THE BLOG
01/23/2009 05:12 am ET Updated May 25, 2011

The Real Lesson for Madoff's Chosen People

As Bernie Madoff sits in his Upper East Side apartment ordering take-out, the rest of the Jewish world is reading, writing, watching, listening to, and forwarding emails, blogs, letters, articles, editorials, and commentaries regarding the lessons to be learned from his now-notorious Ponzi scheme.

Facts are emerging at a snail's pace but the opinions are flying around like WeatherBeater at a paintball match. Due to my intense interest and involvement with pretty much all things Jewish, I am in the path of most of them. Here is a brief accounting of the issues in no particular order except I'm saving what I consider to be the most important for last.

I have received and (since I chair two Jewish organizations myself) have written letters to donors, employees, clients, and volunteers to make sure they know that Agency X had no money invested with Madoff. Depending on the organization, this was due either to conservative investment policies, due diligence, or dumb luck.

A few of my friends have written or forwarded emails bemoaning the fact that the Madoff affair has brought the anti-Semites out of the woodwork again. This link will send you to one article.

The Anti-Defamation League (ADL) said there had been "an outpouring of anti-Semitic comments on mainstream and extremist Web sites."

"Jews are always a convenient scapegoat in times of crisis, but the Madoff scandal and the fact that so many of the defrauded investors are Jewish has created a perfect storm for the anti-Semites," said Abraham Foxman, ADL national director.

Some friends have sent emails making sure I know how embarrassing it is that Madoff is Jewish. Others have voiced their disgust over the fact that Madoff stole money from fellow Jews and Jewish charities.

Those friends and the ADL have a point, but they should try to get past their fears. This is a sad, even tragic, occurrence. But no one has become a Jew hater over this and there is no one left for us to feel embarrassed in front of other than ourselves. We live in America in 2008--Thanks God.

Meanwhile, no one has talked much about what I consider to be the most fascinating statistic--that almost all the victims Madoff personally recruited were Jewish and, despite the numerous warnings and red flags, most of them stuck it out until the very end. Madoff did have institutional victims who were brought in by hedge fund managers but most of the individual investors and foundations were people he met at all-Jewish clubs or through charities where he was personally involved.

These customers represent a small minority of American Jews but they are unique in their wealth, their influence, and their visibility as leaders of legacy Jewish organizations. They were attracted to Madoff because he came highly recommended by other wealthy, highly-regarded members of the community. In addition, a big reason they felt they could trust Madoff so completely was that he was one of us--he was a Member of the Tribe (MOT).

I use that term advisedly and for a reason because, thankfully, it is a phrase that an an ever-shrinking number of Jews in America would use to describe themselves. It reflects an approach that served and sustained American Jews well for decades as our parents fought to break down discriminatory barriers and to have full access to every opportunity, job, school, neighborhood, and country club in the U.S.

I became attracted to and ultimately immersed in the organized Jewish community because it felt so good to be part of it all. I have chaired a Federation campaign, an Israel Bond campaign, the boards of two community Jewish day schools, and donated more money to Jewish causes than I am worth today.

My mentors have been people who remembered a time when there was real anti-Semitism and a big chunk of the American dream was off-limits to our people--a time when we felt that no one cared about Jews and Israel except us. Today, polls show that Judaism is widely respected by non-Jews. They are willing to marry us in unprecedented numbers. AIPAC is attracting huge support from hundreds of religiously-motivated Christians--AIPAC leaders don't call them "right-wing" or "evangelical" now that they're on our side. The annual AIPAC dinner in Washington attracts more members of Congress than any other event in the country.

Today our generation and our children are full participants in everything this great country has to offer with a range of choices and options that our parents and grandparents couldn't possibly begin to understand. Ironically, many Jewish clubs (like the ones where Madoff was a member and sought his prey) and some of our day schools are still among the relatively small number of institutions that remain restricted in our country.

We now live a world where 44 percent of Americans say they have changed their religion at least once during their lifetime. A generation ago, nobody changed religions--we were born Jewish or Christian and we stayed that way and married that way whether we liked it or not. A few generations before that, most people never moved more than a few miles away from their birthplace and they usually took on the occupation of their fathers.

But now, for the first time in history, American Jews have unlimited choices. We are free to marry whomever we want and live, work, and go to school wherever we want. Most Americans are taking full advantage of this amazing range of new choices. The MOTs wring their hands and call it assimilation. The rest of us are thrilled to be so free.

The fastest growing group among Christians are people who describe themselves as non-denominational and by far the largest group of Jews are those who describe themselves as Just Jewish. More than 90 percent say they are proud to be Jewish but they tend not to gravitate to the synagogues, Federations, pro-Israel organizations, and Jewish-only clubs that their parents helped build.

Instead they shop for practices and wisdoms that make their lives more meaningful and better. But not everyone has gotten the message. Ten years ago, a number of Jewish organizations became obsessed with promoting "continuity" which was a buzzword that really meant they were scared to death of rising intermarriage rates. That's because it was assumed that if a person intermarried, they and their children were lost to Judaism forever.

In fact, our synagogues and Jewish day schools are full of kids from families where only one parent is Jewish and the other has not converted. It is not unusual for a family to have a Passover seder in the spring and a Christmas tree in the winter. In some of those families, BOTH parents are Jewish. Only in America.

More and more people are doing more and more Jewish but they'd never describe themselves as Members of the Tribe. And most of them would never invest all their money with a man whose methodology was sketchy and whose results were being questioned by a wide range of smart objective people just because he belonged to Jewish clubs and gave to Jewish charities. Some may call that assimilation. I call it common sense.

Which brings me back to Bernie Madoff and his victims. All of his victims were Jews but not all Jews were victims. In a perverse way, that is the exact opposite of what is often said about the victims of the Holocaust.

In Madoff's case, by any objective measure it seems strange that so many of his clients seemed both willing--even anxious--to ignore the warning signs.

As Exhibit A, I submit this article from Time Magazine.

The article, entitled "How I Got Screwed By Bernie Madoff," was written by investor Robert Chew. He explains that all of his money and that of his wife's entire family (more than $30 million) was invested with Madoff.

But look at what he says:

The call came at 6 p.m. on December 11. I had been waiting for it for five years...I think everyone knew the call would come one day. We all hoped, but we knew deep down that it was too good to be true, right?

Which brings us back to the original question: Why did so many smart people give Madoff all their money and sit back and do nothing when it should have been clear--or at least seemed likely--that he was reporting unrealistic results?

Part of it was human nature but I believe a bigger part was related to the rules of the game governing Members of the Tribe--the Chosen People at the Jewish clubs and charities where a select group of their friends and associates were also invested with Madoff. My guess is that it would have been considered bad form in those circles to doubt Madoff in public. To question Madoff would have been an affront to the other members and particularly those respected tribal leaders who got them in the door in the first place. Never mind the facts and never mind the gnawing feeling described by Robert Chew that this wasn't going to end well.

The Madoff catastrophe has left the Jewish community reeling financially and emotionally. It has also been jarring for many to realize that a fellow MOT could do this to his own.

But the major positive lesson that might be learned is that we need to move beyond or, at least adjust tribal thinking for our own good. We can't and shouldn't abandon the idea of community and a shared responsibility for each other's welfare. But we live in an open, pluralistic world where the true value of Judaism is now reflected by our wisdom, ethics, and values--not by our need to stick together and blindly trust only our own. Most American Jews realized this a long time ago. Hopefully more of our Jewish organizations and their leaders will finally get the message.