Does the following sound cruel, not to mention illogical? The court-appointed trustee over the assets of Bernard Madoffs Ponzi scheme has strongly hinted that he may demand that non-profits who invested with Madoff pay back money theyve already withdrawn and spent before Madoffs fraud was discovered.
The trustees logic is this: He has a statutory duty to assemble the largest possible pool of Madoff assets in order to pay off as much as possible to the investors Madoff cheated. Fair enough, as far as it goes. Actually, it should go no further. Organizations like Hadassah and Yeshiva University and many other non-profits are worried that the trustee may say to them, in effect: You should have known that Madoff was a fraud. Therefore, any profits you made in and expended from your Madoff investments need to be paid back to the central pool of Madoff assets.
Sound far-fetched? It isnt, not according to Irving Picard, the court-appointed trustee for the liquidation of whatever Madoff assets remain.
Admittedly, national Hadassah has a special reason to worry because its former national chief financial officer, Sheryl Weinstein, sat on a Hadassah committee that decided to invest with Madoff while she was, she now shamelessly says in a book, carrying on a liaison with him.
The logic of the trustee, Irving Picard, escapes us. If a non-profit organization was, he strongly hints, supposed to know that Madoff was a fraud before anyone else knew including the same government that appointed Picard why wouldnt this expectation be imposed on all of the investors with Madoff?
Why is the level of prophecy of a non-profit organization expected to be superior to the level of prophecy of an investor? If, supposedly, a non-profit organization could have figured out Madoffs scheme, why not any other investor, too? What makes a non-profit more responsible for spending profits from Madoff investments than any other Madoff investor who withdrew profits from a Madoff investment?
It is downright bizarre to come along after the fact and accuse non-profits for not being smarter than the Securities and Exchange Commission, which, Irving Picard may be reminded, was fooled by Madoff for decades.
Even if one maintains that Madoff investors were greedy or stupid or sloppy, the non-profits that invested with Madoff were no more and no less so than any other investor. The idea that those who unknowingly lost less than others have a fiduciary responsibility to help out the others lacks logic and lacks fairness.
Of course, Mr. Picard, strip Madoff clean. Of course, uncover every hiding place of Madoffs assets. Of course, leave his estate with nothing. Of course, take the assets of those non-profits who are criminally implicated in their association with Madoff (if you can prove it).
But dont go after the innocent victims. They, including non-profit organizations, are no more clairvoyant than you, Mr. Picard. It makes no more sense to demand retroactive prophecy from Jewish organizations than from any other victim of Madoff.
