YU confirms $110m loss in Madoff scam

Yeshiva president says university lost 8% of its endowment in evaporation of investment operation.

Bernard Madoff 248 88  (photo credit: AP)
Bernard Madoff 248 88
(photo credit: AP)
Yeshiva University has confirmed that it lost $110 million, or about eight percent of its endowment, in the evaporation of the multibillion-dollar investment operation run by Wall Street financier Bernard Madoff. The losses came from an indirect investment in Ascot Partners, a fund run by J. Ezra Merkin that had its $1.8 billion assets completely wiped out in Madoff's alleged $50 billion Ponzi scheme. Yeshiva president Richard Joel said in a statement that the university had lost half-a-billion dollars since January from its endowment, which now stands at $1.2 billion, according to Joel's statement. He said the losses would be covered by cuts in operating costs and programs, but committed to protecting both student financial aid and faculty pensions. "The university is financially strong," Joel said. The university has nonetheless retained law firm Sullivan & Cromwell to review its conflict-of-interest policies - in part to reassure skittish donors, whose support Joel called "critical to our future health." University spokeswoman Hedy Shulman said she did not know whether the board was considering a lawsuit against Merkin, who has claimed he was duped by his longtime friend Madoff. Both men resigned last week from their positions on Yeshiva's board. Merkin is already facing a suit from New York Law School, which lost $3 million it had invested with Ascot Partners. The school accused Ascot, Merkin and the fund's auditor Tuesday of "recklessly or with gross negligence" deciding to invest the entirety of Ascot's assets with Madoff. At least one class-action suit has also been filed in New York federal court on behalf of Ascot investors. Real estate titan Mort Zuckerman, who lost about 10 percent of his $300-million charitable trust through Ascot, has also said he plans to take legal action against Merkin. Zuckerman is among those who have said publicly that they were not aware that their investments with Merkin were being funneled into Madoff's hands. Merkin's attorney, Andrew Levander, has said in turn that his client plans to defend himself while seeking damages from Madoff. Community leaders have been critical of boards - from universities to individual trusts - for failing to adequately supervise how charitable funds were being invested. At least one Jewish organization that did not suffer in the scandal, the UJA-Federation of New York, was spared by tough rules governing investments. The organization requires that all its securities trades be supervised by its bankers at JP Morgan, while the agency said Madoff required all investors to appoint his firm custodian.