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Financier Madoff's $50b fraud forces closure of Jewish charity
By Natasha Mozgovaya, Haaretz Correspondent, and Agencies
Tags: Israel News, Jewish World 

WASHINGTON - An alleged $50 billion fraud by Wall Street financier Bernard Madoff has caused deep ripples in the Jewish philanthropic world, forcing the closure of a charity aimed at reversing assimilation and intermarriage and triggering losses by prominent donors.

The Robert I. Lappin Charitable Foundation, which financed trips for Jewish youth to Israel, said the money that supported its programs was invested with Madoff, a former Nasdaq chairman.

Madoff, who allegedly told his employees he was running a "giant Ponzi scheme," was arrested Thursday in New York hours after the collapse of Bernard L. Madoff Investment Securities LLC, and released on a $10 million bond. United States authorities accuse him of running a phony investment business that lost at least $50 billion. Federal regulators reached a deal Friday to freeze the company assets and appoint a receiver to manage the firm's financial affairs. "The money needed to fund the programs of the Lappin Foundation is gone," the Massachusetts-based foundation said on its Web site, adding all staff had been let go. "It is with a heavy heart that I make this announcement," Robert I. Lappin, the foundation's trustee, said in a statement.
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Jewish philanthropy insiders are worried that the ramifications of Madoff's financial demise may extend to the many organizations he supported and the wealthy people, many from the Jewish community, he advised, New York-based Jewish newspaper the Forward reported Friday. The paper said Madoff, 70, was close to a number of prominent Jewish donors and made charitable donations to several Jewish organizations, including UJA-Federation of New York, the 92nd Street Y and the Jewish bone marrow registry Gift of Life.

Madoff has resigned from Yeshiva University, where he served as the chairman of the Syms School of Business and treasurer of the board of trustees, the paper reported.

In addition, two private Swiss banks have acknowledged having investments in funds managed by Madoff. Reichmuth & Co says it has 385 million Swiss francs ($327 million) at risk, and Banque Benedict Hentsch Fairfield Partners SA says its exposure is 56 million Swiss francs ($47.5 million) of client assets.

Many well-off Jewish families said late last week they lost large sums they had invested with Madoff. Although some said there had long been questions about Madoff's business practices, it appears the high profits may have kept them from looking into it too deeply.

Madoff didn't tell clients how he got money for them, even when the stock market was tanking. But they relied on his personal reputation and that of his company, which was ranked one of the 25 most successful Wall Street firms. The steady profits, generally between 10 percent and 13 percent, attracted many European investors in addition to the wealthy American investors who entrusted him with their money.

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