… and he was chair of the board of directors, for the business school, at Yeshiva University.
Even more astoundingly, he was treasurer on the university board of trustees. Here’s the cached page; Yeshiva has with astounding rapidity airbrushed him from history.
I’ll get back to this man’s long history with a university in a moment. First, let’s see what he’s done:
… Bernard L. Madoff, was arrested at his Manhattan home by federal agents who accused him of conducting a multibillion-dollar fraud scheme — perhaps the largest in Wall Street’s history.
Regulators have not yet verified the scale of the fraud. But the criminal complaint filed against Mr. Madoff on Thursday in federal court in Manhattan reports that he estimated the losses at $50 billion.
“We are alleging a massive fraud — both in terms of scope and duration,” said Linda Chatman Thomsen, director of the enforcement division at the Securities and Exchange Commission. “We are moving quickly and decisively to stop the fraud and protect remaining assets for investors.”
Andrew M. Calamari, the associate director of enforcement in the S.E.C.’s regional office in New York, said the case involved “a stunning fraud that appears to be of epic proportions.”
… Competing hedge fund managers have wondered privately for years how Mr. Madoff generated such high returns, in bull markets and bear, given the generally low-yielding investment strategies he described to his clients.
“The numbers were too good to be true, for too long,” said Girish Reddy, a managing director at Prisma Partners, an investment firm that invests in hedge funds. “And the supporting infrastructure was weak.” Mr. Reddy said his firm had looked at the Madoff funds but decided against investing in them because their performance was too consistently positive, even in times when the market was incredibly volatile.
But the essential drama is a personal one — one laid out in the dry language of a criminal complaint by Lev L. Dassin, the acting United States attorney in Manhattan, and a regulatory lawsuit filed by the S.E.C. According to those documents, the case came to light on Wednesday when Mr. Madoff told two senior employees at the firm that his money-management unit was “all just one big lie” and “basically, a giant Ponzi scheme.”
By this account, Mr. Madoff said that he intended to surrender to authorities in about a week but first wanted to distribute approximately $200 million to $300 million to “certain selected employees, family and friends.”…
That lucky inner circle. He delayed his surrender so he could give at least a little of what he’s stolen to the people who stood by him all these years…
UD will follow the story of Madoff’s relationship to Yeshiva. Crooks like associations with universities, because universities make people look clean. Universities are excellent cover for criminals.
As with Blago, however, many people for a long time seem to have known, or strongly suspected, that Madoff was completely filthy. Did anyone at Yeshiva have any idea about him? Madoff was a major benefactor, distributing quite a bit of his stolen goods to YU. He was closely associated with the school for years and years. They made him treasurer. What gives?
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Update: The Lives of a Pun. I got it in yesterday at 10:17 PM. Financial Times comes trailing way behind me.
Later that same day: Pun jumps the pond.
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Update: The Lives of an Exclusive. These guys are really excited that they got one. Unfortunately, the exclusive belongs to University Diaries.
December 11th, 2008 at 11:47PM
Merry Christmas from Wall Street. Madoff will never be able to repay society for the staggering amount he stole
December 12th, 2008 at 3:17AM
Frankly, Yeshiva looks HORRIBLE for moving so rapidly to "airbrush" Madoff from their web pages. Better to take the embarrassment of ill-placed trust than to try to cover up your relationship with a guy. I’m sure they were taken in by him, just as his investors were. By covering it up, though, they look like they’re guilty. EVERYBODY knows he was a Yeshiva benefactor. Yeshiva will probably get sued by Madoff investors to recover some of their losses and "airbrushing" the guy from their website just makes it look like they’re trying to hide.
I don’t know what they teach at the Sy Sims School of Business, but they SURE don’t teach Public Relations very well if this is how the school chooses to handle this.
December 12th, 2008 at 6:12AM
Dorenberg: I agree that this was a classic Monty Python moment: Run Away! Run Away! — and that Yeshiva looks bad as a result. Nobody asked me, but I’d have advised the following:
Sure, remove his name. But ADD to the page, where his name used to be, or close to it, something like the following:
“Because of recent allegations of financial wrongdoing on the part of Bernard Madoff, Yeshiva University has removed him from the board of trustees. Mr. Madoff has long been a friend of Yeshiva, and should the allegations against him prove untrue, his name will again appear on this page as a member of the university’s board.”
In other words, sure — get rid of his name on the page — but at the same time openly acknowledge what has happened, and why you’ve decided this is the right thing to do. That way you don’t look as though you’re panicking and running and hiding.
December 12th, 2008 at 8:39AM
You all underestimate the adminidroids. The attention span of the typical American is now measured in milliseconds, and ancient history is what happened 30 minutes ago. The key task is to get the bad news out of the public’s gaze as quickly as possible. It works well.
December 12th, 2008 at 11:14AM
Don’t bet on it, Professor. The Madoff Story is getting a pass for today simply because the Big Three Bail Out is knocking it off the front pages. But just wait until the lawyers start lining up to sue Yeshiva to recover the funds their clients invested with Madoff that he gave to Yeshiva. The headlines will be "Yeshiva Madoff With Duped Investors’ Funds"…all in all, a PR DISASTER for Yeshiva…especially bad for the B-school’s rep.
December 12th, 2008 at 11:33AM
Oh, I agree with you, Dorenberg. This is going to be an enormous story, and Madoff will be responsible for profound damage to an already badly damaged economy.
I’m not a lawyer, so I’m not sure how people would go about suing for the return of funds in the way you suggest — How you’d be able to trace funds you gave him THROUGH his donations to Yeshiva in order to get the money back from the university. Sounds unlikely to me, but who knows…
As for the pr disaster for Yeshiva. Yes. No way around it. The entire university is seriously dirtied. B-Schools tend to be pretty dirty anyway, so I’m not sure that’s where the scandal will lie. The scandal in this case is that Yeshiva presents itself as a religious institution, concerned with morality as well as intellectuality. They recently had a conference there about business ethics.
It’s laughable. And when a university becomes a laughingstock, it’s in very bad trouble.
http://spider.mc.yu.edu/news/articles/article.cfm?id=101756
December 12th, 2008 at 11:57AM
As of this moment (Friday morning 12/12/08), you can see on the Yeshiva U webpage how they have tried to remove his name.
Go to this page: http://www.yu.edu/board/ Look on the page, and you won’t see Mr. Madoff’s name. However, hit Control-F in Internet Explorer to bring up the search function, and search for Madoff. You’ll find that his name is there, right under the name of Sy Sims, but it has been obscured.
Alternatively, use your mouse to select the text in the block of names at the top of the page. Madoff’s name and title of Treasurer will appear in the selected text. (I believe they changed the color of the font to white, so you can’t see the white text against the white background.)
I assume that the Yeshiva University webmaster will remove this reference as soon as they discover that it is still visible.
I’m not surprised that Yeshiva University scrubbed the reference to his name.
However, I am very surprised, and distressed, that the New York Times participated in this re-writing of history. When I first read the story about the Madoff fraud on the New York Times website (on Thursday evening at approximately 6 or 7pm Seattle time), the article had a reference to Mr. Madoff’s position as chair of the board at the Yeshiva business school. When I checked the article again on the website a few hours later, that reference had been removed from the story.
Why did the New York Times edit the article about the fraud to remove the reference to Mr. Madoff’s board position at the Yeshiva University school of business? I find this deeply troubling.
December 12th, 2008 at 12:07PM
That’s a very good question, Ed.
December 12th, 2008 at 4:31PM
As Prof. Ayers would be pleased to tell us, the NYT is happy to re-write history itself or aid others in doing so.
I don’t see any evidence that these scandals have any impact on enrollment. If YU lost a ton of money and can’t ladle out the financial aid, that will hurt it much more than bad publicity. Look at the amount of bad publicity that Missouri got for keeping Ken Lay’s money: their enrollment went up more than 8% in the 4 years that drama played out. One of our own very naughty neighboring institutions was caught doing some creative recruiting by the feds and paid a seven-figure fine. Between the dough and the bad pr, this should have been sufficient to shutter them for good.
Their enrollment went up.
December 12th, 2008 at 11:01PM
Ed, what you say about the Times editing down Madoff’s Yeshiva connection is, indeed, VERY troubling — both on the part of the Times AND on the part of Yeshiva. One could easily surmise that "a call was made" and some editor was either overly accomodating or, possibly, pressured. (The Times being in the financial straits that it is, it wouldn’t surprise me that some threats to yank advertising dollars might have been made.)
LOTS of people are scurrying around right now. The coverage on this story is pretty small, given that its purportedly bigger than Enron (which was less that $40 billion). It may well be that money is being moved and hidden. Madoff’s offices should have been sealed off as a crime scene AND he should have been forced to surrender his passport. (I’m betting $50 to all takers that he does a "Crazy Eddie" Antar and beats it out of the country. The $10 million bail he posted is probably jury-rigged assets anyway…)
December 15th, 2008 at 12:32AM
YU’s PR may not be great but they are victims of Madoff like everyone else; he actually didn’t give a whole lot of $$ to YU and looks like some endowment funds were invested with him…the truth always emerges
December 15th, 2008 at 6:05AM
Nope. Yeshiva’s no victim. This will become clear in the next few days. From lack of due diligence — about which everyone agrees — to what will probably look pretty much like collusion, Yeshiva’s no victim.
I of course could be wrong. Wait and see.
December 15th, 2008 at 11:10PM
This business about Yeshiva seems like a lot ado about nothing. The fact that Yeshiva airbrushed him from their website makes perfect sense. Why would anyone want to be associated with him? If they decided they didn’t want him as "part" of their institution anymore, then they are perfectly entitled to get him off the website.
Also, I’ve heard that Yeshiva is in a panic because they’ve been hit pretty hard by Madoff’s scheme as well. They likely had between 10-15% of their endowment invested with him, and to lose that in a day would seriously damage the university. How, exactly, are they not victims? They were duped like everyone else who invested with Madoff. At most, someone at Yeshiva made a very stupid investment decision – just like anyone else who invested with him. The weird conspiracy theories being advanced here seem completely groundless to me.
…And I find it distasteful that the entire university is being painted as an immoral (or somehow hypocritical) institution simply because of a bad investement decision.
December 16th, 2008 at 12:53AM
Tal: Yeshiva’s disaster is in part about bad public relations. You seem to be someone who cares about Yeshiva. Yet your comment hurts, not helps, its efforts to pull up out of this crisis.
Institutions – and people – who respond to the appearance of misbehavior or serious mistakes by running away and trying to deny everything make their situation far worse. Yeshiva airbrushed not merely all references to Madoff — they airbrushed their entire trustees page. I can’t tell you how terrible this looks – at least to people who live in democracies. It’s associated with a terrible history in the Soviet Union (Jews were among the victims of this history) and is notoriously featured in Orwell’s 1984, everyone’s primary literary encounter with the way totalitarianism works.
It does no good for you merely to assert that Yeshiva was a stupid, innocent victim of Madoff — that it was “duped.” You cannot know that, and arguments based on confident assertion of something the writer cannot know always fail. Many Madoff investors have come out and admitted that they knew he was too good to be true. Here’s a typical comment about Madoff and due diligence:
“Lots of people looked at Madoff and just didn’t get it.(I did due diligence in 2001 as did many others). The structure of the investment was wrong (unsecured creditor to a company) The returns posted were delivered thru instruments (split strike conversions) unrelated to the underlying process (secretive market making). And the nature of the role of the investor itself (why borrow billions at Libor + 300-500? Cheaper leverage was available on the street.) The fact that Madoff held no positions over reporting periods made it impossible for anyone to see what he was doing.
Bottom line is that investors who put money with Madoff did poor due diligence. All they wanted was seemingly free money. They never stopped to ask why anyone who had the capability of giving it to them would bother to do so in the first place.”
http://blogs.wsj.com/deals/2008/12/15/madoff-the-atomic-bomb-for-jewish-charities/
Nor does tarring anyone who disagrees with you a conspiracy theorist get you anywhere.
There’s nothing distasteful about pointing out the perfectly reasonable possibility that an institution may be hypocritical and even to some extent immoral — if there’s evidence of that. And there does seem evidence in this case. What’s distasteful is trying to make a case based on ad hominem argument and bluster.
December 16th, 2008 at 10:25AM
"Institutions – and people – who respond to the appearance of misbehavior or serious mistakes by running away and trying to deny everything make their situation far worse."
– The "appearance of misbehavior" seems, in this case, to have been manufactured by you – and thus Yeshiva’s response seems awkward. But none of this fits with the facts: from the moment the Madoff scandal broke, it was public knowledge that he was a board member at Sy Syms (the following – http://dealbook.blogs.nytimes.com/2008/12/11/prominent-trader-accused-of-defrauding-clients/?scp=1 – is only one example). If Yeshiva were truly interested in engaging in a Soviet-scale cover-up (hyperbole much?), wouldn’t they also have to somehow wipe all evidence of the Madoff-Yeshiva connection from not-insignificant papers like the Times, the Washington Post, the Wall Street Journal, etc.? Clearly, then, a "cover-up" was not Yeshiva’s intention – indeed, if you call Yeshiva’s PR office and ask about Madoff, I’m sure you’ll get a reasoned response, instead of some 1984-style denial that Madoff had anything to do with Yeshiva (by the way, the Orwell comparison turned an otherwise simply misguided argument into a ridiculous one). It seems much more reasonable to conclude that Yeshiva simply wanted to distance themselves from an obviously toxic figure, and this is just one normal way to do that.
"It does no good for you merely to assert that Yeshiva was a stupid, innocent victim of Madoff — that it was “duped.” You cannot know that and arguments based on confident assertion of something the writer cannot know always fail."
– …And you cannot know that they were culpable, yet here you are making bald assertions about impending PR doom at Yeshiva, the ethical hypocrisy pervading the institution, etc. And it seems to me that the burden of proof should be on you.
"Many Madoff investors have come out and admitted that they knew he was too good to be true."
– A caveat is in order: 1) it’s always easy, the morning after perhaps the biggest financial fraud in history has been exposed, to wake up and say "I knew it all along!" I doubt that this was true in practice. Had Madoff never been caught, I’m sure these same investors would be busy extolling his financial brilliance and investment acumen.
But let’s assume that an investor at Yeshiva really had a feeling that Madoff was too good to be true, but then recommended the investment anyway. In such a case, the investment adviser is certainly responsible for any damage that may befall Yeshiva, and should be fired – and perhaps the Board of Trustees member to whom this adviser reported should be dealt with severely as well. But I’m not exactly sure what makes you believe that anyone else at Yeshiva is at fault for this? All this means to me is that someone (or some people) at Yeshiva made an irresponsible decision that resulted in damage to Yeshiva. This is true of any of the 32 institutions (http://dealbook.blogs.nytimes.com/2008/12/14/a-list-those-exposed-to-losses-from-madoff/) who had substantial amounts of money invested with Madoff, including major Democratic politicians.
"There’s nothing distasteful about pointing out the perfectly reasonable possibility that an institution may be hypocritical and even to some extent immoral — if there’s evidence of that."
– Exactly! And since, at present, there is absolutely NO evidence of that, you must therefore agree that your comments accusing Yeshiva of moral hypocrisy, complicity with Madoff, etc. are completely out of line.
Also, I still fail to understand how you can tar an entire university as "immoral" and "hypocritical" because of the bad decisions of one of its employees? What does this have to do with the student body (whose ethics event you mentioned above), or the faculty? This may not even have anything to do with the administration – if I had to guess (and since there is no evidence, it is only a guess at this point), I’d probably say that someone on the Board of Trustees messed up – and to imply that the entire university was in on it is, quite frankly, distasteful. In this country, we believe in the presumption of innocence – and until such time as facts come to light that even slightly support your accusations, you are simply firing blind.