Jewish Community Foundation Releases Report on Madoff

The Special Committee of the Jewish Community Foundation (JCF), formed to investigate how the money manager for many of Los Angeles’ blueblood Jewish nonprofits lost $18 million with Bernard Madoff, released its findings and recommendations last week. The report included no surprises and little optimism about the potential to recover much of the money lost in the biggest Ponzi scheme in history.

It also included nine policy recommendations, though it’s unclear whether they would prevent a future Madoff-like investment from being made.

“The Special Committee’s work was exhaustive and subjected the Jewish Community Foundation to unprecedented levels of self-scrutiny and self-examination into the massive fraud perpetrated upon our institution and other innocent investors,” Marvin I. Schotland, president and CEO, said in a statement. “We undertook this comprehensive effort and release this summary of findings out of an unwavering commitment to continuing disclosure and accountability that we have stressed since the outset of these events.”

The JCF made its first investment five years ago. The investment committee had been introduced to Bernard L. Madoff Investment Securities by then-committee chair David Polak, who had personally invested in Madoff funds and was not identified by the special committee’s report. At its March 2004 meeting, the investment committee heard from “two guests with personal and institutional investment experience” with Madoff and also discussed a 2001 Barron’s article that questioned whether his record was too good to be true and deserved greater scrutiny.

“By majority vote” — the report doesn’t state whether any member dissented — the investment committee decided to invest $12 million. That chunk grew to about $18 million, and last summer the investment committee added another $6 million. Those funds came not from donor-advised funds but from the common investment pool, which included as participants The Jewish Federation of Greater Los Angeles, Jewish Family Service and Beit T’Shuvah. The total investment had grown to $25.5 million when Madoff was arrested Dec. 11 and the balance immediately plummeted to zero. The losses represented about 11 percent of the common investment pool.

The JCF may be able to recover as much as $500,000 from the Securities Investment Protection Corporation, the special committee reported. But other options appear minimal.

The committee’s nine recommendations primarily concerned investment requirements and general governance, such as shrinking the committee to eight members. One recommendation stipulates that if two of the committee’s members abstain or vote against a particular investment, then the investment will not be made. Another states: “Investment of CIP [common investment pool] assets in funds managed by or affiliated with Investment Committee members shall be prohibited.”

Although this was not previously an explicit policy, the committee reported that “the Investment Committee member who originally met Madoff” — Polak, the chairman emeritus of NWQ Investment Management Co. in Century City — “stated that neither he nor his firm received any considerations or favors.” Neither, the committee reported, did two other JCF board members with personal Madoff investments.
— Brad A. Greenberg, Senior Writer

American Jews Protest Museum of Tolerance Jerusalem Construction
Holding signs that stated “AJU Students against the Museum” and “Yeshiva Bochers for Coexistence,” a handful of American Jews joined a protest Thursday in front of the former Muslim cemetery that is now the construction site for the Simon Wiesenthal Center’s Museum of Tolerance in Jerusalem.

For the past 50 years, the site has been home to a four-story municipal carpark, and the cemetery has long since been declared mundras — no longer sacred — by Muslim authorities. But critics of the project have charged the Los Angeles-based Wiesenthal Center with being intolerant in its quest to build a Jerusalem version of its West L.A. museum.

In addition to students from American Jewish University and Hebrew Union College-Jewish Institute of Religion (HUC-JIR), the April 2 protest included Anat Hoffman, executive director of Israel Reform Action Center; Hanna Siniora, co-director of the Israel/Palestine Center for Research and Information; former Jerusalem City Councilman Meir Margalit; and Haaretz columnist Bradley Burston.

“As a Jewish educator, it is very difficult to take the SWC seriously when they disregard the principle of coexistence fundamental to their educational mission,” Joel Abramovitz, one of the protestors and a student at HUC-JIR’s L.A. campus, said in a statement.

“Homes are demolished in Silwan, families are evacuated in Sheikh Jarrah. These injustices are all part of efforts to erase the heritage and presence of Palestinians in the state of Israel,” said Alana Alpert of Los Angeles. “The SWC has become unintentionally complicit, and therefore American Jews are complicit, in this unholy project.”

The museum land was gifted to the Wiesenthal Center by the city of Jerusalem. Protests and lawsuits soon followed. But last fall, Israel’s Supreme Court sided with the Wiesenthal Center, ruling that the site was no longer recognized as a cemetery and was not connected to the adjacent Mamilla cemetery. Construction crews have been busy since and have almost completed the foundational work.

“Those who think we are going to move the museum are living in a fantasy world,” Rabbi Marvin Hier, dean and founder of the Simon Wiesenthal Center said on Friday, March 3. “The Museum of the Tolerance project in Jerusalem will go forward on the former municipal carpark. And from our point of view, the people of Jerusalem will get a lot more from the Museum of Tolerance on that site than from seeing 1,300 cars parked there every day.”
— Brad A. Greenberg, Senior Writer