Magazine article University Business

Yeshiva Hit Hard by Madoff Scam: Other Higher Ed Institutions Affected

Magazine article University Business

Yeshiva Hit Hard by Madoff Scam: Other Higher Ed Institutions Affected

Article excerpt

THE GROWING LIST OF VICTIMS that have been burned by the fraud scandal involving Wall Street financier Bernard L. Madoff, who is charged with orchestrating a $50 billion Ponzi scheme, has reached higher education. The impact involves institutional funds that were invested in his firm, Bernard L. Madoff Investment Securities, through J. Ezra Merkin, chairman of lender GMAC Financial Services, a close acquaintance.

The institution likely hit the hardest, both professionally and personally, is Yeshiva University (N.Y.). Madoff had more than a business relationship with Yeshiva. A New York Times article reported he had been on the board of trustees since 1996, and the university granted him an honorary degree in 2001. Also in 2001, Madoff made a major donation to the university's Sy Syms School of Business after becoming chairman of the board the year before. He is no longer associated with the institution.

Merkin was a trustee on Yeshivas board and served as chairman of the investment committee; he also stepped down from his positions.

A December 16, 2008, letter from Yeshiva President Richard M. Joel explains the university had no investments directly with Madoff. Instead, officials were told that substantially all the assets of Ascot Partners, a fund managed by Merkin in which officials had invested a small part of the university's endowment funds for 15 years, are invested with Madoff.

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The letter also stated that Yeshivas investment was valued at about

$110 million, which represents 8 percent of its endowment. Taking into account the Ascot loss, their endowment is currently estimated to be approximately $1.2 billion, down from $1.7 billion on January 1, 2008.

"Although this decreased endowment must factor into our long-term fiscal plans, it will have minimal impact on day-to-day operations," Joel wrote. …

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