For Questions and Orders, Call
1-866-937-7506
 

Wall Street Investor Bernard Madoff Confesses to Running Pyramid Scheme

December 16, 2008 by Alexis
Longtime Wall Street investor Bernard Madoff confessed last week to running a years-long Ponzi scheme that’s believed to have swindled up to $50 billion in investments from more than thirty high profile individuals and organizations. The New York City based Madoff first told his children that he was deeply involved in a fraud in which he was receiving artificially high returns using money originally put up by investors.

Most morally concerning is that Madoff targeted a wide variety of charity organizations, many of them aimed at aiding and advancing the Jewish community, one that Madoff is a part of. Among the victims was the Jewish Federation of Greater Los Angeles, which lost $6.4 million, or 11% of its endowment, to Madoff’s pyramid scheme. The Federation, which funds humanitarian, social service and Jewish educational programs in Southern California, Israel and other parts of the world, had put their money in the hands of the Jewish Community Foundation of Los Angeles to invest with the fund manager. Popular film director Steve Spielberg’s Wunderkinder Foundation, a Los Angeles based foundation for private philanthropy, took an undisclosed financial hit, as well.

In fact, it was Spielberg’s relationship with Madoff through Hollywood financial adviser Gerald Breslauer that led to Madoff’s manipulation and exploitation of the Southern Californian Jewish community. In addition to Spielberg’s direct losses, his partner at DreamWorks, Jeffrey Katzenberg, reportedly suffered millions of dollars in losses. Many Jews in the area are calling Madoff’s actions an “affinity scam,” in which members of a specific ethnic or religious group are targeted by one of their likeminded people.

Rob Eschman, editor in chief of the Los Angeles-based Jewish Journal, has called the situation “by far the biggest Jewish story of the year,” and LA real estate Financier Richard Zimon has chastised Madoff by suggesting “There is no greater [disgrace] than stealing from friends, family and those who gave him such trust and confidence.”

Others suggest investors should have seen the writing on the wall. “This is guy who openly claimed he would not answer questions about his strategy,” offered Houston lawyer Harry Susman. “If you put all your eggs in one basket, you better be able to watch that basket well. “

Sadly, many of the victims of Madoff’s foils won’t see any financial consolation. Over $23 billion worth of investments were made indirectly through feeder funds, but only Madoff’s direct customers (ie. Breslauer rather than Spielberg and Katzenberg) would have their financial losses covered by the Securities Investor Protection Corporation.

Related Blogs

  • Related Blogs on Bernard Madoff
  • Related Blogs on Running Pyramid Scheme