Days before Madoff was arrested, he still seemed a white knight

Bernard Madoff made the cover of The Journal this week. Not that he didn’t dominate the inside pages last week, but as our editor in chief, Rob Eshman, told the L.A. Times: “In a word, it’s a catastrophe—by far the biggest Jewish story of the year.”

I’d actually venture that it’s the biggest story in years, and I anticipate it dominating my reportage for the next few weeks.

Here is the opening of my most recent contribution:

The stock market had been hammered for more than a year, but the Jewish Community Foundation (JCF) was doing relatively well, David Polak, chair of the JCF’s investment committee, told the board of directors early this month.

The JCF’s common investment pool, which manages the endowments for some of Los Angeles Jewry’s biggest social service agencies, was down for the year—but only by about 19 percent. Its performance could be attributed, at least in part, to one of the investment pool’s money managers. Polak didn’t identify this apparent financial all-star, which in terrible economic times had managed this year to produce almost a double-digit return on investment.

But less than 10 days later, everyone knew the name: Bernard L. Madoff Investment Securities.

Last week, as the largest Ponzi scheme in history claimed hundreds of millions of dollars from Jewish organizations and institutions, the JCF reported it had lost an $18 million investment that had grown to $25.5 million on paper. Overnight, 9 percent of the money some L.A. Jewish nonprofits use to generate cash for their programs vanished.

“No one is happy, including us,” said Marvin Schotland, JCF president and CEO. “But there has been an enormous amount of understanding about the unique set of circumstances that caused this to occur that could not have been foreseen or expected. It’s a testament to the strength of the community, at least with respect to donors who have funds with us.”

“They have not been engaged with blaming,” he said. “They have not been happy, but they have understood this is an aberration.”

The article goes on to discuss how the foundation came to invest a portion of its common-investment pool in Madoff and exactly what this is going to mean for participating organizations like Jewish Family Services. You can read the rest here.