Bernie Madoff and His Chosen People

Much has been written and said as the shocking details of the Bernie Madoff Ponzi scheme continue to emerge. Most of the commentary has been predictable--shock and dismay over the size and duration of the swindle along with much pontificating regarding the importance of due diligence, not putting all your eggs in one basket, and the wisdom of questioning opportunities that seem too good to be true. The news media have been tripping over each other to trot out the names of celebrities, charities, and regular folks who were wiped out.

Like many others, I've been obsessed with this story since it first was reported. I'd love to write about aspects of the issues just mentioned but, let's face it, we just don't know very much about how the swindle worked, what Madoff was thinking, and how he pulled it off for so long. When we do, I'll weigh in.

We do know that many Jewish charities and philanthropists have been wiped out or mortally wounded. But I have yet to see a serious discussion of why virtually all of Madoff's clients were Jewish individuals or organizations. In many cases, Madoff was entrusted with all the money these people had.

Perhaps the truth that no one seems to want to say out loud is that this could not and would not have happened on the scale it did if Madoff was not Jewish. None of these particular investors would have given all their money to someone who wasn't Jewish.

I have no data to back that statement up, but I'm certain that it's true. It is a byproduct of a world view that served Jewish organizations well for many years--that we are victims and members of a tribe that can only thrive and survive if we trust each other, take care of each of other, and remain wary of anyone who says otherwise.

It was the mantra of the United Jewish Appeal which for years used it to raise unprecendented amounts of money for Israel and other important Jewish causes. But in recent years this tribal view has become increasingly foreign or irrelevant to the thinking of most American Jews. Nevertheless, it continues to be promoted by the leaders of Jewish and pro-Israel organizations as a rallying cry and fundraising tool.

It is also common a common sentiment at Jews-only country clubs (such as those where Madoff connected with most of his clients) as a way of justifying a form of discrimination that is no longer tolerated elsewhere.

As we now know, Madoff attracted billions of dollars from investors at these clubs even though many red flags went up over the years as experts questioned the legitimacy of his legendary returns. An article appeared in Barron's several years ago raising some pointed questions about Madoff's track record. The article was based on this report:

http://nakedshorts.typepad.com/files/madoff.pdf

These concerns caused a number of funds, managers, and investors to steer clear of Madoff's scheme. His pitch only seemed to work in exclusively Jewish venues where members couldn't imagine that a fellow lantzman would cheat one of his own. Fortified with a sense of tribal confidence, otherwise sensible people were willing to invest their life savings with a seemingly charming man they hardly knew.

I am reminded of the wise person who once told me that there are two types of people who believe that Jews are smarter than everyone else--Jews and anti-Semites. But I digress.

Before I go further, you should understand that I am a proud and serious financial advisor who has been a member of a Jewish country club and has served as campaign chairman of Israel Bonds and the Jewish Federation campaigns as well as the chairing the boards of two Jewish day schools and a major national Jewish organization.

I love our rituals, culture, and sense of peoplehood but mainly I am passionate about our religion's great wisdom traditions which are amazingly relevant and useful tools that help all of us live fuller and more meaningful and ethical lives.

I have no desire to belittle or put down Madoff's victims who have suffered devastating financial and personal losses. The list of Jewish charities and philanthropists who lost billions in this scam continues to grow. Brandeis University--where Madoff served as treasurer and a board member--lost more than $100 million. Several charities were wiped out and have been forced to shut their doors

My concern is with the culture and mindset that helped make this scam possible--the widening disconnect between the full, diverse, and pluralistic lives being lived by the vast majority of American Jews and the sense of tribalism and victimhood that continues to be encouraged by key Jewish leaders and the organizations they represent. Madoff could never have succeeded to the extent he did without the xenophobic mindset that has been kept on life support by those who purport to speak for the rest of us.

That schism was dramatically reflected during the election campaign when we all received countless Jew-to-Jew blast emails warning us that Barack Obama was a terrorist sympathizer who would "cut the throat" of Israel if elected. Many self-proclaimed leaders of pro-Israel organizations were passionate in their opposition to Obama and gave the impression that they represented mainstream Jewish sentiment. And yet exit polls taken on election day showed that 77 percent of American Jews in fact voted for Obama.

The disconnect extends to views on Israel and the press coverage coming out of our distant homeland.

Whenever U.S. politicians are taken on trips to Israel by AIPAC or other organizations, the first thing they do is visit Yad Vashem--the Holocaust memorial in Jerusalem--quickly followed by a trip to Sderot--the Israeli city located a mile or so from Gaza which suffers from almost daily bombing and rocket fire. Israeli political observers call it the "Look what they did to us then--look what they're doing to us now" tour.

When Obama visited Israel during the campaign, he got that tour but was never shown the bustling city life of Tel Aviv or the prosperous high-tech industrial parks sprinkled around the country. The top priority was to reinforce the mantra that the Jews have been and still are the victims of vicious and murderous foes that want to wipe us out.

Other active pro-Israel groups such as The Israel Project and honestreporting.com are devoted to countering what they believe is pervasive anti-Israel bias in the news media here and abroad. But those same organizations were silent when virtually no coverage was given to the violent incident in Hebron last week when Israeli soldiers forcibly evicted 60 Jewish settlers from an apartment. Other settlers then went on a violent rampage (Prime Minister Olmert referred to it as a "pogrom") inflicting injuries and destroying neighboring Palestinian homes and property.

I just got a fundraising email from The Israel Project (TIP). There is often anti-Israel bias in the world media and it's good to have an organization committed to getting the truth out. During the recent terror attacks in Mumbai, TIP was the first group to alert the world media that the Chabad center and Jews had been targeted by the terrorists.

But their fundraising piece was headed "My Son was Killed by a Palestinian Suicide Murderer." The message was written by an Israeli asking us to give money to this organization so his son would not have died in vain. That's why we are supposed to give money--because we are perpetual victims and the whole outside world wants to kill us--not because we need an organization devoted to helping the media do better reporting? Am I the only one who thinks there's something wrong with this picture?

Most American Jews feel a connection to and are proud of Israel. But they also value truth and fairness over loyalty and partisanship. They can relate to honesty much more than boosterism.

Polls show that more than 90 percent of American Jews say they are proud to be Jewish. While most are not ritually observant or actively involved in Jewish organizations, they lead lives that reflect Jewish ethics and values and feel comfortable with their identity.

Unlike 30 years ago, virtually none of them are changing their names or getting nose jobs to make them look less Jewish. They view intermarriage, with all its challenges, as part of life in America--not as an existential tragedy. They would never think of joining an all Jewish club and are not worried about Obama's secret plans to undermine Israel. And they would never invest all of their money with a man whose strategy was based on a system that didn't seem to make sense--even if he was Jewish.

Madoff had hundreds of clients and they assuredly invested with him for different reasons. I only know a few of them so I can't speak for them all.

But from a distance it appears as though most of them trustingly followed the advice of a handful of Jewish leaders within their country clubs or organizations--people who they respected and viewed as wise and successful. It reminds me of the way I used to be solicited for Federation and Israel Bonds. A leader of the community would tell me how special I was, how much I was expected to give, and that I should feel great about it. That was a perfect and effective approach for those times--but not for today.

Although most of those new investors were successful independent thinkers, their common sense was apparently overwhelmed by their desire to be a member of the tribe and to be viewed of a part of the chosen people--the Madoff Jews. They were victims of a con man--and of a flawed paradigm.