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Brandeis University's Community Newspaper — Waltham, Mass.

Effects of Madoff Ponzi scheme unclear

Published: January 16, 2009
Section: Front Page

SCIENCE CENTER: The Shapiro family contributed a $14 million naming gift for the soon to be finished Carl J. Shapiro Science Center.<br /><i>PHOTO BY Max Shay/The Hoot</i>

SCIENCE CENTER: The Shapiro family contributed a $14 million naming gift for the soon to be finished Carl J. Shapiro Science Center.
PHOTO BY Max Shay/The Hoot

Though the Shapiro Family Foundation’s announced last month that they would remain committed to the university despite their losses in the $50 billion Bernard L. Madoff Ponzi scheme, the effect of the scandal on other university donors still remains unknown.

As the university’s largest benefactor and as prominent Boston area philanthropists, Carl and Ruth Shapiro’s $145 million losses to Madoff have been widely publicized by both local and national media, including the Boston Globe and the New York Times.

The Shapiro Family Foundation’s Dec. 16 press release, posted on their website states that the foundation “plans to fulfill all of its current obligations,” including Brandeis’ new science center and admissions center. The press release has also been widely publicized.

However, the fate of other, less famous university donors still remains largely unknown.

While university President Jehuda Reinharz wrote in his Jan. 5 campus wide e-mail that the university itself did not have any money invested with Madoff, he admitted, “It is very hard to calculate the immediate and long-term effects on the university’s fundraising results.”

Three days after the Madoff fraud made national headlines, President of Brandeis’ Ethics Center Daniel Terris received a call from the Justice, Equality, Human Dignity and Tolerance Foundation informing him that the Foundation would be unable to pay the Ethics center one-third of a $12,000 grant the center had been promised because the Foundation had been “100 percent invested with Madoff,” Terris told The Hoot in a phone interview.

The resulting $400,000 gap in the Ethics Center budget is the only known immediate consequence of the Madoff fraud to the university, as it is the only commitment that has been revoked.

Still, the long-term effects remain unknown.

In an e-mail to The Hoot, Executive Vice President and Chief Operating Officer Peter French wrote, “we have no idea, and no insider information, on how many of our donors have been affected by this.”

Additionally, Shapiro Family Foundation spokeswoman Diana Pisciotta, who has been hired by the foundation in response to the Madoff fraud, said that the future of Foundation gifts to the university is “still under consideration.”

“It’s so complicated that it’s just going to take a while to untangle,” she said.

Also unclear is how personally connected the university is to Bernard Madoff himself. While the Boston Globe has reported that Carl Shapiro has long been a personal friend of Madoff, Shapiro has been deemed a victim of the Ponzi scheme, not a collaborator.

Shapiro’s son-in-law, Robert Jaffe, however, has escaped neither public criticism nor legal investigation.

The Boston Globe has described Jaffe on occasion as being under investigation for his role as “Madoff’s middle man.”

According to The Globe, Jaffe worked for a brokerage firm that recommended clients to Madoff’s firm. He had been subpoenaed to meet with the Massachusetts Securities Division to discuss his knowledge of the Ponzi scheme on Tuesday; however, he failed to appear.

As the scandal has unfolded, Jaffe has insisted that he knew nothing of the scheme and that he was a victim of Madoff; however, when the scandal broke, he and his wife stepped down from their roles as co-chairs of an annual gala held by the Dana-Farber Cancer Institute in Florida. French wrote in an e-mail to The Hoot that Jaffe has been “long considered a friend of the university, though he is not a regular donor.”

While French would not specify how much money Jaffe has donated in the past, he did write that Jaffe was recognized by the university in the 1980’s as being a member of the President’s council—an honorary society that recognizes service to the university but “has no specific functional role at Brandeis and has not been active for several years.”

French would not say whether Jaffe would step down as a member of the President’s council.