March 11, 2013; Source: Thompson Reuters
The fallout from Bernie Madoff’s Ponzi scheme continues, as the Israeli charity Keren Matana has filed a lawsuit against financial manager Ezra Merkin that will attempt to recoup $1.5 million that the charity had invested in Madoff’s Ascot Fund along with $5 million in damages. According to Thompson Reuters, Merkin’s lawyer was unavailable to comment on this story. Last year, Merkin settled a lawsuit with the office of New York Attorney General Eric Schneiderman for $405 million, but Keren Matana says that it is unable to tap into that settlement fund due to a separate claim filed by a former member of Keren Matana’s executive committee, Benjamin Jesselson.
The lawsuit states that excluding Keren Matana from the settlement based upon Jesselson’s litigation in regards to other investments is “wrong and improper” and adds “insult to injury against a charity.” In 2009, Madoff pled guilty to running the biggest Ponzi scheme in U.S. history and he was sentenced to a 150-year prison sentence. It seems that the ripple effect of Madoff’s fraud, felt by a number of impacted nonprofit organizations, has yet to cease.
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Just last week, NPQ noted the impact of the Madoff affair on the Palm Beach Opera; the Madoff scam was one of several factors that played a part in the opera company’s need to readjust its whole business plan to deal with shrinking budgets. Nonprofit investors should reexamine NPQ’s 2009 article, “Lessons for Charities and Foundations from Bernie Madoff,” to ensure that they do not fall prey to this kind of scheme in the future. –Mike Keefe-Feldman