The financial scandal that has rocked American Jewish charities has also claimed a Canadian victim – though not to the extent felt in the United States.

Bernard Madoff

The Jewish Federation of Greater Toronto took a $486,000 (Cdn) hit as a result of an investment that was indirectly linked to alleged fraudster Bernard Madoff.

“Although any loss is regrettable, and we are by no means minimizing its significance, our exposure is very small compared to other individuals and organizations,” said Howard English, vice-president of corporate communications for UJA Federation of Greater Toronto. “On any given day, considering the size of Jewish Foundation assets and the amount that we invest, market fluctuations of $486,000 either up or down, would not be unusual. In other words, when market conditions are good, we can just as easily make $486,000.”

The nearly half a million dollars referred to by English was invested in a fund of funds, which invests in a basket of other investment funds rather than directly purchasing stocks, bonds or other securities. One of the funds was run by Madoff, a financial guru who managed massive amounts of money invested with him by many American Jews and Jewish charities. The $486,000 was part of a pool of $5.4 million handled by one investment manager. The
remaining $5 million was not invested in any funds connected with
Madoff, English said.

Madoff reportedly lost $50 billion US in what prosecutors claim was a giant Ponzi scheme that relied on new investments to provide substantial and stable returns to earlier investors. Among the biggest losers are Yeshiva University ($110 million US), Hadassah, the Women’s Zionist Organization of America ($90 million US), the Chais Family Foundation, which funds Jewish higher education in Russia ($178 million US), as well as a foundation run by Elie Wiesel to benefit Ethiopians in Israel. The Robert I. Lappin Charitable Foundation, which provides money for Jewish day schools and camps and funds trips to Israel, announced it was closing after losing more than $7 million managed by Madoff.

The Forward, a New York-based Jewish newspaper, reported that 24 Jewish charities lost large amounts invested with Madoff.

English said returns from the fund of funds connected to Madoff generated “steady returns for 12 years without problems.” With about $200 million (Cdn) in total assets, the Jewish Foundation of Greater Toronto relies on professional money managers to determine investments, plus the input of a lay investment committee. The expected half-million-dollar loss is only .26 per cent of the foundation’s total assets.

Furthermore, English continued, “the amount in question did not belong to any one donor, nor will it adversely affect any one beneficiary agency. It has no impact whatsoever on disbursements to agencies from the UJA Federation annual campaign.”

In Montreal, meanwhile, Richard Kleinman, executive director of the Jewish Community Foundation of Montreal, said, “We had no connection to Madoff… We have checked around Montreal and, to our knowledge, no one is tied to the Madoff scandal.”

The foundation’s assets have dropped to $250 million from $300 million, but that is due to market forces unconnected to Madoff, Kleinman added.

One Montreal-based organization, Canadian Hadassah WIZO, announced it had no connection with Hadassah in the United States, which lost millions. “We don’t do joint investments,” said Alina Ianson, executive director of Canadian Hadassah WIZO. The Canadian organization is a separate legal entity, and even memberships are not reciprocal.

“We are not involved with Madoff in any way, shape or form,” she stressed.

In Toronto, Avi Benlolo, president and CEO of the Canadian Friends of the Simon Wiesenthal Center, said they “have not been affected [by the Madoff scandal] thankfully,” while Steve Rabinowitz, a spokesperson for Taglit-Birthright Israel in both Canada and the United States, dismissed reports the organization was affected by the financial fraud.

“Bernard Madoff was not a donor to Taglit-Birthright Israel nor to its foundation, and since the foundation uses all available funds for Taglit trips, they have no funds to speak of to place under investment.

“No donors to the program have reported that they are affected by the situation, either. Therefore, Birthright is essentially unaffected by the scandal. But because of reports that the Robert I. Lappin Foundation… has discontinued its programs and terminated all of its staff due to investments with Madoff’s securities fund and because of speculation about the finances of Birthright’s largest funders, Dr. Miriam and Sheldon Adelson – unrelated to the Madoff scheme – there has been confusion, and also incorrect rumours, about the health of Taglit-Birthright Israel.

“Birthright Israel has announced that they will take all participants who were accepted to 2008-2009 winter trips, are determined to meet all 2009 goals, and just raised over $2 million US at their gala dinner in New York.

“Taglit-Birthright was completely unaffected by Bernie Madoff,” he said.