The whole Madoff story is just one tragedy after another. And, nonprofits were not immune (mainly due their own ineptitude in following standard, common sense ethics guidelines for investments). The deadline for filing suits spurred a lot of activity – in addition to the suicide – that many in the nonprofit world may have missed.
Overshadowed by this past week’s tragedy (Madoff son’s suicide), was a small blurb in the Jewish Telegraphic Agency website that has enormous ramifications in the nonprofit world: http://jta.org/news/article/2010/12/09/2742111/hadassah-to-pay-back-45-million-of-madoff-gains
The title to the link pretty much tells the story. A $45 million Clawback settlement by a prominent nonprofit.
For anyone who has followed this blog (and its previous version), you might remember that Clawbacks against nonprofits who “profited” from Madoff was a big topic of mine.
Bottom line, I saw a few bloggers saying that the Madoff Trustee shouldn’t go after nonprofit net winners of Madoff. I thought differently since the law was pretty clear. Any nets positive gains received during the 6 years leading up to the discovery of the Madoff fraud could be subject to a clawback lawsuit.
I actually didn’t believe Picard would have the time, energy, and money to go after all of the small guys and thought that even charities like the one mentioned in the JTA article might be free from attack.
Oh, how I was wrong. Apparently, Picard and the lawfirm he is using are going after anyone they can find. Literally anyone – grandkids, etc.. One article on CBS http://www.cbsnews.com/8301-503983_162-20021295-503983.html actually exposed the fact that law firms love these cases – virtually unlimited funds to go after any potential Madoff investor on the planet. A huge money maker/fee generator for the law firm involved, no wonder they don’t care if going after some individuals will cost more money than they actually recover.
Sadly, as I criticized nonprofits for shoddy management and failure to follow the most basic rules of nonprofit investing and ethics, I never really expected nonprofits to be coughing up huge sums.
For those interested, see some older posts below on the topic.