Promptly after Jewish Community Foundation learned it had lost its $18 million investment with Bernard L. Madoff Investment Securities, the nonprofit that manages the funds of some of Los Angeles Jewry’s blue-blood nonprofits created a special committee to investigate itself. The special committee reported today that the foundation did nothing wrong.
“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.”
I previously reported much of what appears in the nine-page executive summary (download the PDF here).
Opportunities to recover funds, short of possibly up to $500,000 from the Securities Investment Protection Corporation, appear minimal. The committee’s nine recommendations concern investment-vote approval and general governance. Such as No. 5: “Investment of CIP [common investment pool] assets in funds managed by or affiliated with Investment Committee members shall be prohibited.”
Surprisingly, that wasn’t previously one of the committee’s policies. However, the Jewish Community Foundation’s in-house police reported that “no conflicts of interests or special considerations [were] found.” Though David Polak, then chair of the investment committee, invested personally with Madoff and recommended the common investment pool do the same, he received no “considerations or favors.” Neither, the committee reported, did the two other foundation board members who invested with Madoff.
This was not the case for J. Ezra Merkin and Stanley Chais.
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