University Diaries Gets Tough on Poor Yeshiva University Attitudes Toward Merkin and Madoff Matters

Margaret Soltan, who blogs at University Diaries, follows lots of University scandals, including the Madoff and Merkin conflagration that has engulfed Yeshiva University and other schools with serious financial losses.

In her latest post she cites this article summary from the Corporate Crime Reporter and then adds some of her patented acerbic and salty criticisms:
In Merkin Probe, Cuomo Hits Non-Profits with Subpoenas

New York Attorney General Andrew Cuomo has launched an investigation of Ezra Merkin and his role in steering tens of millions of dollars from major non-profits into Bernard Madoff’s ponzi scheme.

But the big non-profits – including Yeshiva University, Bard College, New York University, and New York Law School – are freaking out.


Because they are being hit by a flurry of subpoenas from Cuomo’s office seeking financial documents and meeting records.

And these non-profits see themselves as the victims – losing hundreds of millions of dollars to the Madoff scheme.

So, why the subpoenas?

That’s just how Cuomo does business.

He could send letter requests to the universities.

With a follow up phone call.

But Cuomo’s calling card is the subpoena.

Sally Blinken is a partner at Venable in New York.

Blinken spent seven years at the New York Attorney General’s Charities Bureau investigating non-profits.

“The Attorney General’s office often will use what is called a letter request,” Blinken said. “That’s simply a request asking for the non-profits voluntary cooperation – could you provide the following documents? It’s informal. But Cuomo’s office tends to use subpoenas more readily than letter requests. It’s a more official way of retrieving documents. People pay attention to a subpoena.”

“The investigation specifically seems to be targeting Ezra Merkin, who sat on various non-profit boards,” Blinken said. “At Yeshiva University, he sat on the board with Madoff as well.” Yeshiva reportedly lost more than $100 million to the Madoff scheme.”

“Cuomo will look to recoup any losses, and stand with the charities who bought into the Madoff fund, such as NYU. The charities have been subpoenaed, rather than asked voluntarily to cooperate in the investigation. Cuomo may be looking at other possible intermediary targets, like Merkin and to see who these charities used to invest these assets. And he will look at the process in place to make such investments. What is their investment policy? Do they have an investment committee? Who is on that committee? Are conflicts required to be disclosed for investment advisers who are sitting on those committees and investing those assets on behalf the charity? Were those conflicts disclosed? Were those on the investment committee reaping commissions for making those investments?”

“The message Cuomo is sending is – this is a good time to re-evaluate your process and make sure you live up to what we consider to be best practices, a time to re-evaluate your diversification spread, re-evaluate your conflict of interest policy. Is there proper disclosure? Is there a proper vote by disinterested board members?”
Soltan (UD) comments "Hell yes, subpoena them" adding as follows:
Yes, a subpoena flurry is certainly an attention-getter. But the real reason Yeshiva’s pissed is that it’s such a … a nice place. It’s a university! A serious place, with good people!

UD has seen how universities sometimes take advantage of the piety we feel toward them. They are special places, committed to the mind and the spirit rather than to crass petty materialism. They’re just… better.

Well, Yeshiva’s finances and business school were for a number of years run by at least two stupendous crooks, and would have continued to be run by crooks had one of them not had to confess when his Ponzi ran out of gas. Its all-male senior trustees were in one another’s financial pockets in the most absurdly flagrant conflict of interest UD’s ever seen at a university. When a high-profile Yeshiva grad demanded the resignation of the entire board, he was told by Yeshiva — in nice language — to fuck himself. Yeshiva remains a horribly tainted little world. Subpoenas are the sorts of things places like Yeshiva should expect.
We are sure that she means to say - the boards of the schools, not the schools themselves. But the sentiment is clear enough.

That's how one critic in the "outside world" sees what is going on at Yeshiva. She's not the only one who is watching and shaking her head in disapproval.

No comments: