Wednesday, December 17, 2008

Madoff Made Off with Billions

First there was Freddie Mac and Fannie Mae and the bad mortgage lending. There was the loss of Lehman Brothers and who could forget the AIG Credit Default Swaps that left taxpayers holding the bag. Then the top three Detroit auto makers announced they were pushed close to insolvency. Citigroup announced the layoffs of 75,000 jobs in order to stay afloat. Now, the news of Bernard Madoff’s investing scam leaves you dumbstruck and makes you wonder how so many people could be taken in.

According to Time Magazine, “Many of Madoff's victims never had an account with his firm. Instead, Madoff got much of the money he allegedly stole through so-called feeder funds. These hedge funds were set up by outside investment advisory firms, which marketed the funds to high net-worth individuals and pension funds based on Madoff's supposed long-term track record of positive returns. Other investors lost money through so-called hedge funds of funds, which invested with Madoff as well as other asset management firms.”

Where was the Securities and Exchange Commission? Apparently this scam had been going on for years. A federal judge signed an order on December 15th stating that investors who may have been duped by this scam need the protection of the Securities Investor Protection Act.

Among those hard-hit were Jewish Philanthropists and at least two foundations have been forced to close because they had invested their funds with Madoff. According to JTA, The Global News Service of The Jewish People, The Robert I. Lappin Foundation in Salem, Mass., will shut down after losing $8 million -- all of its money. The Chais Family Foundation also announced its closing on Dec. 14.

Another organization that suffered tremendous losses is JEHT (Justice, Equality, Human Dignity and Tolerance) Foundation that announced they will close at the end of January 2009. The JEHT foundation supports reform of the criminal and juvenile justice systems.

Where did all of this money go and shouldn’t the Securities and Exchange Commission be culpable for allowing Madoff to operate? Give us your thoughts.