Hadassah's response to frequently asked questions related to investments with Bernard Madoff, LLC.
• How did we originally get involved with Bernard Madoff?
In 1988 a French donor made a gift to Hadassah of $7 million with the stipulation that the donation remain with Bernard Madoff (where it was then invested) until withdrawals were made to finance the project earmarked by the donor.
• How much have we invested with him since 1988?
Over the next decade, Hadassah invested an additional $33 million dollars (approximately), making our total investment approximately $40 million dollars. These funds were invested directly with Bernard Madoff Investment Securities, LLC and not through a third party. Hadassah has not made any additional investments of principle since 1997.
• Did we earn interest from our investments with Madoff?
Our projects and programs have been the beneficiaries of investment returns over a period of more than 20 years. We invested with full faith that these investments were legitimate, only to fall victim to unprecedented fraud.
• How much did Hadassah lose in connection with Madoff?
Approximately $90M at the time we were notified of his arrest.
• What percentage of Hadassah's total endowment did this represent?
The portion of Hadassah's investment portfolio with Madoff over the past 5 years, ending September 2008, was an average of 11%.
• What procedures and polices were in place to monitor Hadassah's investments?
Hadassah has a team of outside advisors who provide investment advice. They are prominent and experienced financial and investment individuals who serve, on a voluntary basis, along with Hadassah's National President and National Treasurer. We also engage the professional services of a firm registered with the SEC that provides advice on funds and their money managers (new accounts only), monitors the risk allocation mix, and measures investment performance (specifically reviewing underperforming funds).
• What is the amount of Hadassah's remaining funds in the investment portfolio?
As of December 11th, Hadassah has approximately $412 million dollars remaining in its investment portfolio.
• Is my charitable annuity protected?
Yes. Hadassah's gift annuity reserve funds meet fund requirements and, as required by law, these funds are segregated from Hadassah's other assets.
• Are Hadassah's Employee Retirement plans protected?
Yes. No investment product managed by the Madoff firm was offered through Diversified Investments, the administrator of Hadassah's plan.
• What steps are being taken to make sure this won't happen again?
We are engaging professional experts to independently review our advisory structure, as well as all policies, procedures, internal control systems and oversight regarding investment activity.
• Were these lost funds insured?
Securities Investor Protection Corporation (SIPC) insurance generally covers such losses up to $500,000. Hadassah will make a claim with SIPC when it initiates a claim process.
• Are steps being taken to try to recover some, if not all, of the losses? Are we filing any lawsuits or pursuing other legal recourse?
All litigation against the Madoff firm is currently stayed. We are represented by counsel, following this closely, and are considering every possible legal avenue to recover/minimize our loss and to protect our position.