BOSTON (Reuters) - The alleged $50 billion fraud by former Nasdaq Chairman Bernard Madoff has rippled deep into Boston’s wealthy elite, forcing a charitable foundation to close and triggering losses by prominent philanthropists.
The Robert I. Lappin Charitable Foundation, which financed trips for Jewish youth to Israel, said the money that supported its programs was invested with Madoff, a 70-year-old Wall Street trader arrested on Thursday.
“The money needed to fund the programs of the Lappin Foundation is gone,” the Salem, Massachusetts-based foundation said on its website, adding all staff had been let go.
“It is with a heavy heart that I make this announcement,” Robert I. Lappin, the foundation’s trustee, said in a statement.
The Boston Globe reported on Saturday that other clients of Madoff included philanthropists Carl and Ruth Shapiro, big donors to the Museum of Fine Arts, Brandeis University and the Beth Israel Deaconess Medical Center.
The Shapiro family foundation lost almost half its money, or about $145 million, to Madoff, the newspaper said.
Other clients included Avram and Carol Goldberg, a previous owner of the Stop&Shop supermarket chain, and Stephen Fine, president of privately held Biltrite Corp.
Federal agents arrested Madoff at his apartment on Thursday after prosecutors said he told senior employees that his money management operations were “all just one big lie” and “a giant Ponzi scheme.”
A Ponzi scheme is an illegal investment vehicle that pays off old investors with money from new ones and is dependent on a constant stream of new investment. Because the invested capital is not earning a sufficient return on its own, such schemes eventually collapse under their own weight.
Madoff is the founder of Bernard L. Madoff Investment Securities LLC, a market-making firm he launched in 1960. His separate investment advisory business had $17.1 billion of assets under management.
Editing by John O'Callaghan