This just in.

As I’ve said repeatedly on this blog, Yeshiva University’s financial collapse was not the work of a day. (Go here for background.) It took a special mix of trustees Bernard Madoff and Ezra Merkin, decades of indifference to the sexual abuse of students, and, more recently, a useless, self-righteous, and highly compensated president, to kill the school. Yeshiva’s board of trustees remains dominated by outstanding moral specimens like Zygmunt Wilf (“the judge decided that the Wilfs showed ‘bad faith and evil motive’ in a case she said was unlike any she had ever seen in New Jersey.“). Wilf and his fellow trustees have been so riddled with conflict of interest that the board seems to have been little more than “an investment club.”

How much lower can Yeshiva go?

Yeshiva, UD feels confident, is capable of falling much farther. Indeed, she anticipates that the school will have to close.

In his letter, President Joel wrote that the current fiscal crisis will force YU to “reframe the way we educate.” Joel noted, “conventional models crumble beneath the weight of fiscal hardship,” and discussed the need for a “new strategic vision” to increase revenue and efficiency in new graduate programs and online education.

This blog has followed, with disgust, Yeshiva University’s longtime irresponsibility in every imaginable institutional sense – hiring, trustee appointments, presidential compensation, intellectual freedom (put YESHIVA in my search engine for details). Now the Post-Bernard Madoff bill’s come due, and the only thing missing from the president’s statement is his acceptance of responsibility and his resignation.

“Yeshiva has suffered philanthropic walkouts,” writes the school paper, putting the matter diplomatically. Remember Andrew Sole’s letter, written all the way back in 2008, to Yeshiva? A letter the school blew off? Sole called for the resignation of the entire board of trustees.

… [H]arm has come to this distinguished University, both in financial loss and worse, in reputation. It is my view that the harm today is directly attributable to the failed performance of our trustees. As fiduciaries they lost sight of their primary mission, to safeguard the long-term interests of Yeshiva University. Whether their activities were merely negligent, or worse, that judgment is best left for others.

In my view it will take a generation to repair the damage inflicted upon Yeshiva. And that is very sad. But what would be even sadder, and which would also give grave concerns to Yeshiva’s many supporters, would be for the University to continue to allow the current Board of Trustees to serve as fiduciaries going forward.

The honorable course (and we have seen virtually no honorable behavior in American corporate boardrooms, nor in our public servants, in 2008) would be for the University’s President, and its legal counsel, Sullivan and Cromwell, to demand the immediate resignation of the entire Board of Trustees.

Fuck that! said Yeshiva. We like our boys (it’s almost all boys; they all seem to be in each others’ pockets; and one of them – Zygi Wilf – just got convicted of racketeering). We’ll just go our own way, and Sole can drop dead.

(This must have been one of the strategies featured in Leadership in the Non-Profit World, a class Yeshiva’s president gave just last January, with a guest lecture from the former president of George Washington University, a longtime defender of Yeshiva University’s way of doing things. Here’s President Trachtenberg. [You need to be a CHE subscriber to read the full contents of the article.])

But Yeshiva has dropped dead. Expect it to go almost entirely online, in the cheesiest, most desperate, way.

… for its typically disgraceful behavior in regard to the depravity of some of its rabbis. Marci Hamilton excoriates Yeshiva for issuing only the thinnest of reports about its decades-long sex scandal and cover-up. She rightly compares Yeshiva with the Catholic church and its shameful efforts to deny the depravity of some its priests.

YU reportedly spent millions paying [a law firm] to produce a “Report” that anyone with knowledge of child-protection policies could have written after receiving YU’s policies and reading [newspaper accounts of the abuse]. … I would not have permitted my name to be on such a deficient and embarrassing document. A document that was truly a “Report” would have included an actual report of the facts that prompted the need to review those policies.

As with Yeshiva trustees Bernard Madoff and Ezra Merkin, the point all along has been to ignore, delay, and then – to the extent possible – deny.

Hamilton’s response would be a significant blow to most universities. But this is Yeshiva, and she is a woman. That means she does not exist.

The report says the investigative team planned to make public its complete findings on sexual and physical abuse but was directed by a special committee of the Yeshiva board of trustees, “as a result of the pending litigation,” to describe the findings “in summary fashion.”

This direction, as the Yeshiva student newspaper points out, “[casts] doubt on the true independence of the investigation.”

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UD decided to pay a visit to those honchos, with their impressive legal delicacy. What manner of man (they’ve recently put some token females on the board), now that it’s lost Bernard Madoff and Ezra Merkin, sits on Yeshiva University’s board of trustees?

UD decided to choose one name on the list and find out all about him. She chose an unusual name because she wanted to be sure she was getting the right guy. She chose Zygmunt Wilf. How many Zygi Wilfs can there be out there?

Here’s the latest, as of August 5, 2013, on Zygi:

[New Jersey Judge Deanne] Wilson found that Zygmunt Wilf, along with his brother, Mark, and their cousin, Leonard, committed fraud, breach of contract and breach of fiduciary duty and also violated the state’s civil racketeering statute, or RICO…. Discussing the Wilfs’ misdeeds, Wilson said they failed to meet the “barest minimum” of their responsibilities as business partners. “I do not believe I have seen one single financial statement that is true and accurate…”

Zygi got an honorary doctorate – for “philanthropic values” – from Yeshiva.

Good to know that as Yeshiva University begins the process of dealing with its faculty’s misdeeds, it will have people like Zygi at the controls.

Yeshiva University’s Moody’s rating has just been downgraded to Baa1 from A2; Moody’s is currently reviewing the university for further downgrades.

How does a university get to such a disastrous place?

It was not the work of a day. Yeshiva had to make itself so notorious that students didn’t want to enroll, and alumni didn’t want to donate. This took about five years, starting with the brilliant idea of putting Bernard Madoff and Ezra Merkin – both YU trustees – in charge of Yeshiva’s money. Conflict of interest? Who cares.

The financial and reputational hit was a biggie. But Yeshiva was just getting started.

Instead of dealing forthrightly with its misbehavior, Yeshiva said nothing and simply erased Madoff’s name from all mentions on its website. (It couldn’t erase everything: “Madoff’s name was prominent in the program for Yeshiva’s annual Hanukkah dinner and convocation, a major fundraising event, held on Dec. 14 at New York’s Waldorf-Astoria Hotel, three days after he was arrested.”) It then went about characterizing itself as an innocent victim of this mean man and his friend Ezra.

With the Madoff/Merkin mess already destroying Yeshiva’s integrity, extensive sexual scandal now hit the newspapers. Decades of important Yeshiva University rabbis preying on children, or looking the other way while children were preyed upon, are the talk of the town. Yeshiva will probably have to settle hundreds of millions of dollars on the traumatized people suing it.

A third crucial component of Yeshiva University’s catastrophe is its inability clearly to admit wrongdoing, coupled with the continued prominence of people reportedly associated with wrongdoing. Take Hershel Schachter.

The power of the rabbinical school rabbis to intervene in student intellectual and extracurricular life could also undermine [Yeshiva University’s] efforts to compete with secular colleges. Rabbi [Hershel] Schachter, who objected to the study of the Christian Bible, also [said] he sees the work of Geoffrey Chaucer as expendable and that 50 percent of an art history course is probably ‘avodah zara and gilui arayot’ (idolatry and licentiousness).”

Okay, so far just a jerk, the sort of anti-intellectual endemic on fundamentalist university campuses. But there’s more.

Earlier this year a prominent scholar at Yeshiva University, Rabbi Hershel Schachter, was caught on audiotape at a conference in London telling Orthodox leaders that Jewish communities should set up their own review boards to evaluate any complaints of child sexual abuse and determine whether to bother with the police. This contradicts state laws on mandatory reporting for teachers, counselors, physicians and such.

Schachter further discouraged police involvement by warning that accused abusers could wind up “in a cell together with a shvartze, in a cell with a Muslim, a black Muslim who wants to kill all the Jews.” Shvartze is a harshly derogatory racial term. Yeshiva University condemned the remarks but seemingly didn’t discipline Schachter, who didn’t respond to my request Monday for comment.

No comment, of course; and Schachter retains a high rank at YU. So does Kenneth Brander.

Better recruiting is [YU President Richard] Joel’s answer to declining enrollment. Back in June, he tasked Rabbi Kenneth Brander, head of the Center for the Jewish Future, with a special assignment: to “re-invent recruitment strategies,” as Joel put it to the Stern College student newspaper, The Observer, in an October interview.

And here is Brander in the Jewish Daily Forward:

[T]wo men have told the Forward that they tried to warn … Kenneth Brander, about Andron. Brander led the Boca Raton congregation from 1991 until 2005, when he took a post as dean of Yeshiva University’s Center for the Jewish Future.

One man who said that he was molested by Andron for three years told the Forward that he called Brander during the early 1990s.

“I told [Brander], he’s definitely a pedophile,” the man said, referring to Andron. “[Brander said] he would look into it, and he never called me back.”

Another man said he tried to warn Brander about Andron a little more than a decade ago.

The man said he tried to call Brander “four or five times,” but Brander did not respond. So the man said he “had to leave a very uncomfortable message” with someone in the Boca Raton Synagogue office. Later, a “third party” from the synagogue contacted the man to say that the allegations against Andron were “rumors” and that “in any case, it’s behind him,” the man said.

Brander may well be innocent of these charges; but as far as YU’s future goes, it doesn’t matter. The school is in free fall.

University Diaries, I’ve had occasion to say, couldn’t exist without Yeshiva University. Yeshiva is part of a tiny American university elite, a group of schools so arrogant, so dishonest, so mismanaged, so inbred, so simply without a clue, that their unceasing scandals provide a good deal of this blog’s content.

Yeshiva, furthermore, is a religious institution, which makes its very bad behavior that much more astounding. To a man (there aren’t any women in positions of authority there), the Yeshiva representatives UD has experienced appear to her to be pious hypocrites.

Yeshiva’s latest catastrophe was totally expected. Let me quote in its entirety the short notice the Jewish Daily Forward just placed on its website.

Yeshiva University’s credit rating has been downgraded by a major ratings agency amid large and growing deficits, a falling endowment and fears of costly litigation stemming from recent allegations of sexual abuse at its high school.

Moody’s downgraded Y.U.’s debt from A2 to Baa1, putting it below the median credit rating for similar institutions.

The agency says that the litigation prospects of the alleged sexual abuse victims will largely determine if the debt is downgraded further.

Since its peak in 2007 Y.U.’s endowment has cratered, falling 45%, doing handily worse than the stock market. Y.U.’s reliance on hedge funds, in particular, has been extremely damaging. It was also slammed by the financial crisis and damaged by its entanglement with Bernie Madoff’s Ponzi scam.

Meanwhile, the federal lawsuit filed last week by former students at Y.U.’s affiliated high school, alleging administrative negligence in response to abuse they suffered there, is demanding over $380 million in damages. According to Moody’s the attendant publicity may have large consequences for Yeshiva’s fundraising efforts.

As a commenter on this notice writes, “the major damage to the YU bond ratings is not just because of the lawsuit, but because YU has probably lost the confidence of donors.” One Yeshiva donor, Andrew Sole, tried to warn Yeshiva as far back as five years ago. Read his letter calling for the resignation of the entire board of trustees here. The letter, it goes without saying, was ignored.

And note the word “entanglement” up there, relative to Bernard Madoff’s scheme. Madoff, you recall, was a high-ranking, much-venerated trustee of Yeshiva University up to the moment he was taken into custody. Ezra Merkin was also on the board of trustees at that time, working, in consort with Madoff, the sort of financial magic that has become the stuff of legend. Yeshiva tried to make itself out to be a victim of Madoff’s, but it was an enabler, it made plenty of money off of him while the making was good, and it looked the other way when anyone could see that Madoff’s returns were totally impossible.

“Moral bankruptcy,” Algemeiner newspaper said of Yeshiva University earlier this year. That moral bankruptcy has so disgusted donors that it threatens to become financial bankruptcy.

This bizarre institution is one of the main locations keeping this blog in business. It specializes in trustees like Bernard Madoff and Ezra Merkin, infantilizing and sexist rules for its students, conflict of interest among its post-Madoff/Merkin leaders, and decades worth of hushed-up sex scandals. And it’s all presided over by a very highly paid president who responds to most things with denial or silence.

Yeshiva is the very model of a corrupt university, and it should surprise no one that today its chancellor has had to resign in disgrace, having ordered the hushing up of extensive sexual abuse of students.

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The larger context:

In recent years traditional law prohibiting cooperation with oppressive governments was invoked by ultra Orthodox groups to forbid reporting sexual abusers to the civil authorities (as required by American law). Modern Orthodoxy followed the haredim in denying the legitimacy of non-Orthodox movements. Even at Yeshiva University, a highly respected rosh yeshiva and decisor, Rav Hershel Schachter (seen as continuing Rabbi Joseph B. Soloveichik’s halachic teaching in the rabbinical seminary), said publicly that the prime minister of Israel should be assassinated if he dared to give up some section of Jerusalem for the sake of a peace treaty. (He later apologized for the comment.) Recently, Rabbi Schachter was recorded warning against reporting sexual abusers to the authorities (lest they be imprisoned and exposed to harm from anti-Semites).

Now it’s Carnegie Mellon’s turn to do what UD calls TRUSTEE-DELETE.

Yeshiva University is the undisputed T-D standard, having – during the wee hours after two of their trustees, Bernie Madoff and Ezra Merkin, started attracting global attention – simply gone in and without any public comment deleted from Yeshiva’s website all mentions of their names.

Faced with a narco-dollar trafficker on their BOT, Carnegie-Mellon has behaved better than panicky, secretive YU.

Ken Walters, a spokesman for the Pittsburgh university, confirmed that [Marco Antonio] Delgado was a trustee from 2006 through mid-2012.

‘I wish it was someone else,’ he said.

They’ve trustee-deleted, but they’ve also made themselves available for public statements of regret.

Delgado “gave the school $250,000 to establish the Marco Delgado Fellowship for the Advancement of Hispanics in Public Policy and Management.” They’re going to have to decide what to do about that.

Universities, UD has noted on this blog, are reputation-launderers. It’s not surprising that a money-launderer would be attracted to them.

And why not? You’d think the reporter for the Jewish Chronicle would at least think to ask the question. Everyone else is getting clawback-sued, and they didn’t – like Yeshiva – have the Madoff/Merkin Partnership on their board of trustees.

… this book.

Or, I mean, they should. Their university, after all, was dumb or corrupt enough to make Bernard Madoff, and his comrade in crime, Ezra Merkin, trustees of the school. The Markopolos book will help Yeshiva’s students understand how Madoff was able to turn their university into a laughingstock. It will help them understand how to avoid having that happen to their university in the future.

Unfortunately, far from dealing openly and honestly with its embroilment in Madoff, Yeshiva airbrushed him and Merkin from its history, hoping, I suppose, that no one would notice the positions of trust and authority these men held at that school for years.

It’s a shameful story, as Yeshiva alumni with integrity, like Andrew Sole, know.

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Here are many UD posts about Yeshiva University and Bernard Madoff.

… is, as you know, a category on this blog which watches the ways a university’s trustees can wreak havoc.

There’s a strictly limited number of ways, but with a really bad board of trustees, you don’t have to do too much to make a school take a tumble.

The crucial characteristic really bad boards of trustees share is cronyism. They’re all sort of buddies. With each other and with the university’s president. Culturally, they’re very similar to one another. Almost no outside voices are heard. It’s an insiders’ game.

Take scandalous, conflict-of-interest-ridden, Yeshiva University. Several on its all-male board had special financial dealings with fellow board members Bernard Madoff and Ezra Merkin. That didn’t work out well for them, or for the school, whose Madoff-related woes aren’t over — another Yeshiva trustee and Madoff investor, Elie Wiesel, is currently threatening a high-profile lawsuit against a playwright who put him in a play she wrote about Madoff. And even without Bernie and Ezra, Yeshiva seems to have a notably conflicted board…

As does Shaw University. Shaw’s been in the news lately because its alumni association is trying to get its entire board of trustees to resign.

This is a rather dramatic gesture, but you can understand their desperation. This isn’t merely about conflict of interest (“[T]he university contracted for insurance coverage with the relative of an unnamed board member.”); it’s about institutional corruption and financial irresponsibility generally:

Citing “gross neglect,” Shaw University’s national alumni group has called for the school’s board of trustees [which includes “boxer Evander Holyfield and boxing promoter Don King”] to step down or be dismissed, an appeal addressed to multimillionaire lawyer, alumnus and board Chairman Willie Gary.

The May 14 letter from the alumni association’s president, Emily Perry, cites no specific grievance, but says: “We can no longer stand by and allow Shaw to appear to deteriorate due to poor judgment. … We have serious concerns regarding conflict of interest, fiduciary responsibilities, adverse interest and commitment.”

Shaw, the South’s oldest historically black college, has spent the last year trying to shovel its way out of debt exceeding $20 million. The May 14 letter is not the first rebuke. In March, the school’s Florida alumni group sent a letter to Shaw administrators saying it was “amazed” that giving among board members totaled only $41,089 since July, despite Gary’s pledge that each of the roughly 40 board members would chip in $50,000.

When the alumni refer, in their letter, to “continued mistrust, negative news media coverage, hostility, calls, faxes and letters,” they allude to the predictable outcome of trustees who don’t attend board meetings, who may be financially corrupt, who hand out contracts to relatives (or to themselves), who have financial dealings with other trustees, and who simply do not understand what a university is.

From the Yeshiva University student newspaper:

… [L]ack of communication is a systemic problem at Yeshiva. Controversy still surrounds a tenure process that deals decisions with nary an explanation, leaving talented faculty members and caring students in the dark. Sy Syms accounting majors experienced similar frustrations this year, when the school failed to communicate to its students recent changes in New York State’s CPA requirements. And the wall of secrecy surrounding our endowment has long been a problem, stinging us with failing grades in our annual Sustainability Report Card ratings and leaving us vulnerable to the likes of Bernie Madoff.

Bravo. But the real wall of secrecy Yeshiva students should be worrying about is the university’s trustees.

From Corporate Board Member:

Are the board members of nonprofits that put money into the vaporized funds of Bernard Madoff legally vulnerable for the losses? Possibly. Some individual donors may go after the trustees if charities they supported invested that money in a Madoff fund. So might the attorneys general of states where the nonprofits are based.

… Directors of nonprofits are legally shielded from monetary liability unless they engage in criminal acts or are grossly negligent or reckless. “You’re not liable for bad judgment; you’re not liable for mistakes; you’re not liable if things just don’t go well,” says Jack B. Siegel, head of Charity Governance Consulting LLC, a Chicago outfit that advises nonprofits on governance issues. Still, the dollar amount that Madoff made off with has invited new consideration of what constitutes gross negligence or recklessness. “My personal view is that this is an area of the law that’s going to be tested heavily as you see more and more nonprofits suffer significant losses in their investment portfolios,” says Keith Freid, a senior vice president with American International Group, a leading underwriter of directors’ and officers’ liability insurance for nonprofit organizations. Donors who see that universities invested their donations badly rather than using the money in the way they intended, for instance, might sue the college trustees for legal redress.

… Directors of nonprofits who have business relationships with the outfits—or “wear more than one hat,” as Steven Scholes, a partner with the law firm of McDermott Will & Emery, puts it—face the greatest risk of being accused of breaching a fiduciary duty. Both Madoff and hedge fund manager J. Ezra Merkin, for example, were members of the board of trustees of Yeshiva University in New York City, which lost a $14.5 million investment with Madoff, along with some $95.5 million in phantom profits. Merkin was chairman of Yeshiva’s investment committee and managed a portion of the school’s money, apparently by simply turning it over to Madoff…

Tell it to Richard Joel, the president of your university.

He still hasn’t faced the fact that Bernard Madoff and Ezra Merkin held among the highest positions of authority at your university for years, and that no one ever questioned that. Only when criminal investigations proceeded against these men did your university respond, and it responded by erasing them from its web pages and pretending they didn’t exist.

Nor has Joel faced the fact that a number of the remaining Yeshiva trustees — all male, of course, wouldn’t want to pollute things with a woman (see the post directly below this one)– at your university seem still to be involved in financial conflicts of interest with one another.

Really, Professor Asch. Begin at home. Start by looking around you.

The trustee overseeing liquidation of Bernard L. Madoff’s assets sued New York financier and philanthropist J. Ezra Merkin on Thursday, seeking more than $500 million Merkin withdrew from Madoff’s investment business.

… The suit describes Merkin as a “sophisticated investor” who “knew or should have known” that Madoff’s investment firm “was predicated on fraud.”

According to Picard’s suit, Merkin and Madoff had more than a business relationship. The two were also close socially, sitting together on the Board of Trustees of Yeshiva University. That relationship should have allowed Merkin access to Madoff’s often secretive operations, the suit contends…

I knew that Yeshiva trustee thing would come back to haunt him…

Merkin is an influential figure, especially in New York, where he was prominent both on Wall Street and in social and charitable circles. While he and Madoff were still riding high, Merkin sat on the boards of such New York institutions as Carnegie Hall and the Fifth Avenue Synagogue.  [Er, I think he’s still riding high. He remains President of Fifth Avenue Synagogue.]