How could the Madoff disgrace not
have produced a suicide? It came in the Wednesday morning news: a
French banker working and living in New York had taken his own life,
turned wretched by having invested $1.4 billion of his clients' funds
over to the biggest financial fraud in history.
You would have thought -or, at least, I thought- that the first suicide
would be Bernard Madoff himself. Alas, not. He has neither a
sense of grace nor a sense of justice. Anyway, although he has been
taking walks near his East 64th Street Manhattan apartment, he will not
be able to face the world. And, apparently, he will not leave
it.
A second man I thought might be tempted by a shortcut to the after-life
is J. Ezra Merkin, although he himself seems also to have been hurt by
putting some of his own money in the funds (Ascot Partners LP and Gabriel
Partners LP) slipped to Madoff. One problem with Merkin is that he
worked a street he purported to love, the Jewish street (not alone in
this particular ethnocentric moral squalor; there were others in Boston,
Palm Beach and Minneapolis) to get friends, foundations and operating
charitable institutions to invest. Ah, with whom? With
himself. But he hid from his investors the fact that Madoff was the
golden goose. This did not keep him from taking circa 1 1/2 percent annually as a management fee for money he did not manage.
Like Madoff himself, Merkin supped off charities in which he was active
and to which, presumably, he gave money: the Fifth Avenue Synagogue (of
which he was president), Yeshiva University, the Ramaz School, all by the
way modern Orthodox in character. There were many Israeli
institutions that lost fortunes, some of them with Merkin, some with
Madoff himself. The Technion (Israel's M.I.T. or C.I.T.), for
example. And American philanthropies working in Israel: Hadassah,
the American women's Zionist organization, that underwrites the Hadassah
Hospital in Jerusalem. Then there were family foundations and
individuals and charitable trusts, from small accounts to enormous
ones. Some of them have already closed up shop.
When I saw Merkin's name on the list of culprits/victims (in the
beginning they were intermingled), I have to confess feeling a small
smile come to my face. Not that I expected any of this. But
when it came, I wasn't exactly surprised. There was something in
his carriage that was haughty and a little bit derisive. Maybe it
was that the rest of us hadn't figured out how the world really
works.
Merkin comes from real Jewish aristocracy. It's not his wealth that
I mean: he's not a Rothschild or a Sassoon, a Schiff or a Kedourie.
But he does come from people of real learning. His great-great
grandfather was Samson Raphael Hirsch and his grandfather was Isaac
Breuer, perhaps the two most significant figures in the development of
modern Jewish orthodoxy, institutionally in Germany and philosophically
around the world. (If any of this intrigues you, there are ways to
read about the two on-line. Google the Encyclopedia Judaica, and
go on from there.) This is a fall from grace...to the financial
gutter.
There's been a lot of talk among Jews about Madoff. Leon Wieseltier
called Madoff a kloleh, a curse. He certainly is a
curse. And he is now, much too late, a pariah. And his
investors, certainly, his long-time investors, were fools. It was
too good to be true.
There were, of course, some warnings going back more than a decade to the
Securities and Exchange Commission. Characteristically, it did
nothing. It is now embarrassed, and its behavior and future will
certainly be examined by the Obama administration. Too late. Obama's designation of Mary Schapiro as the commission chairman is,
however, a good beginning.
Kingsgate Global, another feeder institution, is a London fund that
turned over $2.75 billion of its investors' money to Madoff. According to Tuesday's Financial Times, Kingsgate's documents warned
explicitly that Madoff "could abscond with those
assets...Information supplied by the investment adviser may be inaccurate
or even fraudulent. The co-managers are entitled to rely on such
information (provided they do so in good faith) and are not required to
undertake any due diligence to confirm the accuracy thereof." Kingsgate Global's investors will be unable to claim that they weren't
warned. They were warned precisely about what might happen, and
they chose to take the risk. Stupid.
I have now seen an April statement from Madoff enumerating the trades in
a charitable account that was said to have $13 million in it. There
was $82 million worth of trading activity during that month. A
pig's ass, there was.
To be sure, this fraud was perpetrated over gentile fools as well.
I would guess with more money lost. Here are some of Madoff's other
clients: Union Bank of Switzerland, Royal Bank of Scotland, Allianz
Global, Banco Espanol de Credito, Banco Popular, Santander, Barclays,
BNP Paribas, Normura Securities, Swiss Life Holding, Credit Agricole,
Neue Privat, Bank Medici and on and on...and on.