Bernard Madoff’s downfall is leaving a trail of wealth destruction.
One by one, the well-heeled clients of the once-respected Wall Street operator are expressing their shock at failing to spot Mr Madoff’s alleged schemes.
But the victims of Mr Madoff’s alleged $50bn “Ponzi scheme” are not just high-profile rich individuals such as Fred Wilpon, the owner of the New York Mets baseball team.
The collapse of what appears to have been a financial house of cards is going to have a devastating impact on a number of Jewish charities and philanthropists, compounding the pain they were feeling as a result of the financial crisis.
The Robert I. Lappin Charitable Foundation, a Massachusetts-based group, whose stated mission is “helping to keep our children Jewish” by organising trips to Israel, said on Sunday that it had been forced to halt its activities and fire its staff.
“The money used to fund the programmes . . . was invested with Bernard L. Madoff Investment Securities and all the assets have been frozen by the federal courts,” the foundation said on its website.
“The money needed to fund the programmes of the Lappin Foundations is gone.”
The prominent Boston philanthropists Carl and Ruth Shapiro were also among Mr Madoff’s clients and are likely to have suffered losses as a result of the affair.
Their foundation, which has made donations to local institutions such as the Museum of Fine Arts and Brandeis University, said on Sunday that it had “significant assets invested with Mr Madoff.”
It added that it was reviewing the situation but expected to be able to continue to fulfil its obligations.
The losses for charities that thought their funds were safely growing in Mr Madoff’s care come as New York’s once-booming “industry of giving” is being hit by the economic slowdown and the Wall Street crisis.
With bonuses in the financial industry expected to plummet this year, some 150,000 people laid off by US banks, and the prospect of a long recession ahead, many organisations that rely on charitable donations had already begun to tighten their belts.
A number of museums, for example, have scrapped plans for costly exhibitions, focusing instead on rehanging and rearranging their permanent collections.
“Expect to see a lot of the same stuff this year, just reorganised along different themes,” said a trustee at one of New York’s many charity-funded museums.
Hospitals and other institutions that, over the years, had come to rely on the generosity of the city’s wealthy elite have also been warning of cost and job cuts in expectation of a sharp drop in donations.