Thoughts on the Madoff Debacle


No, he’s not Orthodox. More on that later.

Within a handful of hours after the story broke, the Nazi sites spun it as predicted. Cretins that they are (and therefore understanding nothing about where the money went), they questioned where someone could hide $50 billion. The answer is self-evident: the Zionist Jew had it all shipped to banks in Israel! The fallout would have likely been far worse if Madoff would have embezzled little old ladies in Middle America. Instead, so many of the victims were Jews. The racist and Arab sites were too busy gloating over all those Jews losing fortunes to try to spin this as the latest epilogue to the Protocols of the Elders of Zion and their plan for global domination.

Less predictable was the baseless charge that Madoff was Orthodox. Rabbi Elliot Dorff, rector of American Jewish University (formerly University of Judaism, the West Coast equivalent to the Conservative movement’s Jewish Theological Seminary) wondered how a person who davened three times a day could get it so wrong. It all goes to show, he argued, that ritual observance is not enough, and Jews must learn to incorporate ethics and morals in their behavior, rather than stay mired in empty formalism and legalism. (This is an old mantra that the Conservative movement dusts off every now and then to criticize errant Orthodox behavior. The thought, of course, is essentially correct, and very much a part of Orthodox consciousness and teaching. The implication that somehow Conservative Jews are more ethical and moral because they are not mired in halachic detail is both counterfactual and logically ludicrous.)

Although we have no dearth of scoundrels in our midst, this one did not belong to us. I challenged Brad Greenberg, the Jewish Journal’s “God Blog” master on it, and both of us checked on the facts. I reached someone in Manhattan whose name I cannot use, but knows the story and the players from the inside. “A vicious lie,” was his reaction to the claim that Madoff was Orthodox. He vigorously attested to the fact that Madoff is not in any manner of form shomer shabbos, and cannot be considered Orthodox. While it may be harder to pin the label “Conservative” or “Reform” (or Mammon worshipper?) on anyone (at this point, no one wants him in their camp), there are accepted criteria that define Orthodoxy. It is not about membership in a shul, but about observance of mitzvos, as specified in Shulchan Aruch.

Meanwhile, Brad checked with Rabbi Dorff who conceded that he had presumed Madoff to be Orthodox since he hung out with so many Orthodox, and bilked many of them – including Yeshiva University to the tune of $110M. He donated money to Orthodox causes. That points to his Orthodoxy. Right. If I donate to the NAACP, I guess that makes me African-American.

My source had a keen insight as to what went wrong, and urged that I share it even though I can’t use his name. People could have and should have seen the debacle coming. Some did warn of it, but no one listened. The clue that so many missed was that Madoff apparently never ever filed a negative report about his investments. Real people are just not that consistent. They all have some good days, and some bad. Someone whose public persona admits to no faults is trying to be bigger than life – indeed G-dlike. People could have recognized the pretension.

Why did they not? Those who were fleeced were not evil, not stupid, and in very many cases not greedy. They wanted to invest their money, or their charitable foundation’s money, safely and wisely. Madoff was an icon in the financial world, the one who started NASDAQ, and used his reputation and integrity as selling points. Still, so many upper-level money managers violated the rules of the game by concentrating too much money with one individual. How did this happen? What can the rest of us learn?

I offer a tentative argument, in the hope that it has some merit. A few decades before Freud, R. Yisrael Salanter was arguing the primacy of subconscious thought in human behavior. We like to think that we are rational, objective, and fully in charge. R. Yisrael taught that so much of our behavior is motivated by factors that we are not aware of. Without studying them, we are blissfully unaware of how our inner needs compel what we think are our rational thoughts and conclusions. We are rarely objective, unless we can fully grasp the dynamic that grips us from within.

Those who trusted Madoff were far from criminal, and had no more love of lucre than the rest of us. Hearing of Madoff’s apparent “successes,” they had an inner need not to see the countervailing arguments, to remain blind to the signals that something was wrong.

Maharal questions the upshot of the story of Kayin and Hevel. As the dust settles, the good guy lies dead, and the bad guy cops a plea. It is a confusing message – doubly so when placed right after the terrible aftermath of the sin of eating from the forbidden fruit. If Hashem wanted us to still believe in ourselves, the first narrative after the expulsion from the Garden of Eden should have been about some small mitzvah that Adam or Chavah did that brought pleasure to their Creator.

Maharal offers a beautiful approach (pitting resolute evil against wimpy good), but I would like to offer a different one. Kayin broods over the rejection of his offering, hurt all the more by the fact that his brother’s offering was accepted, even though Kayin came up with the idea, and Hevel apparently copied his older brother. Hashem comes to him and questions his depression. The Seforno explains that Kayin believed that his feelings were justified by the inexplicable rejection of his offering. Hashem countered that if all he was concerned with was his failure, then he should be delighted rather than depressed! Success was as close as asking his brother for the formula for his korban, that had been accepted.

Hashem really told him that his inner turmoil arose not from disappointment about his rejection, but from jealousy of his brother. What hurt was not the rejection, but the acceptance of Hevel’s korban. The message was a powerful one. Hashem showed Kayin that he was not master of himself, that he lacked the self-knowledge to understand his own inner reactions and makeup! How could he master the world, if he understood so little about himself? This dark story is actually a wonderful introduction to the rest of Torah. Why do we need the guidance of Torah in our actions and our thoughts? Because without it, we will never escape our own petty needs; we will never achieve the objectivity we all think we have.

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6 years 9 months ago

Isnt the real issue: How could YU mishandle a $100million that came from hard working people? They gave it to one of their hevra to “invest” and never looked back, all the while being raped by him. AND the bonus: now YU will throw good money after bad by hiring a white shoe lawfirm to tell them what the should already know!

Im holding back this years contribution to YU till someone takes responsibiltu.

6 years 9 months ago

Charlie Hall, re: your comment #33:

While it’s illegal for YU to discriminate in hiring for its secular components — and YU does a good job in adhering to this and often gets slammed from the right for it — isn’t the board a different matter? (Or RIETS? Would RIETS hire a non-Orthodox talmudist, assuming the requisite level of expertise?)

It would be very hard for someone to document a claim of discrimination for not being appointed to the board of YU and until the Orthodox community’s disowning of Madoff I assumed as a matter of course that the Board of YU was made up exclusively of Orthodox Jews. I would be very surprised if a Reform or Conservative-affiliated Jew was on the Board of YU; in fact, it would be less surprising to find a Gentile.

Religiously-affiliated universities with secular components and government funding are a strange hybrid and often walk a fine line. My alma mater, Georgetown, also adheres to academic freedom, non-discrimination, and receives extensive federal funding. Yet, in the theology dept. certain slots are reserved for Catholics and in order to teach certain subjects in that dept. one needs ecclesiastical endorsement. Until recently the President of Georgetown had to be a Jesuit and if I remember correctly the by-laws had to be changed when they hired a lay president a few years back.

Charlie Hall
6 years 9 months ago

“Would Yeshiva University give somebody an official position who wasn’t Orthodox? He guessed no. ”

It would not have taken a lot of effort to discover that Yeshiva University does not discriminate on the basis of religion. For one thing, it is illegal!

6 years 9 months ago

The latest casualty in the Madoff affair is an investment fund manager who committed suicide after learning that $1.4 billion that he invested with Madoff evaporated in thin air. This affair just started unfolding. What if the current tidal wave of destruction resulting from market illiquidity and credit crisis will undo several other practitioners of fraud and deceit with Jewish names and Orthodox affiliations, or even full fledged members of Orthdox kehilos? Madoff might be unique in the magnitude of his fraud, but we know his was not a singular case. In not so old times, a backlash with collateral damage (you and I) followed. We may call the Nazis cretin and the Arabs racists, but Madoff may provide the spark that could ignite the mob’s thirst for vengeance, especially in the current economic turmoil. It may ask for a pound of flesh or a bucket of blood (yours and mine) to assuage its frustrations and severe losses (jobs, savings, homes, retirement funds, etc.) that they certainly incurred. Are you sure, it is out of the question in 21st century America? Dinkins let New York black youth run amuck unchallenged for three days to vent their frustrations, terrorizing the Jewish population in Crown Heights, and looting and destroying property. Will Obama do differently in similar circumstances?

6 years 9 months ago

re comment 27. Your observations are correct.I think that the gulf between the frum and the non frum has grown over time for reasons that are plain to see but sad anyway. Years ago, many people kept a kosher home, today their children eat meat and milk cooked together without even realizing that it isn’t a Jewish thing to do. Years ago, we had a common cultural mileau, Yiddish , synagogue affiliation with a traditional shul, grandparents who were frum. Now, young Jews are not joiners, their are proud to be Jewish but don’t do much to act on it.
At the same time, the observant community has grown in numbers and is more and more independent. I don’t know for a fact but I guess that Lakewood gets almost all of its money from orthodox doners . The time when we had a lot in common with the non frum community seems to be passing. I am not happy about this. The kiruv world is the exception but for Jews who live in frum communities, how much social interaction do they have with a non frum Jew?