Over 20 years Hadassah withdrew $130 million from Madoff account
Jewish Week: Over 20 years Hadassah withdrew $130 million from Madoff account
By Jacob Berkman · January 15, 2009
Over a 20-year period, Hadassah withdrew as much as $130 million from the account it held with Bernard Madoff, according to the New York Jewish Week.
Hadassah became invested with Madoff in 1988 after a donor from France gave the organization $7 million with the stipulation that it be invested with Madoff. After seeing the returns on that money, the organization invested another $33 million with Madoff and then reinvested an additional $50 million that it supposedly made in what would eventually be discovered was a $50 billion Ponzi scheme.
The organization did not invest any new money with Madoff after 1997, the Jewish Week reported. But since 1988 the organization withdrew around $130 million from its account to pay for Hadassah initiatives.
The paper airs criticism of the organization for publicizing that it lost $90 million with Madoff in real and imagined money, while not publicizing that it also made significant money.
Some more bad news, as one commercial real estate lawyer, Stan Epstein, speculated that Hadassah might have to return tens of millions of dollars:
He speculated that Hadassah might have to return as much as $42 million.
The source said Hadassah is clearly worried about the law but hopes that it would be exempt because it is a charitable, not-for-profit organization.
The Madoff scandal comes at a time when Hadassah’s other investments have taken a hit. A year ago, the organization had an investment portfolio that totaled about $750 million. Today, it totals about $450 million, according to the source.
The Jewish Week's unnamed source said that the organization only recently realized that it had pulled out so much money:
“We had no idea how much we had pulled out until a few days ago,” said a source close to the organization.
The source said Hadassah “went back through its books, year by year, to check all the records” to learn how much was withdrawn after receiving many calls from members upset with the $90 million loss.
According to Hadassah's president, Nancy Falcuk, the past withdrawals don't allieviate the organization's immediate need for funding:
She stressed that the organization was still in need of money because over the past five years it has sent $91 million in cash each year to Hadassah’s projects in Israel. She said the organization is obligated to send another $91 million this year to pay, among other things, salaries at Hadassah Hospital in Jerusalem.
“Yes, we have money in the bank but a lot of it is restricted,” Falchuk said, adding that Hadassah is now erecting a new tower at Hadassah Hospital and is still housing children in its youth aliyah village in Israel. “We’re looking for an opportunity to recover [from the Madoff and stock market losses]. ... Three hundred thousand women own this organization and we will come through this.”