A law firm with a large practice in class action suits related to securities fraud now represents some of the alleged victims of Bernard Madoff, who is accused of masterminding a $50 billion Ponzi scheme rip-off.
David Rosenfeld, a partner in Coughlin Stoia Geller Rudman & Robbins LLP, said the firm would pursue multiple lawsuits against Madoff, Bernard L. Madoff Investment Securities LLC, and the hedge funds that invested in Madoff�s fund.
The hedge funds did not perform due diligence and are therefore liable for the losses, Rosenfeld told The Jewish Star Monday night. He declined to identify the funds the lawsuits might target.
"The reason you pay the hedge funds the money they demand is you expect them to do due diligence where they put your money,? he said.
"If I�m going to put that money in the garbage can and just rip it up or shred it, which is what they did here, that�s not something I�m interested in and I would not make an investment of that type.?
Investors in Madoff�s fund who withdrew their money before the alleged fraud was revealed could also be sued, Rosenfeld added.
Madoff, 70, admitted to his sons that his financial empire was "just one big lie? and that he ran a "giant Ponzi scheme? that bilked investors of over $50 billion, and that he was "finished,? according to a federal complaint filed last Thursday.
Madoff, who was once the chairman of NASDAQ, resigned on Friday as treasurer of Yeshiva University and chairman of its Sy Syms School of Business.
Yeshiva�s endowment fund has lost $100 million, the Chronicle of Philanthropy reported. Two sources told The Jewish Star on Monday that YU�s exposure to Madoff�s fund was significantly higher � as much as $150 million.
Just last week Yeshiva�s president, Richard Joel, announced that the university�s endowment had shrunk from $1.8 billion to $1.4 billion as a result of the ongoing financial crisis. His remarks were first reported in Yeshiva�s student newspaper, the Commentator.
Another possible target of lawsuits is J. Ezra Merkin, a Yeshiva University trustee, and founder of the $1.8 billion Ascot Partners LLP hedge fund, which invested significantly in Madoff�s fund. Merkin, who owns a home in Atlantic Beach, also resigned from YU�s board on Friday.
The fact that Madoff, who was managing hundreds of millions of dollars belonging to the university, was also its treasurer is raising eyebrows in the world of finance.
"People were so trusting of this guy,? said an investment banker who asked to not be identified. "He was part of their social fabric.?
Another investment banker, a Five Towns man who also asked to not be named, said, "The treasurer of the institution should in no way be profiting from the investments because ultimately the treasurer is the one who has a fiduciary responsibility on the disbursement of funds.?
In the Modern Orthodox world we like to criticize the yeshiva world for being ?too heimish,�? he noted, "but this is about the most heimish type of insider transaction you can imagine. It�s crazy.?
Yeshiva declined a request for comment about the propriety of Madoff�s role as treasurer.
"Our lawyers and accountants are investigating all aspects of his relationship to Yeshiva University. We reserve our comments until we complete our investigation,? said a spokeswoman, Hedy Shulman.
Banks and non-profits around the world have lost money to the alleged fraud; some smaller non-profits have been hard hit, as have some individual investors including a number of residents of the Five Towns.
The Elie Wiesel Foundation for Humanity, founded by the Nobel Laureate and famed Holocaust survivor, is reported to suffered heavy losses. A foundation belonging to Steven Spielberg had a significant portion of its assets invested with Madoff.
The Robert I. Lappin Foundation, which funded trips to Israel for Jewish youth, was worth $7.1 million as of 2006. The Chais Family Foundation, which funded a variety of Jewish projects, was worth a reported $178 million in 2007. Both were wiped out and have shut down.
The president of SAR Academy, a yeshiva day school in Riverdale, had about a third of its endowment in Merkin�s Ascot fund, its president, Jack Bendheim, said in a letter to parents Monday [sar-madoff-letter-12-14-08]. $1.3 million dollars of the Ascot investment was placed with Madoff, the letter said, and the school considers the money lost. The loss represents approximately $65,000 from the school�s annual cash flow, said Bendheim, a loss from which the institution will recover.
Rena Mosak, a Cedarhurst resident, said that an elderly family member who had their life savings with Madoff had been completely wiped out. "It�s kind of tragic that somebody so affiliated with Jewish charities and Jewish good could do such a thing,? she said.
At least two very charitable families have lost everything, a prominent fundraiser told The Jewish Star. "People who were giving hundreds of thousands in the last years to charity have put their homes on the market,? he said, "They�ve put their art up for sale and have moved in with their children.?
(Michael Orbach and Mayer Fertig for the Jewish Star - LINK)
http://www.theyeshivaworld.com/article.php?p=27250
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