Local Toll Runs High In Madoff Collapse

By Megan Greenwell
Washington Post Staff Writer
Sunday, December 21, 2008

Bernard L. Madoff's alleged multibillion-dollar fraud has ruined personal fortunes and shrunk charitable endowments across the Washington region, with estimates of the financial toll locally ranging from the hundreds of millions of dollars to more than $1 billion.

The casualties include a retired couple who invested their substantial life savings with Madoff and told their rabbi this week that they will have to sell their house and might move in with one of their children; a dozen clients of a prominent D.C. law firm, some of whom lost upward of a million dollars; and clients and friends of a financial manager who conservatively estimates they lost a billion dollars combined.

By most accounts, Washington area residents lost far less than the thousands of people in New York, Los Angeles and Palm Beach, Fla., thought to have been taken in by Madoff's alleged Ponzi scheme, which he has said cost investors $50 billion. Real estate deals, charitable funds and personal fortunes, mostly in the region's Jewish community, were seriously damaged here as well, according to people with direct knowledge of the losses, who said the full extent probably will not become clear for months.

"When someone does this and has such a devastating impact on so many individuals and on the community as a whole, it really is an earthquake," said Stuart Weinblatt, a rabbi who leads Congregation B'nai Tzedek in Potomac and has spoken to several people who lost all or part of their savings. "It's shaken the very foundations."

Only a handful of area nonprofit groups -- and no individuals -- have publicly acknowledged losing money. Among Jewish philanthropists, some were willing to discuss friends and clients, but few would discuss their own situations.

"Who wants to go on the record to say they were duped?" said Gary A. Tobin, a San Francisco academic who studies Jewish philanthropy and says he has been told about substantial losses in the Washington area Jewish community. "For Jews, this is like a family betrayal, a dirty little secret in the community that's now out there for everybody to watch. It's embarrassing, it's shameful, it's sad."

The Jewish Federation of Greater Washington said last week that about 8 percent of its long-term savings were in a Madoff account. The endowments of 15 area schools, synagogues and other nonprofit groups were managed by the fund, including Hillel groups at George Washington University and the University of Maryland, the Jewish Community Center of Greater Washington and the Jewish Council for the Aging. All of the fund's member groups expect to lose 8 percent of their endowments.

"When everybody gets over the initial shock based on the amounts of money involved, the second predominant feeling is one of total uncertainty," said Abbe D. Lowell, a partner with D.C. law firm McDermott Will & Emery and a board member and general counsel for the Jewish Community Center. "No one seems to grasp what this all means yet."

One of the region's largest Jewish family foundations, the Charles I. and Mary Kaplan Foundation, earned almost $3.2 million in interest dividends from a Madoff account last year, according to the group's tax filings. It is unknown whether the group invested with Madoff at the time of his arrest, because 2008 records are not available.

Irene Kaplan, the previous president of the Jewish Federation of Greater Washington and vice president of the Kaplan Foundation, declined to comment when reached at her Potomac home. Attempts to contact the other three officers of the foundation, who are also members of the Kaplan family, at their homes and offices were unsuccessful.

In 2006, according to tax records, $29.2 million of the foundation's $30.1 million endowment was invested with Madoff.

Lowell said his law firm has at least 10 or 12 clients who had invested with Madoff. Some, he said, fear they have lost more than $1 million.


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