It’s likely Bernie Madoff’s death in a federal prison on Wednesday conjured up unhappy memories for the members of Boston’s philanthropic sector who more than a decade ago were fleeced by the former investor, who ran a massive Ponzi scheme.
Madoff’s Boston-area victims were some of the most prominent names in the city’s business and philanthropic circles, including the Goldberg family, founders of the Stop & Shop chain. And many had used their “profits” from their investments with him to endow everything from major new buildings and centers at Boston’s hospitals and universities to summer camps for kids.
The sense of betrayal was profound, as many had entrusted Madoff with entire fortunes or retirement savings as well as viewed him as a friend. Madoff built relationships with an exclusive crowd of wealthy and prominent philanthropists, many of them in the Boston area’s Jewish community; in some cases, he became so trusted that some referred relatives and friends to him in a toxic pattern that exacerbated his reach.
Madoff’s legendary — and fictional — returns created such a mystique about him that the well-heeled lobbied to be clients, and getting in was as difficult as becoming a member at the tony golf clubs where many of them socialized. In Weston, it was Pine Brook Country Club. In Florida, where many wintered, it was the Palm Beach Country Club, where Madoff once rubbed shoulders with people like New England Patriots owner Robert Kraft.
That made the scheme, exposed in 2008, all the more gut-wrenching for Boston philanthropists, who were left blindsided, their retirement funds, nonprofit organizations, and institutional donations in limbo.
In Boston, one family stood out as being particularly close to Madoff, and having much of their fortune affected by his Ponzi scheme. The late Carl and Ruth Shapiro used the proceeds that he steered to them to help underwrite organizations including the Museum of Fine Arts, Brandeis University, and Beth Israel Deaconess Medical Center. The Shapiros lost more than half a billion dollars to Madoff, and in 2010, Carl Shapiro agreed to pay back $625 million of his tainted profits.
Paul Grogan, then the chief of the Boston Foundation, said at the time that it was “bad news for the world of philanthropy in Boston.”
- The Shapiros’ son-in-law, Robert Jaffe, went into business with Madoff. Jaffe became the face that shopped Madoff’s services among Boston philanthropists, frequently recruiting in the Boston area and in Palm Beach, a popular winter destination for the crowd. Back then, major medical institutions, including Brigham and Women’s Hospital, Beth Israel Deaconess Medical Center, and the Dana-Farber Cancer Institute held annual fund-raising galas events in Palm Beach, attended by many Madoff clients.
- The scheme forced the Robert I. Lappin Charitable Foundation in Salem, to shut down for a period after it lost its estimated $8 million endowment to Madoff. Among its activities, the foundation financed trips for Jewish youths to Israel. At the time, the executive director of the foundation, Deborah Coltin, said, “We are all devastated. You put your faith in someone. It turns out to be a huge scheme.” The foundation has since been revived.
- The Massachusetts state pension fund had $12 million tied up in investments with Madoff.
- Also wrapped up in the scheme was the Goldberg family, whose charitable organizations, the Goldberg Family Foundation and the Sidney & Esther Rabb Charitable Foundation, lost an estimated $14 million. The Goldbergs’ daughter, Deborah Goldberg, is the Massachusetts state treasurer.
- Elie Wiesel, the Nobel Peace Prize winner and Boston University professor, lost millions from his Foundation for Humanity. He received an outpouring of support that saved the fund.
- Harry Markopolos, the famous Madoff whistle-blower, had repeatedly warned the Securities and Exchange Commission about the scheme before 2008. Markopolos worked for a Boston investment firm.
Here’s a list of the more than 450 individuals, businesses, charitable foundations, and trusts from Massachusetts who filed claims in the Madoff proceedings.