmudic reasoning alert! See, they are not that stupid and irresponsible after all!

According to Crain's, Yeshiva University now claims it did not lose Merkin's fictitious $95.5 million profits. It just lost $14.5 million that it gave him to invest.

Hooray. Isn't that great talmudically reasoned news? Next we will hear about how this episode is really a net gain for the school.

Yes, stay tuned to the ongoing soap opera, As the Yeshiva Spins.

But seriously folks, this announcement seriously mitigates the school's claims of damages. Why would the lawyers allow the PR department to undercut their claims before they have even made them? Yikes.
Yeshiva revises Madoff losses to just $14.5M
By Aaron Elstein

Yeshiva University sharply lowered its estimated loss from investing with Bernard Madoff, saying it now appears to have had just $14.5 million tied up with the disgraced financier instead of $110 million.

The university attributed the vast difference to “fictitious” numbers provided to it by Ezra Merkin, the former chairman of Yeshiva’s investment committee who served as middleman between the school and Mr. Madoff.

The university said in a prepared statement that it had $14.5 million invested with Mr. Madoff at the time of his arrest. The administration had thought that figure had grown to $110 million, thanks to Mr. Madoff’s investing acumen. However, “it now appears that any ‘profits’ above the $14.5 million were fictitious,” said Yeshiva’s vice president for business affairs and chief financial offer, J. Michael Gower.

While the university faces a much less severe loss than previously estimated, it still doesn't possess the $110 million administrators were counting on. The university will likely have to restate its $1.2 billion endowment, a person familiar with the matter said.

Two weeks ago, Moody’s Investors Service warned that it might cut Yeshiva’s credit rating. The ratings agency also raised concerns about governance at Yeshiva, where Mr. Madoff served as treasurer of the board of trustees and chairman of its business school until his alleged $50 billion Ponzi scheme came to light earlier this month.

Moody’s analyst Kimberly Tuby couldn’t be reached for comment on whether the new loss estimate would change her firm’s assessment of Yeshiva’s financial health.

The fact that Yeshiva’s losses appear to be much less severe than initially feared raises the possibility that other customers of Mr. Madoff are in the same situation. Conversely, investors who thought they had big investment gains may find those profits never really existed.

In the meantime, Mr. Merkin faces a date in court next week with another unhappy client, New York University, which says it lost $24 million investing in Mr. Madoff’s funds via Mr. Merkin and is seeking a temporary restraining order. A hearing is scheduled Tuesday afternoon in New York State Supreme Court.

12/29/08

LATimes: Pope and Vatican Declare Galileo Not a Heretic

Galileo is a hero of faith says the Vatican.

In 1992 they merely said that his 1633 trial was a mistake.

We all make mistakes.

Now they say, "Galileo Galilei was a man of faith who saw nature as a book authored by God."

Yay Vatican. Way to go!
Galileo's lucky stars: Vatican calls its famed heretic a hero of faith and science
By NICOLE WINFIELD, Associated Press Writer

VATICAN CITY (AP) — Galileo Galilei is going from heretic to hero.

The Vatican is recasting the most famous victim of its Inquisition as a man of faith, just in time for the 400th anniversary of Galileo's telescope and the U.N.-designated International Year of Astronomy next year.

Pope Benedict XVI paid tribute to the Italian astronomer and physicist Sunday, saying he and other scientists had helped the faithful better understand and "contemplate with gratitude the Lord's works."

In May, several Vatican officials will participate in an international conference to re-examine the Galileo affair, and top Vatican officials are now saying Galileo should be named the "patron" of the dialogue between faith and reason.

It's quite a reversal of fortune for Galileo Galilei (1564-1642), who made the first complete astronomical telescope and used it to gather evidence that the Earth revolved around the sun. Church teaching at the time placed Earth at the center of the universe.

The church denounced Galileo's theory as dangerous to the faith, but Galileo defied its warnings. Tried as a heretic in 1633 and forced to recant, he was sentenced to life imprisonment, later changed to house arrest....
Little known fact. What do Bernie Madoff and Galileo Galilei have in common? Both were subject to house arrest.

[Hat tip to John H. in Iowa. Happy holidays John.]

Washington Post: Religious Teens Break Virginity Promises and then Have Sex at Average Rates

A study shows that teens don't seem to care much about the sin of bearing false witness by taking a religious oath to remain virgins and abstain from sex and then engaging in sex at the same level of activity of teens who made no such pledge. "Teenagers who pledge to remain virgins until marriage are just as likely to have premarital sex as those who do not promise abstinence," the report on the study says. The difference between the two groups? The religious teens who pledge abstinence are learning how to "retract their promises."

According to the story, "Premarital Abstinence Pledges Ineffective, Study Finds," our government funds these 82% worthless plans with mega-millions. Here is a crucial excerpt:
...Rosenbaum analyzed data collected by the federal government's National Longitudinal Study of Adolescent Health, which gathered detailed information from a representative sample of about 11,000 students in grades seven through 12 in 1995, 1996 and 2001.

Although researchers have analyzed data from that survey before to examine abstinence education programs, the new study is the first to use a more stringent method to account for other factors that could influence the teens' behavior, such as their attitudes about sex before they took the pledge.

Rosenbaum focused on about 3,400 students who had not had sex or taken a virginity pledge in 1995. She compared 289 students who were 17 years old on average in 1996, when they took a virginity pledge, with 645 who did not take a pledge but were otherwise similar. She based that judgment on about 100 variables, including their attitudes and their parents' attitudes about sex and their perception of their friends' attitudes about sex and birth control.

"This study came about because somebody who decides to take a virginity pledge tends to be different from the average American teenager. The pledgers tend to be more religious. They tend to be more conservative. They tend to be less positive about sex. There are some striking differences," Rosenbaum said. "So comparing pledgers to all non-pledgers doesn't make a lot of sense."

By 2001, Rosenbaum found, 82 percent of those who had taken a pledge had retracted their promises, and there was no significant difference in the proportion of students in both groups who had engaged in any type of sexual activity, including giving or receiving oral sex, vaginal intercourse, the age at which they first had sex, or their number of sexual partners. More than half of both groups had engaged in various types of sexual activity, had an average of about three sexual partners and had had sex for the first time by age 21 even if they were unmarried.

"It seems that pledgers aren't really internalizing the pledge," Rosenbaum said. "Participating in a program doesn't appear to be motivating them to change their behavior. It seems like abstinence has to come from an individual conviction rather than participating in a program."

While there was no difference in the rate of sexually transmitted diseases in the two groups, the percentage of students who reported condom use was about 10 points lower for those who had taken the pledge, and they were about 6 percentage points less likely to use any form of contraception. For example, about 24 percent of those who had taken a pledge said they always used a condom, compared with about 34 percent of those who had not.

Rosenbaum attributed the difference to what youths learn about condoms in abstinence-focused programs...
The fundamentalist religious leaders will continue to support these failed abstinence programs even though, as we said, all they are accomplishing is training teens to lie about not having (often unprotected) sex - excuse me, I mean they, "retract their promises."

12/28/08

AP: Hamas Rocket Aimed at Israel Kills Gaza Schoolgirls Instead

I'm annoyed that in the print edition our local Bergen Record sub-titled its AP article today, "Punishing strike on Hamas: 230 killed as Israel retaliates for rocket attacks."

I will take the use of the term "Punishing" in the title in a neutral way. Not that Israel was executing a punishment on Hamas, but rather that the attacks were "harsh" which indeed they seem to have been.

However I cannot allow the use of the term "retaliates" to go unchallenged. The story below that headline makes clear that retaliation was not the motive for the Israeli attacks. Israeli policy is governed by modern and rational military and diplomatic principles. Hamas has an articulated policy in place to bombard Israeli civilian targets with rockets. The Israeli strikes were intended to inflict damage on Hamas to prevent future Hamas rocket attacks on Israel. No primitive notion of retaliation, no ancient notion of eye for an eye, was even hinted at in the AP report. The Bergen Record ought to know better than to use headlines to turn international AP reporting into a platform for a local paper to impute false motives to Israel's leadership.

I do make note that the sub-title is absent from the web version of the story.

Ironically, given the tragic events of last Friday, the efforts by Israel to halt Hamas rocket barrages, designed to help protect the safety of civilian Israeli citizens, will also protect the civilian children of Gaza from death by Hamas terrorist rocket.
Palestinian rocket misfires, kills 2 girls in Gaza
By IBRAHIM BARZAK, Associated Press Writer Ibrahim Barzak

GAZA CITY, Gaza Strip – A crude rocket fired by Palestinian militants fell short of its target in Israel on Friday, striking a house in the northern Gaza Strip and killing two schoolgirls.

The attack came as Israel sent mixed signals over its plans to respond to continuing Palestinian rocket fire. Israeli defense officials say politicians have approved a large-scale incursion into the territory once rainy conditions clear. But at the same time, Israel appeared receptive to international pressure against an invasion, opening the Gaza border Friday to allow in deliveries of humanitarian aid.

None of Gaza's militant factions claimed responsibility for the deadly attack on the house in Beit Lahiya. Gaza Health Ministry official Dr. Moiaya Hassanain said the two victims, ages 5 and 12, were cousins. Three other children were wounded, he said.

The girls were the first Palestinian civilians inadvertently killed by militants since their truce with Israel began collapsing six weeks ago. Family members and medics said they were killed by rocket fire...more

12/27/08

Rocky Mountain News: The Tale of Colorado Con Man Arnold Zaler on the Lam in Jerusalem

Lest you think all Jewish con men like Madoff and Merkin come out of New York City, here's a sordid tale of scammery out of the Rocky Mountain states of Colorado and and Arizona.
Candidate to con man: Deli owner in string of scams said to be living free in Israel
By Sara Burnett, Rocky Mountain News

Arnold Zaler stood before a federal magistrate judge on the morning of March 11, about to pull off one of his best scams yet.

The businessman known to most as "Arnie" was charged with 30 counts of bank and wire fraud for a scheme involving his kosher hot dog company and Denver's biggest sports venues.

If convicted, he faced more than 30 years in prison.

The judge, with no objection from prosecutors, set Zaler's bail at $25,000, unsecured. Zaler could go free without posting any money or property, but he had to agree not to leave the state of Colorado.

That same day Zaler turned over his passport and temporary travel documents issued by Israel, where he has told people he has dual citizenship.

Thirteen days later, he boarded a Delta Air Lines flight in Atlanta, bound for Jerusalem, the FBI has since learned.

Authorities here haven't seen him since.... all the sordid details here....

WSJ: Madoff Robbed the Jewish Fat Cats So Bring Back the Pushke


Lucette Lagnado, a former editor at the Forward and now a reporter for The Wall Street Journal, waxes rhapsodic in the aftermath of the crimes of future-cellmates Madoff and Merkin and their ilk and the resultant decimation of Jewish philanthropy.

Her solution, together with a wonderful WSJ graphic, is to bring back the pushke (charity box) to replace the loss of those big donors.

This echoes for the Jewish community some small sliver of what motivated the larger populist wave that brought us last month the political victory of the democrats and Barak Obama.

We all just want to feel like we are part of the process.

After she reviews the scandal she makes a case. Listen to her conclusions in "OPINION: HOUSES OF WORSHIP - When the Big Spenders Fail, Who Will Save Jewish Charity?"...
...I would like to see the comeback of the pushke -- the little collection box that was once in every Jewish home. To be sure, I don't want Jewish charities to suffer; it is simply that in our post-Madoff universe I find myself longing for the kind of more humble, more individual tzedakah, or personal charity, that took place before the rise of the uber-Jewish foundations and zillionaire philanthropists.

There was a time when every Jewish family was expected to have a pushke. It was part of a simple and deeply felt tradition of individual giving that called for everyone, even little children, to donate some coins as a show of faith and a commitment to charity. My own home had multiple boxes, and every once in a while, typically on a Sunday, a rabbi would appear to collect the contents and we would start again.

I recall how good it felt when, as a child, I dropped a quarter or a dime into the pushke on Friday afternoon before the Sabbath. I loved the feel of the box when it was full. When I walked on the streets of Bensonhurst, Brooklyn, then a very Jewish area, I would sometimes see women in the street shaking their boxes for favorite causes.

Back then, instead of relying on a few megadonors, the Jewish community relied on donors like my dad. He favored charities in Jerusalem, and regularly would dispense two-figure checks of $10 or $20 to his pet causes -- orphanages, trade schools, even a bride's fund designed to help orphaned girls obtain wedding dresses and veils for their big day.

It would be lovely to see the return of little checks -- the donations everyone could afford to give and often did. Neither they nor the pushkes require the fund-raising galas and the elaborate administrative structures that have become the norm across the Jewish charitable world.

Some Jewish leaders may blanch at my words. Prof. Wertheimer notes that "Jewish organizational life has become much more expensive -- nickels, dimes and pushkes aren't going to do it." Though Mr. Kane at the UJA and others now hint at new strategies to broaden the donor base, some Jewish leaders are ready to return to business as usual, sending the message that we must get in some big checks to replace the money that was lost. But this scandal makes me wish we could remember the values of our shtetl and think small again.
Lucette doesn't really want the shtetl back. She clearly does want to be a part of the process doing good.

To me that means we need to replace the present republican-thinking mob who have usurped the roles of leadership of Jewish philanthropy and community life with a new democratic-oriented gang. Not an easy road ahead.

12/26/08

iSkoot Wins Our Harris Epstein Award for Best Invention of the Year

ISRAEL21c reports on the innovative iSkoot service that we have judged worthy of our Harris Epstein Award for great inventions.

Epstein was my great grandfather and a clever inventor and holder of several US patents. We unabashedly try to keep this award in the family. David Guedalia, inventor of iSkoot is my cousin and a great great grandson of the illustrious Harris Epstein.
Hooking up to Skype via your cell phone
By David Shamah

In these tight financial times, investors and venture capital companies won't part with even small funding commitments unless they really - but really - believe in a product. Much less $19 million. But iSkoot, an Israeli developed application that lets mobile phone users take full advantage of the Skype online phone system, inspires confidence, because of what the application does, and because of the people behind it.

At iSkoot, says company co-founder and CTO David Guedalia, it's all about making life easier for phone service suppliers, and their customers. "While there are many applications that let users make online phone calls, iSkoot is different, because our system doesn't overwhelm the service provider. Plus, it takes less of a toll on handsets," he tells ISRAEL21c.

Dialing into Skype

iSkoot allows callers to use a regular phone call to dial into an iSkoot gateway server. From there the call is completed via the Internet, as if you were using Skype from your computer.

The result: Users can hook into the Skype network from their cell phones, making long distance calls to other Skype users around the world for the price of a local call. And, they can make long distance calls to landlines using their Skypeout minutes. Users save money on their cell phone bills, and because the connections are made on iSkoot's hardware, service providers have less processing to do on their networks. Plus, the system also eliminates long distance termination fees due to other operators.

It's such a great idea, says Guedalia, that the Hutchinson's 3 network bundled iSkoot on its 3 Skypephone handset, a fully-featured 3G Internet phone that allows users to access Skype service from their cell phone. For Hutchinson and Skype, it's a natural: users dial in to their local number in order to access Skype services, and Skype gets contact with mobile users.

In its latest third round of financing led by the Vision Opportunity Master Fund, iSkoot, a 30-employee company, netted an additional $19 million in development money - amid rumors that the company is set to close a deal with another major cell phone operator, to build a mobile platform for them.

Guedalia, who founded iSkoot with brother Jacob (a third brother, Josh, who works with the team, makes iSkoot a family affair), has been tinkering with Internet/phone/voice services for years. His previous startup, which began life with the name Shoutmail (later called Mobilee), was eventually purchased by NMS Communications in the US.

From apples to emails

"At Mobilee, we tried to realize the vision of bringing the Internet to phone voice services," Guedalia says. "We started out with an application that let you hear your e-mail read to you over the phone, and eventually developed a platform that let users call in and get weather, news, and other information just by asking for it, bypassing phone menu buttons."

Before that, he was involved in a number of other startups, including Live Picture, where he was the chief architect for the team that developed Live Picture's Image Server products. His first programming venture? Apples. "I worked for a company called Fruittonics and helped develop a system to sort apples according to quality, using a new neural network approach," he says.

Both iSkoot and Mobilee are located in the hilly town of Bet Shemesh, where Guedalia and many of the company's employees live. Bet Shemesh, a growing city about a half hour from Jerusalem, has been a magnet for western olim over the past several years, with new housing built in the city's Givat Sharrett and Ramat Bet Shemesh neighborhoods. The area boasts some of Israel's largest forests, quaint small towns, wineries, and interesting archaeological sites.

Unlike many entrepreneurs who seek out fancy digs in "hot" high-tech areas, like Jerusalem's Har Hotzvim or Herzliya Pituach, Guedalia believes in building up local communities. So, iSkoot is located in an industrial zone about 10 minutes out of Bet Shemesh.

In a bid to encourage high-tech business to relocate to the area, Guedalia, and colleague Zvi Wolicki, established the Shimshon High-Tech Forum several years ago to enable local companies to network, show off their products and services, and help people find jobs in the area.

The eventual goal: Construction of a high-tech center in the area, similar to those found in places like Tel Aviv's Ramat Hahiyall or Petah Tikva's Kiryat Aryeh, where buildings housing high-tech companies revitalized aging manufacturing districts, attracting restaurants, shops, and leisure facilities.

Guedalia's interests don't end there. He has been active in local politics, establishing a political party called Chen that had a seat on the city council until the most recent municipal elections. Plus, he runs an internship program that allows disadvantaged youth to get involved in high-tech, giving them the opportunity to check out a career alternative they might not have believed would be open to them.

The Excommunication of Bernard L. Madoff

In a letter that he has published on his blog, Rabbi Joshua Hammerman makes a strong case for the excommunication of Bernard L. Madoff from the Jewish community.

I say, Amen. As far as I am concerned Madoff is herewith excommunicated from the Jewish people.

Hammerman says that means, "He is not welcome in any synagogue, JCC or Federation event anywhere. No rabbi will marry him or bury him. No organization will make excuses for him. He is ... cut off. Period."

Actually full excommunication means more than that.
The more severe form of Jewish excommunication is called herem. That term, related to the Arabic-derived word “harem,” signifies a “devoted thing,” something that is forbidden for common use. In the Hebrew Bible, the herem—generally translated as “utter destruction” in the King James translation—is the ultimate curse pronounced by the Lord upon the intransigently wicked, resulting in both physical and spiritual destruction. In rabbinic times, a decree of herem is announced by a rabbi standing in front of the open Torah ark, the most sacred place in the synagogue, perhaps even holding the Torah scroll in his hand. The shofar, or ram’s horn, is sounded, candles are snuffed out, biblical curses are recited against the excommunicant, and warnings are issued against associating with him. The excommunicated person is required to study alone and is permitted to receive only the barest necessities of life from other Jews. Dramatically, his coffin is stoned at burial. In the medieval period, not only was the excommunicant himself treated as a non-Jew, but his spouse and children were often also ostracized.
Kindly join our decree of excommunication. Please add your endorsement in the comments to this post with your own chosen appropriate words of vilification.

Bernie Madoff's Motivations, Miracles and the Messiah

We are talking about L'Affaire Madoff in the post office, in the locker room, at our Hanukkah parties, in our synagogues and churches, at the supermarket, everywhere. Jews and Christians are talking. Even Hindus are wondering about it. It's a big story.

Some people are asking about the Madoff psychology (viz.  Allan Chernoff at CNN). What made him think he could pull this off? What freed him from all bounds of conscience?

People are asking if it is important to note that he is Jewish? The AP writes that Some Jews fear case stokes anti-Semitism. Duh. Most definitely - all Jews worry about that.

Know well. We can never enter into the mind of a Madoff and discover the tortured paths of reasoning that enabled and motivated his evil deeds.

We can speculate.

What bothers me is the obvious. I keep thinking that someone who starts a Ponzi scheme knows without a single doubt that there is no exit at the end. You can never sell the business, pay back your investors or walk away. Perhaps his death or disappearance would relieve the principal perpetrator of some humiliation or suffering at the end. But there is no satisfactory conclusion to the narrative of the Ponzi scheme other than collapse and prison (and for Ponzi himself, ultimately deportation). So what was Madoff thinking and believing?

Here is where religion might enter in. If he has Jewish beliefs (and we don't know if he is a believing Jew) then Madoff could have thought to himself that the Messiah would come before his scheme collapsed, and that in the messianic age he would not be required to pay back his investors. Stop laughing. It's a possible explanation, as good as any other.

If he has only general religious beliefs, then maybe he believes in miracles? Only a miracle could enable him to escape at the end of a Ponzi scheme. Or perhaps Madoff is secretly a Christian and believes that at the end of the line he can be forgiven of his sins and born again by dint of faith in the Christian savior. Hey. It could be.

Another point about motivations. Madoff's scheme is so way out of proportions it begs for an explanation. The sheer magnitude of the chutzpah of the Madoff scheme boggles the imagination of us ordinary humans. It's a drama of cosmic proportions - it's a plot of biblical and canonical size. So I begin to wonder - maybe Madoff studied a lot of bible as a kid and it help inspire the size of his nefarious ambitions. Hey. We all say that the bible is a book of inspiration.

Bernie now knows that no miracle saved him and that the Messiah did not come in advance of the collapse of his evil financial empire. There was no deus ex machina dropping down to save the protagonist of this drama.

Bottom line. Religion provides great motivations for personal good and for the betterment of society when it is employed by good people.

We ought to at least entertain the thought that confused, dysfunctional, sociopathic people can find their own solace in their private grotesque distortions of religious tenets.

12/25/08

The TimesOnline (UK) Visited the "Sombre" "Private" "Low-key" 5th Avenue Synagogue After NYU Sued J. Ezra Merkin

The 5th Avenue Synagogue where "tarnished financier" and "once-respected money manager and philanthropist" J. Ezra Merkin serves as president is not in fact located on 5th Avenue and never has been in its 50 year history. It's always been located in a small row house building on 62nd Street. Accuracy of naming and representation is optional at this synagogue, of recent fallen into ill-repute.

The TimesOnline (UK) visited the "Sombre" "Private" "Low-key" 5th Avenue Synagogue on this Hanukkah/Christmas morning and reported on the mood there.

And by the way, some descriptions of the synagogue reported in this story reminded me of this personal anecdote (circa 1972).
After he finished his week's teaching one Thursday afternoon, I was driving my revered teacher Rav J. B. Soloveitchik to Laguardia Airport so that he could catch the Shuttle to Boston where he lived.

In the course of conversation the Rav asked me where I davened. I told him that because I lived on 68th Street, I often attended services at the 5th Avenue Synagogue on 62nd Street.

He told me he had never been there and asked me to describe to him that place of worship.

I told him when I went there on Shabbos it did not feel to me like I was davening in a shul.

He asked quizzically if it felt more like a "Synagogue."

I replied back and said, No, not really.

He asked, What then?

I told him that it seemed to me more like I was attending an event at a private club.

Aha, I understand, he said, with a knowing nod.
Below is the latest story in the continued unraveling of a most troubling string of revelations involving that synagogue and the son of Herman Merkin (d. 1999), the man who endowed the distinguished chair that Rav Soloveitchik occupied as a teacher at Yeshiva University.
University goes to court over $24m lost in Bernard Madoff scandal
Suzy Jagger in New York

This is not how J. Ezra Merkin, the president of the wealthy Fifth Avenue Synagogue on the Upper East Side of Manhattan, would have wanted to end its jubilee year.

On Wednesday, 50 years after his parents helped to set up one of the most powerful synagogues in the country, Mr Merkin was ordered by a New York judge not to conceal or destroy any documents relating to his investments with Bernard Madoff, whose alleged $50 billion (£34 billion) fraud scandal is rocking Wall Street and beyond.

The injunction formed part of legal action by New York University, which is suing Mr Merkin for turning over its investments to Mr Madoff in a move that lost the university $24 million.

Mr Merkin, who is chairman of the car loan giant GMAC, has been forced to liquidate his own hedge fund, called Ariel, because of losses incurred through Mr Madoff’s Ponzi scheme. It is thought that he also had about $1.8 billion of his other fund, Ascot Partners, invested with Mr Madoff.

In the two weeks since Mr Madoff confessed to his sons that his investment empire was “just one big lie”, it has emerged that he used Mr Merkin to exploit his impeccable, high-powered connections at the synagogue to find new clients and to tap into the vast network of Jewish charities who knew and trusted him.

Yesterday, the mood at the synagogue was sombre. While Christmas Day joggers shuffled past the modern building, near Central Park, Cantor Joseph Malovany and a handful of congregants talked inside over doughnuts and coffee after 7.30am prayers.

Myron Poloner, a member of the synagogue, told The Times: “We are all very concerned. This is an embarrassment. This is shocking. Many of us here have lost a lot, but then many of us can afford to – you know, it’s not like we gave him our last dollar. But it is terrible that he [Madoff] tried to harm the charities.”

Mr Poloner, who visited the synagogue yesterday for Chanukkah prayers, said that Mr Madoff was not mentioned by name inside the building. “We just say it’s ‘difficult times’,” he said. Another congregant, who declined to be named, said: “We are very private here. This is a very low-key synagogue. Merkin has not been here much since this broke. Everyone is concerned. I just feel terribly sorry for the not-for-profits. Things are very sombre inside.”

It is not known whether Mr Merkin will be forced to step down as president of the synagogue, but last Sunday [tzvee: I think they mean Saturday] he was greeted warmly when he attended a service there.

Such warmth must have taken genuine humanity: Ira Rennert, chairman of the synagogue’s board, had $200 million invested in Mr Madoff’s fund and is believed to be one of at least ten members who have lost money in the scandal. Elie Wiesel, the Holocaust survivor and Nobel Peace Prize winner and another prominent member of the synagogue, had $37 million of his own charity wiped out. Mort Zuckerman, the owner of the Daily News newspaper, lost $30 million from a charitable foundation that he had invested with Mr Merkin. Tufts University near Boston and New York Law School also signed large checks to Mr Merkin, who in turn placed the money in Mr Madoff’s care.

As the synagogue counted the cost of the alleged fraud, a group of French investors demanded that their own Government release a list of the country’s funds that had been exposed to Mr Madoff. SOS Petits Porteurs said that it had asked the Finance Ministry to provide a list of French funds “contaminated by the Madoff virus”.

The group said that many depositors were complaining that fund managers were refusing to discuss their potential losses or exposure to Madoff-related investments.

NYPost: NYU Lawsuit Filed Against Madoff Crony J. Ezra Merkin

NYU has filed a lawsuit against J. Ezra Merkin making damaging allegations as reported in the NY Post. The paper called Merkin a "tarnished financier" and concluded that, "The once-respected money manager and philanthropist has seen his reputation crumble as a result of his ties with Madoff."

One damaging aspect of the legal filing was the allegation of Merkin's attempts at willful and calculated deceit of NYU:
According to the lawsuit, Merkin in October suggested that NYU consider authorizing one of his funds, known as Gabriel, to invest the school's money with Madoff. The school declined, saying there was no oversight of Madoff's activities. At the time, Merkin declined to mention he had already invested nearly $25 million of NYU's money with Madoff, the school charges.

Merkin's ties to Madoff have slaughtered many already bruised university endowments. In addition to NYU, Merkin also managed money for Tufts University in Medford, Mass., which lost $20 million as a result of Merkin's reliance on Madoff. New York's Yeshiva University, where Merkin served as a trustee and chairman of its investment committee, lost $110 million.
The rest of the story is here.

12/23/08

Was Rene-Thierry Magon de la Villehuchet Jewish?

No. It is highly unlikely that Rene-Thierry Magon de la Villehuchet was a Jew. He descended from French aristocracy. His tragic death was reported today.

We will update this post as more information on his biography becomes available.
NEW YORK — A fund manager who lost more than $1 billion of his clients' money to Bernard Madoff was discovered dead Tuesday after committing suicide at his Manhattan office, marking a grim turn in a scandal that has left investors around the world in financial ruin.

Rene-Thierry Magon de la Villehuchet was found sitting at his desk at about 8 a.m. with both wrists slashed, NYPD spokesman Paul Browne said. A box cutter was found on the floor along with a bottle of sleeping pills on his desk. Police did not find a suicide note.

De la Villehuchet was one of several money managers and investors left reeling in the wake of Madoff's alleged $50 billion Ponzi scheme, and his suicide demonstrates how the repercussions of this gigantic scam are intensifying by the day.

De la Villehuchet, 65, was a distinguished financier who came from a long line of aristocratic Frenchmen, and he tapped his connections in the world of European high society to attract clients to his firm, Access International Advisors. It was not immediately clear how he knew Madoff or who his clients were...

De la Villehuchet (pronounced veel-ou-SHAY) comes from rich French lineage, with the Magon part of his name referring to one of France's most powerful families. The Magon name is even listed on the Arc de Triomphe in Paris, a world-famous monument that was commissioned by Napoleon in 1806.

Source: Harvard Endowment Lost 50% this Year

I've complained about my alma mater Yeshiva University losing more than 30% of its endowment this year to the market decline and to crooks like Madoff and Merkin.

Now it turns out according to Edward Jay Epstein on Huffington Post that Harvard was even more careless with its endowments.

They maybe lost $18 billion -- 50% of the value of their endowment.

Okay. It might be that the fund's value was inflated by its managers so they could walk away with large bonuses and hence was never ever really worth $36 billion. Still any way you slice and dice it, Harvard starts looking worse than YU...And they did not have a Madoff-like scandal.

Yikes. The smartest people in the world over there at Harvard Yard lost half of their endowment money? That sounds a bit irresponsible.
Harvard University's admission that it lost $8 billion from its $36 billion endowment fund, as staggering as it sounds, may grossly underestimate the true magnitude of the loss between from July 1 through Oct. 31 2008. According to a source close the Harvard Management Corporation (HMC), which runs the fund for Harvard, the loss is closer to $18 billion if the losses on the fund's illiquid investment are realistically appraised.

...Harvard University, which relies on the interest from its endowment fund for one-third its budget, needs to be more realistic. As its President, Drew Faust, noted in letter to the Harvard faculty, "We need to be prepared to absorb unprecedented endowment losses and plan for a period of greater financial constraint..."
More details of the losing Harvard investment strategies over at Huff Post.

Better Jewish Lessons from the Madoff Affair via the Times' Robin Pogrebin

Try, try again. Not satisfied with the answers it got at Yeshiva University yesterday, the Times sent a writer out for better post-Madoff Affair Jewish lessons.

These Jewish figures cited below (and a bit of what they said) are in tomorrow's article about Jewish Lessons of the Madoff Affair via the Times' Robin Pogrebin:
  • Rabbi David Wolpe, Sinai Temple in Los Angeles: After you die, God will demand of you, Were you honest in your business dealings?
  • Rabbi Jeremy Kalmanofsky, Congregation Ansche Chesed in New York: Judaism has highly developed mechanisms for not letting people control money without ample checks and balances.
  • Bradley Burston, columnist for haaretz.com: Bernard Madoff is like Santa Claus' gift to the anti-semite.
  • Burton L. Visotzky, professor at the Jewish Theological Seminary: If a Jew takes a loan out, in some ways the whole Jewish community guarantees it.
  • Rabbi Jennifer Krause (pictured above), author: The Talmud teaches that a person who only looks out for himself and his own interests will eventually be brought to poverty.
A well written and thoughtful newspaper essay. Much more to be said.

Times: Yeshiva University President Richard Joel Learns No Lesson From Madoff-Merkin Scandals


The Times came to YU to do a story titled, "Yeshiva U. Adds a Lesson on Madoff." And they reported that, "Yeshiva’s president, Richard M. Joel, declined to be interviewed for this story, as did the dean of the business school and members of the board of trustees."

The lesson that I learn from that fact is that these university managers are gripped by fear. Their fear follows several years during which they mainly reveled in the thralls of greed.

Greed and fear. Every money manager will tell you that those two emotions move the markets.

Richard Joel's greed was subtle but tangible. He could raise mega-millions for the endowment of his school, and be rewarded with compensation of close to $1 million a year, and reap an abundance of ego-enriching accolades for his visionary leadership.

Now he's feeling the emotional swing back to fear. He rightfully fears that he will be held responsible for escorting the gonovim into the board room. He and the dean and the other board members are responsible for fiduciary failures. They indeed may be held civilly culpable in a court of law. They may lose their jobs, their positions, their reputations. Not surprising that they are shut tighter than clams. The last thing they want is to be quoted in the New York Times speculating on what moral lessons we ought to learn from their fiasco.

We are certain that numerous lessons will unfold as time passes and as subtle and deep thinkers, like Norman Linzer, Shalom Carmy and their faculty colleagues at YU and elsewhere muster the courage to speak up and to speak out.

For now let me say that Richard and his ilk ought to have said to the Times that they brought the gonovim in to plunder the Yeshiva and for that they are sorry.

WSJ: Bank forclosures on bankrupt churches go up as economy declines

Banks have no mercy during bad economic times, even on houses of god. The Wall Street Journal chronicles tales of woe from overextended churches that have been forced into bankruptcy and into foreclosure.

No mention in the story of synagogues or temples in foreclosure or bankruptcy. A Google search on that subject doesn't turn much up either. In fact, in a gutsy move, given the recession and the crisis in Jewish philanthropy resulting from the Madoff scandal, new construction just started on the expansion of the Rinat Yisrael shul in Teaneck.

From the WSJ:
...Church Foreclosures

"We are seeing more stress in churches than we have in modern history," says Mark G. Holbrook, president and chief executive of the Evangelical Christian Credit Union of Brea, Calif., which specializes in lending to churches. The credit union has moved to foreclose on seven of its 2,000 member churches this year, and Mr. Holbrook says he expects to take similar action against two more next year. Before now, it had foreclosed on only two churches in its 45-year history.

Church Mortgage & Loan Corp. of Maitland, Fla., another church lender, foreclosed on 10 church properties in the past couple of years. Unable to sell any of them, the company didn't have the funds to pay more than 400 bondholders the estimated $18 million it owes, says company lawyer Elizabeth Green. Church Mortgage filed for Chapter 11 bankruptcy protection in March.

Strongtower Financial of Fresno, Calif., says two of its 300 evangelical church borrowers are in default, compared with only one in the previous 15 years.

Dozens more churches are listed as delinquent on their loans, according to a search of county court records nationwide.

Churches were long considered good credit risks, lenders say. Weekly collections tend to be steady, even during recessions, and churches feel a moral tug to pay debts. Most of the nation's 335,000 churches carry little or no mortgage debt, and are based in buildings that were paid off long ago...more

12/22/08

Forbes: Robert Blumenthal, AG for Connecticut, Wants to Make Reckless Charity Board Members Pay for Madoff Scandal Losses

You thought being a charity board member was a great honor. The AG of Connecticut Robert Blumenthal, wants to make you reckless charity board members pay for your Madoff Scandal losses based on the Prudent Investor Act.

Imagine that! Someone like you might be responsible for losing money that was supposed to help the the destitute, the ill, the infirm, widows, orphans and children.
Blumenthal May Investigate Charities Ripped Off By Madoff
Carrie Coolidge

The list of victims who have fallen prey to Bernie Madoff's alleged $50 billion Ponzi scheme is growing longer by the day. Among its victims are countless nonprofit organizations, ranging from Yeshiva University and Tufts University to the North Shore-Long Island Jewish Health System Foundation.

Now at least one attorney general is asking for records to determine if trustees sitting on nonprofit boards failed to perform their fiduciary responsibility to do proper due diligence.

Robert Blumenthal, attorney general for the state of Connecticut, has asked the court-appointed trustee responsible for Madoff's liquidation for the names of Connecticut-based victims, including nonprofit organizations. The attorney general says the issue of nonprofit board liability "is, obviously, by no means crystal clear."

"If they failed recklessly to do the necessary due diligence, we would certainly investigate and take action," Blumenthal told Forbes.com. "If the claim is that a trustee or a board member or that the board itself failed in its fiduciary responsibilities, there would be legal action and they could be held personally and financially responsible."

"A number of nonprofit organizations are very severely impacted by loss of grants or endowments, and obviously we are looking to any one who may bear responsibility to that loss," he adds. "We are also looking into what we can do to help the charities recover the money, which is our paramount objective."

Charity losses from an alleged ponzi scheme run by Madoff are expected to be substantial....

"In the charitable sector, there tends to be more trust and less scrutiny," says Michael S. DeLucia, director of charitable trusts and senior assistant attorney general at the New Hampshire Attorney General's Office. "The Achilles heel in the charitable sector is that people appear to be more trusting and have less internal controls and oversight. That is a weakness."

"A board has a fiduciary duty to protect their charitable assets," adds DeLucia. "If they do not take the steps to prevent fraud, then they are in breach of their fiduciary duties."

Indeed, 30 states, including New York, Massachusetts and Connecticut, have adopted the Prudent Investor Act, which applies to all trustees, including those who oversee charitable organizations. According to the statute, a trustee or board member must act in good faith and exercise the degree of diligence, care, caution and skill that an ordinary prudent individual would use under similar circumstances in a like position. None of the nonprofit organizations that invested with Madoff seemed to be alarmed that he used a three-person accounting firm in New City, N.Y., to perform his audits, which should have been a red flag.

Jurisdiction over charitable organizations typically falls under the state attorney general, who is responsible for supervising charitable organizations to insure donors and beneficiaries of those charities are protected from unscrupulous practices in the solicitation and management of charitable assets. It is not beyond the realm of possibility that an attorney general will investigate and pursue litigation against trustees for their failure to perform their fiduciary duties for a charitable organization that fell prey to Madoff...

NJ state Sen. Loretta Weinberg lost $1.3 million in Madoff Ponzi Crash

Again the Madoff carnage hits close to home here in Teaneck. Loretta is a dedicated and well-respected local politician and an early supporter of Barack Obama.
Madoff wipes out state senator from New Jersey
By Jacob Berkman

New Jersey state Sen. Loretta Weinberg lost her entire life savings in the Madoff scheme.

While many of the losses of huge foundations and organizational endowments that have been making headlines over the past week are truly mind boggling, Weinberg was not ultra wealthy at all.

A lifelong civil servant, the veteran Democratic lawmaker was among a handful of Madoff victims to give their stories to The Wall Street Journal this weekend. Weinberg makes about $49,000 as an elected official in Trenton, where she represents the 37th District, which covers a highly Jewish region in the northern part of the state.

She had her savings, about $1.3 million, invested with Stanley Chais, another Madoff victim.

From the Journal story, which is subscription only:

"Irwin had a saying, 'If you made a dollar and a half, you put 75 cents into a savings account and you lived on the other 75 cents,' " says Ms. Weinberg, whose husband had his own business building and designing retail stores. "That's how we lived."
Ms. Weinberg's family had investments with Stanley Chais, a Los Angeles money manager who ran what he called "the arbitrage partnerships," and Loretta and her husband also opened up accounts. "It's where my family had their money," she says. "We'd get reports every quarter."
Year in and year out Mr. Chais delivered steady returns of 10% to 14% annually. "We had a family joke that every night we should all say a little prayer for Stanley Chais."
She had never heard of Bernard Madoff -- until last week, when she learned that Mr. Chais had invested her money in Mr. Madoff's entities. Mr. Chais didn't return calls for comment.
We wouldn't blame her if that daily prayer now became a daily curse, spitting optional.
[Hat tip to Henry.]

By the way, in no way meaning to diminish the hurt, I do think many of the numbers bandied about in Madoff victim claims are inflated.

Let's take Loretta's case since it is in the realm of the reality of many working couples, unlike some of the multi-million dollar figures cast forth in other victim claims.

If Loretta invested $400,000 with Madoff 10 years ago and he claimed to have given her 12% returns compounded quarterly, she'd have a balance today of $1.3 million.

But in reality Loretta had no such gains and no such balance. Her investment in a legitimately super successful fund could have averaged 6% compounded quarterly for a balance today of $725,000.

And if she was not so lucky and chose to invest in a well-regarded but not so productive mutual fund like Fidelity Magellan over the past ten years at an annualized 2% gain, her balance today would be $488,000.

Losses of any kind are tragic and I am sorry for Loretta and for all other investors who have lost their invested monies.

But the Madoff Ponzi scam losses are all greatly exaggerated since they are based on phony made up balances as of December 11, 2008, inflated sums that never really existed.

12/21/08

Blogs Call Madoff Scandal, "A New Holocaust" and "Kristallnacht Two" and Expect the Spielberg Movie Version of the Scandal to be called "Swindler's List"

Let the overstatement about the Madoff Ponzi Crash intensify!

Italian Blog Come Don Chisciotte Calls the Madoff Scandal, "A New Holocaust" and Blogger CounterPunch Diary says, "'It's Kristallnacht Two!' An Ethnic Cleansing in America."

The Jewish Journal proposes that the Spielberg movie version of the scandal be called "Swindler's List" - the name it has given to its blog that promises to follow the swindle.

Come Don Chisciotte puts it this way:
Come si vede, non si tratta di una comune truffa finanziaria, ma di una nuova Shoah, per la quale saremo ben presto costretti, con ogni probabilità, a celebrare un nuovo giorno della memoria. Cockburn dice di sperare che Spielberg, uno degli investitori colpiti dalla truffa di Madoff, ci faccia presto un film. Il Jewish Journal ha già proposto il titolo: Swindler’s list (in inglese swindler = imbroglione). Tenete pronti i fazzoletti.

As you can see, this is not a common financial scam, but a new Holocaust, for which we are soon forced, in all likelihood, to celebrate a new day of remembrance. Cockburn says he hoped that Spielberg, one of the investors affected by the scam Madoff, will make a movie soon. The Jewish Journal has already proposed the title: Swindler's list. Keep the hankies ready.

NY Post Calls 5th Avenue Synagogue "Temple of Doom" after the Madoff-Merkin Ponzi Scheme Crash

A Tragi-Comic Headline and a bunch of other stories today in the Post including this nifty non sequitur:
"Mr. Merkin and his family are personally among the largest victims of the massive fraud confessed by Bernard Madoff," said Merkin's lawyer.

The controversy didn't stop Merkin from attending yesterday's 9 a.m. service, where he was "warmly received," said a member who asked not to be named.
I'm nearly ready to start a charitable fund for poor victim Mr. Merkin who lost so much money.

Links to the Post stories -
MORE: Synagogue of Sufferers
MORE: Bridges Burned With Madoff Clan
MORE: Fiendish Friend
MORE: Should Madoff Mean More Regulation?
MORE: Hurricane Madoff Tears Up Tiny Town

Yeshiva University Ought to Purge Ezra Merkin from its Memory

We thought that this press release was removed after 12/18/2008 from the Yeshiva University web site. It was retrieved from Google's cache when the site was temporarily down. It was not deleted. In light of the involvement of Ezra Merkin in the Madoff scandal, and the loss to the University of $110 million, the article ought to be purged as soon as possible and the named chairs ought to be renamed. To hold a Merkin chair is not an honor any more.
Merkin Family Chair in Jewish History and Literature Established at Yeshiva University

New York, NY, May 21, 2001 -- Dr. Norman Lamm, President of Yeshiva University, today announced the endowment by Lauren and Ezra Merkin of The Merkin Family Chair in Jewish History and Literature at the Bernard Revel Graduate School of Jewish Studies. The Chair is to be occupied by a member of the faculty who is a leading figure in Jewish academic scholarship. The first occupant of the Chair is such a figure: Dr. Haym Soloveitchik, a University Professor and distinguished Talmudist and historian.

"Establishing an endowed chair is essential to the enhancement of the academic environment of a program or school," said Dr. Lamm. "We are forever thankful to Ezra and Lauren Merkin for their enlightened support."

Dr. Soloveitchik received a B.A. from Harvard University, was ordained at Yeshiva University’s affiliated Rabbi Isaac Elchanan Theological Seminary (RIETS) and earned a doctorate in Jewish History from Hebrew University. He is an expert in Jewish medieval history and is the author of several books and numerous scholarly articles.

Dr. Soloveitchik’s late father, the revered Rabbi Joseph B. Soloveitchik, was the initial occupant of the Leib Merkin Distinguished Professorial Chair in Talmud and Jewish Philosophy at RIETS. The Leib Merkin chair was endowed by Ezra Merkin’s late father, Hermann Merkin, who served as Vice Chairman of the University for many years. In addition, in recognition of a gift by Hermann and Ursula Merkin, the Isaac Breuer College for Hebraic Studies was named in memory of Dr. Isaac Breuer, the father of Ursula Merkin.

Ezra Merkin said: "It is appropriate to remember my father at an institution that he loved, and served, so well. In establishing a memorial for my father, Lauren and I are delighted to continue a shared tradition of the Merkin and Soloveitchik families. We cannot imagine a more fitting occupant of the Merkin Family Chair than Dr. Haym Soloveitchik."

J. Ezra Merkin and Lauren Merkin have been at the forefront of leadership and support of the Jewish community for many years. Mr. Merkin has been a member of the board of RIETS since 1984. He serves as Chairman of the Investment Committees of both Yeshiva University and UJA/Federation of New York. In addition, he serves as President of Fifth Avenue Synagogue and as Vice Chairman of the Ramaz School. He studied at Yeshivot Kerem B’Yavneh and Har Etzion and was graduated from Columbia College and Harvard Law School. Mr. Merkin manages a family of investment funds in New York. His wife, the former Lauren Korngold, is a graduate of Bryn Mawr College and received her M.B.A. from the Wharton School. Mrs. Merkin serves as a Trustee of the Avi Chai Foundation. Their four children currently study at Ramaz.

12/20/08

Fortune Magazine: Post Madoff Scandal Will J. Ezra Merkin Dare to Attend Minyan at the Fifth Avenue Synagogue?

In a rather strange story yesterday, a Fortune writer wonders if Ezra Merkin will dare to show his face in shul, as she puts it, "If Merkin decides to attend services tonight..", in the article, "A closer look at Madoff's web: A small network of connections that helped to facilitate many of the investments," by Jennifer Reingold.

My assumption is that he dare not show he is fearful of humiliation, and that accordingly he did attend shul last night and today, he will continue to attend, he will make the announcements from the pulpit, if that is his duty as president. And furthermore I assume that anyone who used to shake hands with him and wish him a Good Shabbos in shul will continue to do so. It is altogether likely that Merkin will continue to act as president at least for the near term until the shul board elects a new president and tells him to desist.

But I wasn't there in shul this Shabbos so I don't really know what transpired. And for the record, if I had been there, I would not have shaken his hand or wished him a Good Shabbos. Fortune says:
(Fortune) -- It is not easy to stay on the sidelines while others are busy getting rich. Wall Street, moreover, is constitutionally predisposed to overdo things. The stereotype imagines a Wall Street populated by bulls and bears. In reality, the Street itself is neither bull nor bear but shark, constantly shifting direction in an eternal search for food. This feeding process involves massive shifts of capital, which inevitably, is sometimes misallocated. - J. Ezra Merkin, writing in an introduction to a chapter in the 75th anniversary version of Graham and Dodd's Security Analysis.

On Wednesday night, Dec. 10, J. Ezra Merkin held a benefit at his apartment at 740 Park Avenue in Manhattan to support the Israel Museum.

Smiling, cordial, and relaxed as he displayed his world-class collection of Rothkos, he looked totally unaware that the next morning his world - and that of hundreds of others - would fall apart because of that misallocated capital.

Within 24 hours, the man with whom he entrusted his clients' money, Bernard Madoff, was arrested in what may turn out to be the biggest financial fraud in history.

If Merkin decides to attend services tonight at New York's tony Fifth Avenue Synagogue, where he is the president, it's a fair bet that he won't invoke those words, written just months ago, when he was a well-respected investor and one of the top Jewish community leaders in the country. More likely, he won't show up at all.

It's likely to be a strange scene at the synagogue, home to the likes of Ron Perelman and other prominent businessmen, and one of the places where the Bernard Madoff fraud has hit hard....
And about the wonderful and warm community of the "tony" Fifth Avenue Synagogue, which I attended fairly often when I was a teenager growing up on the East Side... I will have more to say on another day.

Minnesota Jews Lost $300 Million in Madoff Fraud

Our friend, Avraham Ettedgui, a prominent Rabbi and former director of the Minneapolis Talmud Torah, comments in the StarTribune about the fallout in the Twin Cities Jewish community from the Madoff affair and its meaning for the community.
Jewish groups reeling over Madoff scheme: The scandal has stirred anger and resentment in the Twin Cities.
By CHRIS SERRES, Star Tribune

...With Hanukkah beginning at sundown Sunday, local rabbis said they are trying to put the Madoff scandal in the context of the Jewish holiday, and the eternal struggle against human fallibility, vanity and greed. "This is a reminder that people have to come back to goodness, because nothing else lasts," said Avraham Ettedgui, the rabbi of Sharei Chesed Congregation in Minnetonka.

Total losses to the Jewish community in the Twin Cities are still unknown, but some local attorneys representing investors with Madoff say at least $300 million has evaporated. Many affected were members of the predominantly Jewish Oak Ridge Country Club in Hopkins, where Madoff's name and reputation spread by word of mouth...
The Werner Foundation had assets of $1.6 million and posted gains of $111,943 from Madoff securities in 2007, according to forms filed with the IRS. The foundation gave money to the Minneapolis Institute of Art, Walker Art Center, Sholom Foundation and the Minneapolis Jewish Federation....

Other local organizations that had investments with Madoff include the Minneapolis-based Phileona Foundation, which last year gave $2.3 million to more than 60 charities and causes, including many Jewish organizations; the Charles and Candice Nadler Family Foundation in Excelsior; and the Steven C. & Susan L. Fiterman Charitable Foundation in Golden Valley, which reported a loss of $33,589 last year on its Madoff investments, according to forms filed with the IRS...

As director of the Talmud Torah Foundation of Minneapolis, Rabbi Avraham Ettedgui plays a key role in raising funds to support scholarships and educational programs. But Ettedgui said he "feels uncomfortable calling certain donors," because he's not sure who might have invested with Madoff. "The people who are hurt by this also happen to be those who are the most generous," he said. "It ties our hands a bit."

Ettedgui noted that some people in the Jewish community feel "a sense of shame" that Madoff was considered a pillar of the Jewish community. "He brings disrespect to our people," he said. "It's like stealing from your own family." more

Picower Foundation Shut Down after $1 Billion Loss in Madoff Ponzi Fraud

AP via ABC News reports closing of another victim of the Madoff fraud, a billion dollar foundation that supported biomedical research:
Barbara Picower, who along with her husband, Jeffry, established the Picower Foundation in 1989, said in a statement on Friday that the foundation's grant-making would cease "effective immediately" and that it would "close its doors in the coming months."

She wrote in the statement that Madoff's "act of fraud has had a devastating impact on tens and thousands of lives as well as numerous philanthropic foundations and nonprofit organization."

Madoff is accused of swindling investors of $50 billion in a massive Ponzi scheme. He was ordered on Friday to remain in his Manhattan home under 24-hour surveillance and to hire security guards for protection.

The Picower Foundation has given millions to the Massachusetts Institute of Technology, Human Rights First and the New York Public Library. It also funded diabetes research at Harvard Medical School. It is based in Palm Beach, Fla., and has offices in New York.

The foundation, whose assets were managed by Madoff, said in its 2007 tax return its investment portfolio was valued at nearly $1 billion.

The foundation is by far one of the largest national philanthropic organizations to become mired in the financial mess created by Madoff's alleged scheme.

12/19/08

Slate: Madoff Elected to the Jewish Gangsters Hall of Fame


It's amazing to me how the Internet has accelerated the news and analysis cycle of our society.

Ron Rosenbaum writes in Slate today, "Where Are the Jewish Gangsters of Yesteryear? Or, what we can learn about "respectability" from Bernie Madoff and Meyer Lansky." It's one short week since the story came out and he's already put Madoff into a keen cultural and historical perspective!

Rosenbaum concludes with some comparison of the sad bad Madoff saga to a famous Jew-on-Jew scam story of the past:
...the controversy among the Jewish gangster alte kockers (old guys) about Mickey Cohen and the Irgun ship.

It seems Mickey Cohen (you know, the L.A. crime boss from the '40s and '50s; he appears in some James Ellroy novels) went around leaning on a lot of respectable and nonrespectable types for money for the Irgun, the Jewish-gangster-favored faction of Zionists in the perilous period of the founding of the state of Israel. It seems Mickey Cohen claimed he'd used the money to buy a ship and fill it full of guns and ammo for the Irgun to fight for survival of the embattled state, but alas—Mickey said—the ship had sunk on its way to Haifa or something.

There were always rumors, according to Lucky, that there never was a ship, that Mickey Cohen kept the money for himself—pulled a Bernie. Lucky didn't believe it. Honor among thieves. There was a ship. He was sure.

I hope it's true. I really think there is a difference between the disreputable but colorful and—in their own way—honorable Jewish gangsters and someone like Bernie. As that Jewish folksinger Zimmerman wrote, "When you live outside the law you must be honest." A lesson about true respectability that Bernie seems never to have learned. A lesson the old time Jewish gangsters could teach us.

Times: Pope Benedict's Dignitas Personae Challenges Barak Obama

Yet another "pastor problem" for Barak.

John Allen, a Catholic journalist believes ("The Pope’s Real Message for Obama") the new hard-line Vatican document released last week presents serious challenges for the incoming administration.
... a tough new Vatican document on bioethics, released one week ago, that ratchets up the church’s condemnations of embryonic stem cell research, in vitro fertilization, the “morning-after pill” and a host of other techniques it regards as violations of human dignity.

In the United States, the tendency may be to see the document, titled “Dignitas Personae,” or “Dignity of the Person,” as a battle plan for resistance to the incoming Obama administration...more

Times' Krugman: It's a Madoff, Madoff, Madoff World

In a brilliant and sardonic op-ed today, "The Madoff Economy", Paul Krugman reminds us why he's not going into politics. He wants to be able to compare what Madoff did to what Wall Street as a whole has been doing to people for years, i. e., feeding on your greed and then making off with your money.

12/18/08

Coleman Leads Franken by Two Votes as Recount Continues in Minnesota Senate Race

The two Jewish senate candidates are separated now by two votes as the recount continues.
2 votes separate Minn. Senate rivals; court orders counting of improperly rejected absentees
By PATRICK CONDON , Associated Press

ST. PAUL, Minn. - Sen. Norm Coleman saw his lead over Al Franken in Minnesota's U.S. Senate race dwindle to just two votes Thursday. Meanwhile, a key court ruling put hundreds of improperly rejected ballots in play and promised the recount would drag into the new year...more

Anti-Semitism and the Madoff Affair

We were interviewed today by a journalist from the Netherlands about anti-Semitism and the Madoff affair.

He wanted to know what kinds of comments I had to censor from my posts on this blog about Madoff. I told him they were nothing new -- run-of-the-mill stereotypical anti-Semitic accusations of Jewish greed and Jewish control of the monetary system.

I also observed that these comments stopped rather abruptly after it became known that many if not most of Madoff's victims are wealthy Jews and Jewish charities.

Obviously that brutal and tragic factual scenario of a Jewish scoundrel feeding off of Jewish victims does not feed into the common anti-Semitic narrative.

And yes, we know that Madoff did rip off many non-Jewish victims.

But the utter depth of evil of this man Madoff is encapsulated in the vignette of his audacious and persistent subterfuge against his own tribe.

He sat there in the board room for years as treasurer of Yeshiva University and meanwhile stole $110 million from the school's endowment and much more from the accounts of its supporters. Madoff played hundreds of rounds of golf in Jewish country clubs nationwide solely to gain the trust and the funds of fellow members of the tribe.

That set of Madoff bad acts negates all the good and moral teachings of Judaism, of any other religion and of common human conduct.

So it is hard for an anti-Semite to hate a Jew who by dint of his wrongful life has taken himself out of the tribe.

In short, the anti-Semites are rightfully stymied and confounded by the sordid "One Bad Jew v. Many Good Jews" dimensions of the Madoff affair.

[I look forward to seeing how that assessment will sound in Dutch.]

TheStreet.com Analyst Calls for Merkin Ouster from GMAC

Gavin Magor opines the obvious on TheStreet.com, "GMAC's Merkin Must Go":
GMAC Financial Services can ill afford to be distracted by the Bernard Madoff scandal now that it touches its chairman -- J. Ezra Merkin.

The timing couldn't be worse, as the financing arm of General Motors... is finding it impossible to drum up investor interest in its $38 billion bond swap and is rapidly running out of cash. Merkin must step down to avoid the inevitable conflicts of prioritizing his time when GMAC needs everyone solely focused on its survival...

For Merkin to "vigorously" defend himself and his fund against the lawsuits he now faces personally and professionally in the form of Ascot, he clearly cannot continue in his current position as chairman of the struggling GMAC. It is not fair to him, his investors, or to GM and GMAC as the corporations struggle to survive.

12/17/08

Gothamist Uncovers Starbucks Hanukkah Prank

Gothamist has uncovered what appears to be a Starbucks Hanukkah put-on, that is an imaginary, "special edition Starbucks menorah cup, which supposedly contained the chain's 'Hanukkah Blend.' This individual claims he bought it at an unspecified location on the Upper West Side..."

Tipoff that it is not real: no way, no how, no 7 branched menorah.

A New Chapter in the Stinking Tale of Mukasey, Mukasey, DiPascali, Merkin and Madoff

AP reports that Attorney General Michael Mukasey has "recused himself" from the Madoff Affair because his son represents the Madoff front man Frank DiPascali.

Wait, wait, wait a minute. It should be the other way around. Your dad is the AG of the United States of America. You don't accept a job with the bad guys.

Could this be true? The AG's son, Marc Mukasey, accepted money from Madoff's deputy to "represent" him?

Marc Mukasey ought to know better than to get involved in any way in the scam of the century. Or is this step one in Madoff's payoff campaign to receive a quick Bush presidential pardon?

Just when you thought the odor of this scandal had leveled off, this raises the smell to a whole new height. It stinks to the highest of heavens.
At the Justice Department, a spokesman said that Attorney General Michael Mukasey had recused himself from the investigation into Madoff. Mukasey's son, Marc Mukasey, is representing Frank DiPascali, a top financial officer at Madoff's investment firm...

DiPascali was the Madoff employee who had the most day-to-day contact with his investors. Several described him as being the man they got on the phone when they had questions about the firm's investment strategy, or wanted to add or subtract money from their accounts.

Authorities have not said publicly whether DiPascali is suspected of any wrongdoing.

"We are trying to learn the facts like everybody else," Marc Mukasey said in a phone interview with The Associated Press on Tuesday.
Marc. Please give this man back his retainer. Use a scintilla of common sense. Don't touch this.

12/16/08

Madoff Scandal Damage Report: NY Law Sues J. Ezra Merkin - Yeshiva U says it is "Way to Early"

A tale of how two schools operate under pressure after the Madoff-Merkin Affair.

NY Law:
New York Law School filed an investor lawsuit against J. Ezra Merkin, chairman of lender GMAC Financial Services, one of his funds and its auditor on Tuesday over investments made through Bernard L. Madoff Investment Securities LLC, whose founder has been charged in a massive Ponzi scheme.

The lawsuit, filed in U.S. District Court in Manhattan, alleges recklessness, gross negligence and breach of fiduciary duties by Merkin, who also heads money- management firm Gabriel Partners; the fund, Ascot Partners LP; and its auditor, BDO Seidman LLP.

The complaint alleges Merkin abdicated his responsibilities and duties as Ascot's general partner and manager in entrusting substantially all of its assets - $1.8 billion - to the Madoff firm and that Seidman failed to recognize "red flags" at the Madoff firm.

"As a proximate result of Merkin's bad faith breach of fiduciary duty, plaintiff and other class members have sustained damages, suffered mental and emotional distress and have lost most, if not all, of their respective investments in an amount yet to be determined," the lawsuit said. (Dow Jones via CNN)
YU:
“The university has retained legal counsel, but it is way too early to say what legal actions are being considered as far as any talk of suing Merkin.” (Bloomberg)
Well YU, just join the NY Law investor lawsuit and don't bother your dilatory selves with "any talk."

Merkin:

The lawsuit, filed in U.S. District Court in Manhattan, alleges recklessness, gross negligence and breach of fiduciary duties by Merkin, the fund, Ascot Partners and its auditor, BDO Seidman LLP.

Merkin’s lawyer, Andrew J. Levander, offered this response:

“Mr. Merkin and his family are personally among the largest victims of the massive fraud confessed by Bernard Madoff. Like the other victims and the entire financial community, Mr. Merkin is shocked by these events. He intends to defend the lawsuit vigorously while seeking redress for himself and his investors from whoever perpetrated this fraud.” [Link]

Merkin will seek redress from, "Whoever perpetrated" - well in large part that would be for Merkin to sue himself for gathering up $1.8 billion to siphon through to Madoff for his Ponzi scheme, wouldn't it?

Yeshiva University Student Newspaper Gives J. Ezra Merkin a Good Spanking

The YU student newspaper has released a scathing story about former board member and former investment committee chairman J. Ezra Merkin who lost $110 million of the University's endowment by investing it through his Ascot Fund with the now notorious Bernie Madoff.

The article distances YU from Merkin, by saying that nobody there ever liked him, that he was difficult to work with and that his actions on behalf of the school were sketchy at best. It goes on and on in most unflattering terms .... here.

Combine this with the negative page six business section Times story today about how Merkin trusted Madoff ("Firm That Trusted a Disgraced Investor") and you'd have to say it was not a good day for the fellow. He got quite a (well earned) spanking in the press.

Not to worry about this man. The Merkins like to be spanked.

[Hat tip to Henry.]

Is Sen. Ken Salazar Jewish?

No, the Obama nominee for Interior Secretary, Colorado Senator Kenneth Lee Salazar, is not a Jew.

Salazar is Roman Catholic. He was born in Colorado to parents of Mexican descent. Salazar attended St. Francis Seminary and Centauri High School in Conejos County. He graduated in 1973.

Salazar is known for his outspoken defense of Catholicism.