Hadassah: The Women’s Zionist Organization of America will pay back $45 million of the money it made in the Bernard Madoff scam.
Hadassah President Nancy Falchuk in a letter Thursday told the organization’s supporters of the settlement reached by the group with the trustee of Madoff’s estate.
The organization, which began investing with Bernard Madoff Securities in 1988 with a $7 million gift, deposited a total of $40 million in its Madoff accounts, and by April 2007 had withdrawn $137 million. The last account statement showed approximately $90 million at the time the fraud was discovered.
The $45 million is half of what Hadassah earned unwittingly in the scam. With the settlement, Hadassah avoids a lawsuit by the trustee, Irving Picard, who already has sued a number of individuals, organizations and foundations that made money in the Madoff fraud.
“As painful as it is, this settlement is in the best interest of Hadassah," Falchuk wrote in the letter. "It allows us to put this chapter behind us, and move forward with our critical life-affirming mission. A charitable mission praised by the trustee for its philanthropic value.”
Here is the full text of Falchuk’s letter:
Dear Friends,
As we approach our Centennial, no one can doubt Hadassah’s success. We built the healthcare infrastructure and much of the educational foundation for the State of Israel. Remaining true to our core Zionist mission, we are a central force in the nation’s continued development and in strengthening the Jewish people. Hadassah has overcome many obstacles in our history, from wars and terrorism to recessions, the Great Depression and other financial crises.
It must be said, that because of all of you, Hadassah has been able to invest over $1B in Israel in just these past 15 years to meet the needs of our projects.
Hadassah has always followed, and continues to follow, a sound financial investment strategy, constantly reviewing our investment policies. As a result, Hadassah realized gains on its investments over the years. These proceeds were used for our charitable purposes of supporting healthcare, education and youth work in Israel and around the globe. But despite this strategy, like others, we were misled by Bernard Madoff who perpetrated the largest fraud ever—a fraud that even escaped detection by federal regulators.
The Bernard Madoff scandal has left thousands of individuals, organizations, and charities with huge financial losses, and in some cases utter collapse. From Hadassah’s inception 99 years ago, we have treated every dollar as a sacred trust. We have been responsible stewards of the contributions from our generous donors and members, enabling us to uphold our mission of strengthening our partnership with Israel and ensuring Jewish continuity.
Hadassah was introduced to Bernard Madoff Securities in 1988 by a French donor, through a $7M gift. In addition to the gift, between 1988 and 1996, we deposited $33M in our accounts, and by April 2007 had withdrawn $137M. The last account statement showed approximately $90M at the time the fraud was discovered.
Like so many, for those who withdrew more than they had invested, we faced a “clawback”. After many months of negotiation, and as a direct result of good faith cooperation of Irving Picard, the Madoff Trustee, and his counsel, we arrived at an agreement, allowing us to continue our commitment to Israel. According to that agreement, subject to approval of the bankruptcy court, Hadassah will pay back $45M.
As painful as it is, this settlement is in the best interest of Hadassah. It allows us to put this chapter behind us, and move forward with our critical life-affirming mission. A charitable mission praised by the trustee for its philanthropic value.
Hadassah’s fiscal discipline will allow it to pay this obligation from existing unrestricted funds. As always, Hadassah gifts will continue to be used for their intended purpose.
Let me emphasize that Hadassah, like so many others, were misled. Precisely because we were following a sound investment strategy, we realized more than we invested, and will return some of the proceeds to be distributed to those who lost.
You and I, together, will not let the evil deeds of one man shake our dedication, or that of Hadassah’s 300,000 members and supporters around the world. We not only remain steadfast in our commitment to our mission, but we will put this painful event in the context of all we have accomplished over these past 99 years.
Tomorrow, we will wake up to a new day, united in purpose, looking forward to being together in Jerusalem in October 2012 to dedicate the Sarah Wetsman Davidson Hospital Tower.
In the spirit of our humble beginnings, we will continue as pioneers and pacesetters in Israel and a critical force in American Jewry for the next 100 years.
With humility, appreciation and respect,
Nancy Falchuk
National President
Hadassah, the Women’s Zionist Organization of America, Inc.
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