Of all the words that have been used to describe the Bernard L. Madoff scandal, the most emotionally charged may be "Jewish."
The disgraced investment guru is accused of orchestrating a $50 billion Ponzi scheme that preyed heavily on fellow Jews and ultimately drained the fortunes of numerous Jewish charities and institutions.
There's nothing new about con artists targeting their own kind. There's even a word for it — affinity fraud — and it has struck numerous religious, ethnic and professional groups.
But the allegations against Madoff are particularly wrenching for some in the Jewish community, who fear that the sensational case is fanning vicious stereotypes about Jews that go back to the Middle Ages.
The Anti-Defamation League cites a spike in anti-Semitic comments online after Madoff's Dec. 11 arrest. A columnist for the Israeli newspaper Haaretz lamented the case as "the answer to every Jew-hater's wish list."
And the American Jewish Committee's executive director, David A. Harris, wrote a letter to The New York Times criticizing what he saw as "a striking emphasis" on Madoff's faith in one of the paper's many stories about the scandal.
The case is "fodder for the bigots," Abraham H. Foxman, the ADL's national director, said in an interview this week with The Associated Press. "It's both embarrassing and it's painful."
Intertwined with Jewish life
It's difficult to describe the case in any detail without mentioning Madoff's religion. The 70-year-old money manager and former Nasdaq stock market chairman donated hundreds of thousands of dollars a year, much of it to Jewish causes. And many of the known victims of his business, Bernard L. Madoff Investment Securities, are big names in Jewish life.
Yeshiva University, one of the nation's foremost Jewish institutions of higher education, lost $110 million; Hadassah, the Women's Zionist Organization of America, lost $90 million; director Steven Spielberg's Wunderkinder Foundation acknowledged unspecified losses; and a $15 million foundation established by Holocaust survivor and writer Elie Wiesel was wiped out. Jewish federations and hospitals have lost millions and some foundations have had to close.
Madoff is charged with securities fraud and is under house arrest in his Manhattan apartment with round-the-clock security. His lawyer has said he intends to fight the charge.
The damage to the Jewish community is psychological as well as financial, said Kenneth Bandler, a spokesman for the AJC. He said his organization declined to invest with Madoff earlier this year because it was unable to decipher how Madoff was producing his renowned returns.
At Jewish organizations and synagogues, Bandler said, people ask themselves: "How could someone who is held in such high esteem in the Jewish community knowingly rip off what were supposed to be his friends, the organizations he admired and supported?"
Not a new kind of fraud
Members of churches, minority groups and various occupations have wondered the same thing after falling victim to similarly targeted frauds. Religious-based schemes alone swept up more than 80,000 people and nearly $2 billion nationwide from 1998 to 2001, according to the most recent figures available from the North American Securities Administrators Association, an investor-protection group.
The Baptist Foundation of Arizona told investors their money would build churches while paying returns. In fact, their savings were sucked into what authorities called a $550 million Ponzi scheme in the 1980s and 1990s. Several foundation officials were sentenced to prison in 2006 and 2007.
Chicago real estate investment firm Sunrise Equities Inc. had the blessing of Muslim clerics, who said its dividends conformed with Islamic laws against earning interest. Its owner disappeared this past August, leaving 200 of his fellow Muslim immigrants with losses that could total $50 million.
Whatever the circle, affinity frauds exploit trust. Victims are approached by one of their own and "therefore there's less suspicion, there's less concern," said Joseph P. Borg, the Alabama Securities Commission's director and a former NASAA president.
'Merchant of Venice'
Adding to the sense of betrayal in the allegations against Madoff are worries about whether they feed into centuries-old, ugly caricatures of Jews.
Since Jews served as lenders in medieval Europe, where they were barred from many other occupations, they have sometimes been portrayed as miserly, greedy and obsessed with money. In just one example, Shakespeare's Shylock, the Jewish character who demands a pound of flesh in payment for a loan in "The Merchant of Venice," has become synonymous with usury.
In his letter to the Times about a Madoff article, the AJC's Harris wrote: "Yes, he is Jewish. We get it. But was this relevant to his being arrested for cheating investors, or so key to his evolution as a businessman that it needed to be hammered home again and again?"
The Rabbinical Council of America issued a statement Wednesday underscoring that "there is no reason to believe such terrible behavior is more common among Jews" than anyone else.
Still, anti-Semitic broadsides have peppered the Internet in the wake of Madoff's arrest, some in highly visible public-comment sections of popular news sites, Foxman noted.
Some get removed by the sites' administrators or draw replies noting there are bad apples of all creeds and in all walks of life. Victims also extend to all creeds and walks of life — banks, insurers, pension funds and even the International Olympic Committee are among those who say they've been taken by Madoff.
Still, the scandal has reverberated throughout the Jewish community. This week, representatives of about three dozen Jewish foundations met in New York City to come up with a plan to help Jewish nonprofits that lost money with Madoff, said Jeffrey Solomon, president of the Andrea and Charles Bronfman Philanthropies. Solomon said the foundations agreed to contribute to a pool of money that will be distributed to hard-hit organizations.
"This is a tragedy by any stretch of the imagination but within the context of $300 billion worth of donations to American charities, we shouldn't lose sight of the larger picture — both the generosity of Americans and the effectiveness of the nonprofit system," he said.