Today the media is buzzing with the news of Bernard Madoff’s guilty plea to charges of orchestrating a ponzi scheme that stole over 50 billion dollars over a period of 20 years. Just as many university and college endowments were devastated by the stock market collapse and losses from toxic mortgage backed securities, colleges and universities did not escape Madoff related losses. The Wall Street Journal has published a list of Madoff Victims that includes 3 academic institutions:
- Bard College, a New York university, lost $3,000,000 that was invested in Madoff’s fund through J. Ezra Merkin’s Ariel Fund without the school’s knowledge.
- Yeshiva University, a private Jewish university in New York, lost $14.5 million. Although the university had “no direct investments” in Madoff’s firm, a portion of its endowment had been invested for 15 years with Ascot Partners, which had “substantially all its assets invested with Madoff.”
- New York University filed a lawsuit claiming J. Ezra Merkin turned over his investment responsibilities to Madoff’s funds and lost $24 million of the school’s money.
These losses will increase pressure to cut costs at the institutions involved. It remains to be seen how universities will cope with the massive losses to endowment funds, decreased state and federal funding, and decreased alumni donations due to economic hardship.