Hadassah: Madoff scam may cost us $90m

Women's Zionist Organization of America: Key pillars remain strong; Congress to investigate "pyramid scam."

madoff after court 248.88 ap (photo credit: AP)
madoff after court 248.88 ap
(photo credit: AP)
Hadassah, the Women's Zionist Organization of America, announced Wednesday that it had invested $90 million with Bernard Madoff, who has been charged with securities fraud. "We are currently in the process of investigating the exact amounts and their impact, but it appears that at the time of his arrest, Hadassah had approximately $90m. invested with his firm," the organization said Wednesday in a statement. "Falling victim to this unprecedented fraud will require us to make necessary adjustments, but it has not in the slightest affected our commitment to our core Zionist mission. These are indeed turbulent times, but the key pillars of Hadassah remain as strong as ever." Hadassah was already facing tough times because of the current economic downfall, adopting cuts in its operating budget and expecting additional reductions in the coming months. The details of the yet-to-be-determined cuts are likely to become more clear following a board meeting in January. "Now the Madoff situation compounds and accelerates the matter," said a source close to the situation. A Hadassah spokesman said it was not clear whether the losses connected to Madoff would affect the construction of a new tower at its main campus in Ein-Kerem. Meanwhile, the US Congress will investigate the alleged pyramid scam run by Madoff, a leading House lawmaker said Wednesday. Madoff, who has been charged with securities fraud, remains free at his Park Avenue apartment, after the judge overseeing his case agreed to renew his bail. The 70-year-old financier had been free on $10 million bond but now must wear an ankle-monitoring bracelet and observe a 7 p.m.-to-9 a.m. curfew. Madoff did not appear in court after Judge Gabriel Gorenstein canceled a scheduled bail hearing and issued the changes in a written order. Madoff agreed to surrender his vacation houses in Montauk, New York, and Palm Beach, Florida, if he flees. The change was submitted after Madoff said he was unable to find two cosigners (in addition to his wife and brother) to vouch for him. Madoff's attorneys have until Monday to submit additional paperwork. The scandal has "further weakened already-battered investor confidence in securities markets and has raised more troubling questions about the effectiveness of the regulatory system," said Rep. Paul Kanjorski (D.-Pennsylvania), chairman of the House Financial Services subcommittee on capital markets. Kanjorski said he'll convene a congressional inquiry early next month to examine the alleged fraud and to determine why the Securities and Exchange Commission and other regulators "failed to detect these substantial evasions." The planned congressional inquiry follows a stunning rebuke that Securities and Exchange Commission Chairman Christopher Cox leveled against his agency's career regulators, blaming them for a decade of failure to investigate Madoff and for failing to detect the largest pyramid scam ever. At the Justice Department, a spokesman said that Attorney-General Michael Mukasey had recused himself from the investigation into Madoff. Mukasey's son Marc is representing Frank DiPascali, a top financial officer at Madoff's investment firm. DiPascali was the Madoff employee with the most day-to-day contact with his investors. Several described him as the man they got on the phone when they had questions about the firm's investment strategy, or wanted to add to or withdraw money from their accounts. Authorities have not said publicly whether DiPascali is suspected of any wrongdoing. "We are trying to learn the facts like everybody else," Marc Mukasey said, in a phone interview with The Associated Press on Tuesday. A former SEC attorney, Eric Swanson, married Madoff's niece Shana last year, The Wall Street Journal reported. The SEC's compliance office issued a statement on Wednesday saying Swanson was part of a team that looked into Madoff's securities brokerage operation in 1999 and 2004. The SEC cited its "strict rules" prohibiting employees from participating in cases involving firms where they have a personal interest. The SEC's inspector general, David Kotz, said on Wednesday that as part of his investigation, he intends to examine the relationship between Madoff's niece and Swanson. "There are a lot of different issues" as outlined in Cox's statement, Kotz said. "We obviously will move as soon as possible."