Is Hadassah about to Take a $45m Hit?
The JTA’s Jacob Berkman writes, “According to several sources within the organization, Hadassah’s lawyers have been working with Picard on a settlement. They will present the settlement to Hadassah’s higher-ups at a meeting Wednesday evening in Chicago. And then the proposal will be brought to Hadassah’s board for approval Thursday.”
This should come as no surprise. Irving Picard, the court-appointed Madoff trustee, has until December 11th to file the last of his suits. And Picard has been busy. According to CNN, 388 clawback suits have been filed to date. Hadassah, who clearly has some vulnerability, has stated they invested $40 million with Madoff and over the years withdrew at least $130 million. The issue is not complicity; Picard is simply trying to even out the scale of loss.
In the much publicized bankruptcy of Foundation for New Era Philanthropy, the courts proved successful in recouping almost all monies from those (including major universities) who suffered no losses in order to share with others.
The going settlement number appears to be somewhere between 30-50%. For months, there have been stories that the estate of Jeffrey Picower would settle at $2 billion (the suit is for $7.2 billion) and just yesterday, the Swiss bank Union Bancaire Privée settled for fifty cents on the dollar.
Hadassah has every reason to settle. And, they have a first-rate, in house, legal department whose responsibility is to mitigate the long-term damage to the organization. While any settlement will hurt, the potential of a drawn-out court fight could prove most unsatisfactory. Additionally, by settling now, and with the organization slated to have a change of leadership in 2011, after two long years Hadassah will be able to finally put the Madoff distraction behind them and concentrate on mission. This is a good thing and would be the best news to come out of the organization in a while.
Other Jewish world groups that are targets of clawback suits include the America-Israel Cultural Foundation, who was sued for over $5 million, and the American Committee for Shaare Zedek Medical Center in Jerusalem, which was sued for nearly $7 million. Also sued, the mysterious United Congregations Mesorah* (for over $16 million). As suits against all three, including numerous other foundations and charities have already been filed, there is no time-line pressure to settle this week.
Let us hope that all organizations with liabilities make the best decisions for their stakeholders, avoid using donor money to pay futile legal defenses and put all of this behind them as quickly as possible. Not one of these groups needs the distraction, or the continuing hit to their image.
*United Congregations Mesorah is a nonprofit controlled by Zev Wolfson and his son Abraham and the Chana Sasha Foundation, controlled by Morris and Arielle Wolfson.