Madoff case brings out the Bigots - Anti Jewish Commentary on Madoff Fraud

NEW YORK -- Of all the words that have been used to describe the Bernard L. Madoff scandal, the most emotionally charged may be "Jewish."

The disgraced investment guru is accused of orchestrating a $50 billion Ponzi scheme that preyed heavily on fellow Jews and ultimately drained the fortunes of numerous Jewish charities and institutions.

There's nothing new about con artists targeting their own kind. There's even a word for it -- affinity fraud -- and it has struck numerous religious, ethnic and professional groups.

FRAUD WITH MANY FACES The Securities and Exchange Commission defines affinity fraud as "investment scams that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly or professional groups." Some recent examples:
* The Baptist Foundation of Arizona told investors their money would build churches while paying returns. In fact, their savings were sucked into what authorities called a $550 million Ponzi scheme in the 1980s and 1990s. Several foundation officials were sentenced to prison in 2006 and 2007.
* Chicago real estate investment firm Sunrise Equities Inc. had the blessing of Muslim clerics, who said its dividends conformed with Islamic laws against earning interest. Its owner disappeared this past August, leaving 200 of his fellow Muslim immigrants with losses that could total $50 million.
* Renaissance Asset Fund Inc. raised more than $16 million from more than 190 investors in a Ponzi scheme that promised elderly members of Jehovah's Witnesses congregations returns of up to 75 percent.
* Under various names with biblical connotations, including Jubilee Trust Fund, Oracle Trust Fund and Elkosh Trust Fund, a group of schemers bilked $7.4 million from members of Christian churches in rural Kansas, Nebraska and Missouri.
SOURCES: THE ASSOCIATED PRESS, SECURITIES AND EXCHANGE COMMISSION

But the allegations against Madoff are particularly wrenching for some in the Jewish community, who fear that the sensational case is fanning vicious stereotypes about Jews that go back to the Middle Ages.

The Anti-Defamation League cites a spike in anti-Semitic comments online after Madoff's Dec. 11 arrest. A columnist for the Israeli newspaper Haaretz lamented the case as "the answer to every Jew-hater's wish list."

And the American Jewish Committee's executive director, David A. Harris, wrote a letter to The New York Times criticizing what he saw as "a striking emphasis" on Madoff's faith in one of the paper's many stories about the scandal.

The case is "fodder for the bigots," Abraham H. Foxman, the ADL's national director, said in an interview this week with The Associated Press. "It's both embarrassing and it's painful."

Prominent victims

It's difficult to describe the case in any detail without mentioning Madoff's religion. The 70-year-old money manager and former Nasdaq stock market chairman donated hundreds of thousands of dollars a year, much of it to Jewish causes. And many of the known victims of his business, Bernard L. Madoff Investment Securities, are big names in Jewish life.

Yeshiva University, one of the nation's foremost Jewish institutions of higher education, lost $110 million; Hadassah, the Women's Zionist Organization of America, lost $90 million; director Steven Spielberg's Wunderkinder Foundation acknowledged unspecified losses; and a $15 million foundation established by Holocaust survivor and writer Elie Wiesel was wiped out. Jewish federations and hospitals have lost millions, and some foundations have had to close.

Madoff is charged with securities fraud and is under house arrest in his Manhattan apartment with round-the-clock security. His lawyer has said he intends to fight the charge.

The damage to the Jewish community is psychological as well as financial, said Kenneth Bandler, a spokesman for the American Jewish Committee. He said his organization declined to invest with Madoff earlier this year because it was unable to decipher how Madoff was producing his renowned returns.

At Jewish organizations and synagogues, Bandler said, people ask themselves: "How could someone who is held in such high esteem in the Jewish community knowingly rip off what were supposed to be his friends, the organizations he admired and supported?"

Preying on trust

Members of churches, minority groups and various occupations have wondered the same thing after falling victim to similarly targeted frauds. Religious-based schemes alone swept up more than 80,000 people and nearly $2 billion nationwide from 1998 to 2001, according to the most recent figures available from the North American Securities Administrators Association, an investor-protection group.

Whatever the circle, affinity frauds exploit trust. Victims are approached by one of their own and "therefore there's less suspicion, there's less concern," said Joseph P. Borg, the Alabama Securities Commission's director and a former NASAA president.