Riverdale, NY – SAR Orthodox Yeshiva Sends Letter To Members: Endowment Fund Wiped Out By Madoff Ponzi Scheme

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    Students at SAR academy praying.Riverdale, NY – An e-mail letter sent today by the president of Riverdale’s SAR Academy informs members that it has been seriously affected by the Madoff Ponzi scheme.

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    Undoubtedly, you have heard of the recent allegations of unprecedented financial fraud. While unfortunately our school is affected, the dama ge is limited to our Endowment Fund only. Hence, this will not change our ability to run the school, pay our bills, and meet our payroll and other day-to-day operations of the school.

    The Endowment is invested with several investment managers. Years ago, it invested in Ascot, a manager which, unbeknownst to us, had substantially all of its assets invested with Madoff. Over time, that investment grew to $1.3 million. We are obviously monitoring the situation and evaluating our alternatives; however, in light of the allegations, we are now valuing this investment at zero.

    In SAR’s operating and capital accounts, no money is or has ever been invested in Ascot, Madoff or any other investment manager. All of our tuition money, scholarship fund money, capital campaign money, grant money and any other funds raised for operations (running the school) or capital (construction and building improvements) are either used immediately for their stated purpose, or temporarily placed in highly liquid, bank or money market accounts.

    The Endowment was started over 15 years ago, with about $1 million donated by a small number of private donors, many of whose families were aware of its asset allocation. Despite the September-October turmoil in financial markets and before the Ascot writedown, the Endowment was recently valued at approximately $3.7 million.

    Each year, our Endowment generally converts up to 5% of its total assets to cash with the proceeds used to support some of our unique programming. Thus, we expect that our potential Endowment capital loss can result in a reduction of approximately $65,000 to this annual cash flow. Unquestionably, this is a setback, but it is also something we will recover from, and we continue looking ahead, together with you, to plan for our children’s future.

    Sincerely,
    Jack C. Bendheim, President


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    42 Comments
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    Yankel Turech
    Yankel Turech
    15 years ago

    Lets define a stockbroker as: “Someone who invests your money for you until its lal gone.”

    Anonymous
    Anonymous
    15 years ago

    many many frum yidden and moisdos got majorly hit with this scam

    oiberchochem
    oiberchochem
    15 years ago

    wow nebech.. let’s all send in money to this school to help cover thi loss! I mean no one else is suffering… let’s all give money to this great yeshiva..whats the name of it again?

    Anonymous
    Anonymous
    15 years ago

    It is interesting to note how open a modern orthodox yeshiva is about their funding: where they get their money from, how it is invested, and how much of it is put to which uses. It behooves other more “yeshivish” institutions to do the same.

    Anonymous
    Anonymous
    15 years ago

    So sad — SAR is a really excellent school.

    Anonymous
    Anonymous
    15 years ago

    Do all mosdos invest in stocks?

    Anonymous
    Anonymous
    15 years ago

    I’m just wondering if all mosdos put money into stocks?

    Charlie Hall
    Charlie Hall
    15 years ago

    I just happen to have davened Shacharit at SAR HIgh School this very morning. It is a very special place. The teachers dedicated to Judaism and the students are enthusiastic. Everyone there is nice. I wish I could have attended such a school.

    It is possible to contribute SAR through its web site by buying an ad for their journal dinner. I will do so later today or tomorrow, bli neder.

    robroy560
    robroy560
    15 years ago

    Good points #6 & #7 .

    Keep in mind this yeshiva is managing their money properly. Notice how they keep the immediate funds liquid and the endowment, like what many institutions do, was invested in alternatives. Usually, endowment funds are not depleted right away for general operating expeses. Unfortunately another person from our ‘chevra’ ripped off people.

    So the damage to the income lost was $65,000 per year. That’s not a catastrophe. Yes, I know the money doesn’t grow on trees. But they can recover. R’L, some folks were wiped out by this guy.

    Be careful out there. Religious and affinity organization crimes are one of the biggest scams. Churches get ripped off, although not as big, all the time.

    Yitzchok
    Yitzchok
    15 years ago

    What chutzpah any yeshivah or “moised” has to invest money that people give to tzedakah into stocks, funds etc. Monies given to Tzedakah should be held in the safest possible place, some big macher in the Yeshivah hiarchy feels that he should have been a Hedge Fund guy and the Tzedakah money is his personel piggy bank, I say fire whomever made the decision to invest the money with this individual.

    Anonymous
    Anonymous
    15 years ago

    #13 and14
    An endowment is MEANT to be invested. The “pairois” spent as earned with the “keren” never continuing to generate income.. Lookitup. Halevai more moisdos and donors were in a position to create endowments. Most of our donations need to be used for immediate expenses.

    MoneyGuy
    MoneyGuy
    15 years ago

    #14 , anybody that invests for the long term should not be putting 100% of the money in cash. I would say MOST yeshivas have some sort of portfolio, perhaps some just Treasuries, but the whole point of an endowment is to invest for the future. If you have all your money in the bank, you are actually losing money, and that is in the short term, certainly you will be losing more money as time goes on. Investing wisely with the beauty of compounding on a probably tax-free account is what most non-profits should do.

    Anonymous
    Anonymous
    15 years ago

    If you read the letter carefully, it says they lost $1.3 million out of a total endowment of $3.7 million. They did not lose everything. They have $2.4 million left from what started out as $1 million 15 years ago. That means even after their loss they made about 5%/year on their investment. That’s not too bad for safe funds. And they invested wisely. They split their endowment into three parts and gave each part to a different money manager. Read the letter. Perhaps the one to blame is Ascot, for taking a fee for just turning the money over to someone else to manage. Ascot, along with many other people, seems to not have done much to earn their fee. On the other hand, it is difficult to catch a fraud done well. As for Madoff, he appears from my amateur standpoint to be mentally ill; he had some of his own money invested with himself, even though he must have known he was a fraud.

    Anonymous
    Anonymous
    15 years ago

    There were Yeshivish Mosdos that were hurt by the scam as well. Endowment funds are meant to be invested, that is their whole purpose. Any Yeshiva that has a Fund would likely be invested in funds. Unfortunatly the wrong fund happened to have been marketed to many Yeshiva and Tzedaka Endowment funds.

    Yitzchok
    Yitzchok
    15 years ago

    Having graduated Yale Law and London School of Economics, I know exactly what an endowment is and what the stated purpose is. However when I have a yeshivah fundraiser come into my office to ask for money to sustain the Yeshivah, I hardly think that he has the rite to play the market. If he has a long term vision let him buy T-bills. I have been in the financial markets for almost 20 years, and I will be the 1st to tell you that this game is not for the novice investor seeking a safe place to keep money, I don’t have my own kids money in anything other then T-bills. And I do this for a living.

    shmilik
    shmilik
    15 years ago

    The story in the Talmud tells that a Rabbi didn’t trust one with the name KIDOR
    He defended himself by saying ” Anyone with a name with Kidor is from a low
    charachter, because the word Kidor is related to a word in the Torah that is of bad
    nature.
    How could you invest in a person whose name alone tells you that he had

    MADE OFF ????????????????????????????????????

    Anonymous
    Anonymous
    15 years ago

    — Having graduated Yale Law and London School of Economics, I know exactly what an endowment is and what the stated purpose is. However when I have a yeshivah fundraiser come into my office to ask for money to sustain the Yeshivah, I hardly think that he has the rite to play the market. —

    You did not graduate from the Yale Law and London School of Economics as you claim. No one who graduated from Yale Law School would have wrote “rite” rather than “right” in the context in which you used it. One has to have strong writing skills to graduate from Yale Law School.

    Finally, other than the fact that Madoff was a crook, which few people could have predicted, investing with him was not risky. Madoff claimed to be using a trading strategy called split-strike or collar trades, which is a low risk investment. (Although it usually cannot produce the returns that Madoff claimed to be earning.)

    Anonymous
    Anonymous
    15 years ago

    Madoff…Rubashkin…Abramoff…
    so much for jewish business ethics.
    What Chilulei Hashem

    seer
    seer
    15 years ago

    we had quite a few financial scams over these past few decades perpetrated in jewish circles. a lot of innocent investors, mostly jewish, were hurt by them. by and large they to were similar ponzi type of financial scams.although the extent of these scams never reached the scope or size of the recent madoff scandal , the people affected lost in most cases their life savings. many different types of jews were steriotyped as spoilers and thieves for having led many people down into financial abyss.
    whats makes the madoff scandal so horrible , is that he wasnt a chossid, a frum misnagid or for that matter one of the ‘religious’ type who ‘steal and lie’ and take from widows or unsuspecting investors and cannot be trusted.
    madoff was the treasure of yu university and chairperson of the sy syms school for business. what credential he must of had to gain such respect.
    well, madoff’s ponzi scheme was greater money wise, and from any other prospective, than all the schemes perpetrated to date , combined, by all others, from the time that we jews came to america to-date. what a shame this is for all of us and those who had blind faith in an individual to give him hard earned money for charities and other needs and see it all squander away in such an ill way.it is a sore blot for the jewish people.

    DEEPTHINKER
    DEEPTHINKER
    15 years ago

    The Chofetz Chaim was once asked it 100,000 should be invested and the proceeds used to fund a single yeshiva. He replied that we should rather fund ten yeshivos and rely on Hashem to keep them going, once established.

    If SAR had followed the chofetz chaim’s advice, and simply opened another yeshiva with the money, they would not be looking at a loss today.