Since Bernie Madoff admitted that he had swindled hundreds of his friends and several charities out of $50 billion, we have learned very little regarding the details of his operation. We still don't know exactly how he did it, how many people were in on the scam, and where the money went. Eventually we will.
But there continues to be no shortage of emails, blogs, news reports, and commentaries -- most of them from inside the Jewish community -- and that is the part of this drama that continues to be most fascinating. Fascinating for what is being said and written, but far more for what seems most people feel they can't say out loud
The low-hanging fruit here is Madoff himself. He has become the lightning rod not just for his victims but for all of the frustration, anger, and fear that millions of Americans feel over the money they have lost during the last year. Make no mistake about it. Madoff is a crook who cheated a lot of people out of billions of dollars. He should and will spend the rest of his life in jail.
But let's get real here. Does it really make sense for the entire country to be sitting glued to its TVs watching continuous coverage of Madoff leaving his apartment, driving to the courthouse, walking in and out of a building, and then driving back home. I mean this is a guy who did some very bad things, but he didn't kill anyone or physically abuse his family. He cheated a lot of people and stole a lot of money. Period. Do we really need to be on "Madoff Watch" 24-7 with reporters and cameras camped outside his apartment building?
My fellow Jews love to write and talk about how horrible Madoff is and how much damage he has done to the Jewish people. Some have even compared him to Hitler which is scary because it means that money has become so important today that someone who steals money and swindles people is comparable to a person who engineered the murder of six million people.
My friend and teacher Rabbi Brad Hirschfield of CLAL wrote a blog for Beliefnet.com entitled "Madoff and Hitler -- Bernie, Adolf, and the Death of Proportionality" that laments what is says about us that such a comparison can even be made.
http://blog.beliefnet.com/windowsanddoors/2009/01/madoff-and-adolf --- bernie-hitl.html
Most Madoff-bashers stop short of the Hitler comparison. But I have received dozens of emails from Jewish friends who want to make sure everyone knows what a horrible person Madoff is, how he has devastated the Jewish people, and how he has provided anti-Semites with new ammunition.
The most widely disseminated email is an article written by Rabbi Marc Gellman (no relation, although we have met) who wrote a piece for Newsweek entitled "A Letter to Madoff."
http://www.newsweek.com/id/176821
Rabbi Gellman's main point (I like the way that name sounds) is that Madoff should be ashamed of himself (he should) because his actions have devastated his best friends (they have), wiped out several charities and foundations (also true), and helped promote anti-Semitism (it hasn't). Is there any non-Jew in America who was thinking about marrying or doing business with a Jew that is now reconsidering that decision because Madoff was Jewish?
But, with credit to Sherlock Holmes, what I find most fascinating is the dog that isn't barking -- the questions that are not being asked of and about people who clearly shared blame for much of what has happened.
For example, there has been little said out loud about how a multi-millionaire, much less an entire charity, could put himself in a position where he could be totally wiped out as a result of having money invested with a single crook.
I have been an investment professional for almost 30 years and investor for even longer. On balance I have done well but there have been at least a dozen times that I have made an investment where I lost all my money. In most of those cases, I came to know for sure that I was cheated or lied to by one or more people who were involved.
On a few occasions I have been tricked, swindled, and/or robbed by people I knew and trusted. Everyone has. That's why no responsible person puts all their eggs in one basket--particularly if the basket is being held by a man whose honesty and integrity has been publicly questioned by a number of experts in national publications (Barron's in 2001) and before the Securities Exchange Commission (2005).
This is analogous to person taking all his money and/or all of a charity's money and betting it on a "sure thing" in a horse race. Then, against all odds and logic, the favorite horse loses the race and the entire bet is lost. Later it is learned that his jockey deliberately threw the race.
The jockey is clearly a crook and should go to jail. But how much of the blame for the financial disaster should go to the jockey and how much is on the head of the person who decided to bet all that money on a horse race in the first place?
For all of the obsession with the evil of Madoff, where is the discussion of the breakdown in oversight and governance of the trustees of those charities, universities, and non-profits who chose to invest all that money with a mysterious character who employed an investment strategy that no one understood?
I have chaired and served on many non-profit and school boards of directors. In each case, the first thing one is required to do upon becoming a trustee is to sign a Conflict of Interest document agreeing to never do business with or profit from their relationship with the organization they are helping to direct and oversee.
In most of the charities that were hurt the worst, it appears that Madoff or one of his asset gatherers served on their boards or were in positions of great influence. Why were the Conflict of Interest prohibitions waived by the others trustees in those cases? Where were the governance and the widely accepted standards of conduct in those organizations? With all the focus on Madoff's crimes, where are the conversations about the "victims" who behaved so irresponsibly?
The Jerusalem Post came the closest to raising this issue in a recent article which took an very gentle shot at the private foundations and charities which seemed to allow the ego and chutzpah of key players to take the place of sound institutional process. In this article, a spokesperson for the Jewish Federation movement--which has seen millions in assets and many key donors move away from the umbrella organization to start and run their own private foundations -- points out that having process and burocracy isn't always a bad thing.
But by far, the most interesting and telling piece I had read so far is author Joseph Epstein's recent column in Newsweek entitled "Uncle Bernie and The Jews."
Epstein concludes (as I did last month in my post "Bernie Madoff and his Chosen People") that one reason why Madoff has been so vilified by so many Jews -- even those who were not his victims -- is that many of us continue to view ourselves as part of The Tribe. So Madoff's actions were not just embezzlement and theivery -- they rose to the level of treason.
He notes that "Jews are still tribal enough to think of their co-religionists vaguely as family and that Madoff bilked his own family..."
But Epstein then goes off the track and comes to exact wrong conclusion about that tribalism.
He says the Madoff affair has highlighted the extent to which American Jews have gone astray. He views it as highly symbolic that Madoff solicited most of his victims at Jewish country clubs ("there is something deeply trivial about golf that is unseemly for Jews") which he considers part of the general "Episcopalization" of American Jews.
"A younger generation has now taken to giving their children WASPy first names, so that today one runs into such comic nomenclatural pairings as Tyler Ginsberg, Mackenzie Rosenthal, Hunter Fefferman, Kelly Rabinowicz, and other such preposterosities," Epstein concludes.
He says this assimilation has drained the energy from American Jews that made us so great in the past and finally states that the "silver lining" of the Madoff affair is that he "performed the valuable--if very expensive--service of demonstrating to his coreligionists, among others, that the waters of life are not as pacific as they seem."
I couldn't disagree with Epstein more.
What he and others lament as the "goyification" of American Jews is actually the reward we are enjoying from a battle that our parents and grandparents fought for decades and finally won. For many years, there was real anti-Semitism and discrimination against Jews in most of America. People changed their names, altered their physical appearance, watched what they said, and took great care not to seem "too Jewish" because there was a real price to be paid by Jews.
Today, there is no school, no profession, no neighborhood, and no potential spouse that is off-limits to Jews. That's how complete and total victory our people have won.
But, as with all victories, there are challenges that comes with success as well. Jewish institutions and organizations which for many years had a captive audience are now being forced to fight for business in an open marketplace and some have done a better than others at competing on a level playing field.
It is a hallmark of failing enterprises to blame the customers rather than focus on ways in which they need to change their own strategies to compete better. But any efforts to blame Jews for taking full advantage of the choices we now have is doomed to failure. No one with choices ever goes back to a more restrictive environment.
Today, most American Jews choose to become or remain Jewish because of the value that Jewish wisdom, values, and traditions bring to their lives. Being Jewish today is an active choice. People will not choose to stay on board because the rest our non-Jewish neighbors hate us so much and isolate us so badly that we have no choice but to stick together. Some of my Jewish friends haven't gotten that message yet.
It is true that the Madoff affair has pointed out the need for Jews to move beyond tribalism, or at least redefine what it really means to be a Member of the Tribe. But longing for a return to the good old days -- the days that weren't considered so good by the people who worked tirelessly to change them -- is not the answer as Epstein suggests. Our parents and grandparents would say "good riddance" and look with pride -- not apology -- at their great victories which helped create the new Jewish reality in our country.
So I will let everyone else obsess over Madoff himself. How did he do it? How much money did he really steal? How many other people were in on it? Where did the money go? Should he be imprisoned in his apartment or in jail while he's awaiting trial?
At the end of the day, what difference does it make? What's done is done. Madoff was a crook. He stole a lot of money and he'll die in jail and no one will get their money back.
It's the drama, soul-searching, and thoughts of my fellow Jews that continues to be most fascinating to me. It's all about what is said and what isn't. And the lessons that some people claim be learning from this episode say a lot more about themselves and their own world view than they do about Madoff.
Maybe the elders should get together and round up all the Rabbis, give them a swift kick in the pants and put them back into the Temples?
Wealth can be remade, the markets will be mended. Now is a good time for people to start investing in Wisdom for a change.
I completely agree that the victim's are not responsible for Madoff's crimes. They are, however, responsible for putting their families and even moreso their charities in a position where the dishonesty of one person could wipe them out completely.
These people had the wherewithal to diversify and most of them knew that responsible investors--particularly those acting in a fiduciary capacity for a charity or university--should do just that.
As to why there is 24/7 interest, there are several reasons:
First, this is the biggest financial swindle ever. Anytime some evil deed is big enough to get into the Guiness Book of World Records, it is fascinating because of the sheer magnitude.
We live in a celebrity driven and star-crossed culture. Even though it's absurd, a lot of people relate to celebrities as if they were extensions of their own social circle. So that fuels the fire of obsessive interest.
Finally, we're in the throes of a historic economic de-leveraging. We're having a "look, the emperor has no clothes moment" about people many thought were financial wizards. The hedge fund industry is collapsing - and it turns out that at least some of these hedge fund managers were just dumb as a stump...making the worst rookie mistakes.
All in all, fascinating stuff.
i'm glad you disagree with joseph epstein. if reggie jackson said african americans were becoming too white he would be vilified and rightfully so. the reason the christian right has never become real mainstream is the feeling of most christians that criticizing other peoples' beliefs is simply not right. if there is anything that would make people more antisemitic it would be a belief similar to epstein's. i'm surprised newsweek posted it.
As far as Epstein is concerned, the great irony is that the very characteristics that he cites so disparagingly are the result of the greatest triumph in American Jewish history--overcoming the real barriers and institutional anti-Semitism that actually existed in this country and creating the new reality where Jews are free to participate fully in all the great things this country has to offer without getting nose jobs, changing their names, or otherwise trying to hide the fact that they're Jewish.
What Epstein longs for has never happened before in history--a group of people voluntarily opting for less freedom and fewer choices. In addition, if that were to happen it would be bad for America and horrible for the Jews. The good old days that Epstein longs for were not considered so good by the people who actually lived through them and who worked so hard to change things. Thank God they succeeded.
i might have clarified my criticism comment. you are right.
the usa is truly a melting pot deriving all of its most positive attributes from new ingredients that are added eventually carrying the same flavor as the old ingredients making us all americans.
Of course that's what always happens where someone steals money from someone else.
You're an "investor", and put $10 million with Madoff and get statements from Madoff showing a 10% return, so that your $10 million investment now appears to have grown to $11 million.
Even if you take all of the pretend "profit" out, that leaves Madoff with $9 million of your money. And because of the appearance of profit, more people wanted in on the deal, meaning more millions coming in with which to pay out the pretend "profits". So, he accepts $10 million dollar investments from 2 or 3 of the dozens of people you've told about what a good deal you've got.
And some investors didn't even take out all of the "profits" Madoff reported, instead letting their "investment" continue to "grow". Some even "invested" more.
The scam collapsed when a significant number of investors needed to pull their capital out instead of just taking the "profit" and letting the rest stay "invested". As long as Madoff didn't have to pay out more in "profits" than he took in as "investments"; didn't have to give back the capital as well as paying out the "profit" he was fine.
In the meantime, Madoff lived lavishly, paid for by the money he took in.
Several charitable foundations lost their endowments in this debacle. The person in charge of investing for that charity may have been unwise, as this article points out. However, the people hurt are the people who were receiving services from these foundations. Those people are, more often than not, poor and needy; not greedy.
Also, the folks who set up and run charities are not among the "greedy" of the world. Rather, they are, by definition, among the charitable.
Your obvious bitterness about not being wealthy is clouding your ability to see the devastating loss that many non-greedy people have suffered in this situation.
As is mentioned in the post, Madoff's crime is not that he's a thief and a liar, but that he stole from "family".
I'd say that's as good an indicator of "greedy investors" as is needed here.
I'm not the least bit worried about Madoff. He'll get what he deserves. I'm really fascinated by his "victims" and how little is said about the conscious choices they made to invest with him despite what seemed to be a lot of red flags that were being waved and ignored.