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Michael J. Kline writes:

There is evidence that some charities may be exercising greater caution in their gift acceptance policies as a result of the dramatic and sometimes devastating consequences that highly respected charities have suffered from involvement in the Ponzi schemes of Bernard L. Madoff (“Bernard”) and others.  It would appear that Fidelity Charitable Gift Fund of Boston, Massachusetts (“Fidelity”) has moved in that direction from actions it has taken respecting grants received from the private foundations formed by Bernard’s sons Andrew and Mark and their respective spouses. This blog series has been following for almost four years the misfortunes of charities flowing from involvement in  Ponzi schemes, and apparently some charities have responded to reduce exposure to potential risks in this area.

The Forms 990-PF for 2010 filed with the IRS and posted on GuideStar by the Deborah and Andrew Madoff Foundation (the “Andrew Foundation”) and the Mark and Stephanie Madoff Foundation (the “Mark Foundation,” and, collectively with the Andrew Foundation, the “Madoff Sons Foundations”) reveals that each of the Madoff Sons Foundations made grants to Fidelity in December 2010  $176,000 by the Andrew Foundation and $79,000 by the Mark Foundation. Andrew serves as a trustee of both of the Madoff Sons Foundations, as did Mark until his tragic death from an apparent suicide on December 11, 2010. The death of Mark was exactly two years to the day after Andrew and Mark turned their father Bernard over to authorities for arrest and was in the same month that the Madoff Sons Foundations made their respective grants to Fidelity. 

Each of the 2010 Forms 990-PF of the Madoff Sons Foundations contains the following “General Explanation Attachment”:

In December 2010, the Foundation made a grant of $ . . . to the Fidelity Charitable Gift Fund in order to satisfy its distribution requirements . . . [under IRS regulations]. In February 2011, such amount was returned to the Foundation by the charitable organization. The Foundation will reflect this amount . . . as a recovery of a qualifying distribution on its 2011 annual return.

Why did Fidelity return the money to the Madoff Sons Foundations in early 2011? Was it to avoid potential adverse publicity that could flow from continued association with the scandal-ridden Madoff name and the recent death of Mark? In this regard, the 2009 Form 990-PF of the Andrew Foundation (but not that of the Mark Foundation) reflected a grant on December 29, 2009 of $207,000 to Fidelity, already more than a year after the arrest of Bernard. However, Fidelity did not return the 2009 grant.

Alternatively, or in addition, could the return of the 2010 grant have resulted from a concern by Fidelity that, even though the funds in the Madoff Sons Foundations had not been invested in the Bernard scheme, the assets of the Madoff Sons Foundations were derived from contributions by Andrew and Mark and could possibly be traced to monies from the Bernard scandal? If that turned out to be the case, the grants may be subject to "clawback” by Irving Picard, the Trustee of the Bernard bankruptcy estate. Picard had already sued Andrew and Mark for millions of dollars that he alleged they received from the Bernard Ponzi scheme. 

This blog series has discussed the unfortunate experience of Malvern Preparatory School with a charitable pledge and grant from a donor/trustee who was later accused of operating a Ponzi scheme. The charitable pledge became worthless, and substantial grants already received by the School were recovered by the trustee in bankruptcy for the former donor/trustee who then was already in prison. 

(As an aside, it is interesting to note that, in contrast to the Madoff Sons Foundations, which did not invest in the Bernard Ponzi scheme, the now-defunct Bernard L. and Ruth Madoff Foundation did invest in the Bernard Ponzi scheme, according to GuideStar Form 990-PF postings.)

In this blog series, we have advocated that every charity should respond pro-actively in the wake of scandals involving the Bernard and other Ponzi schemes. Such actions include heightened transparency in disclosures in Forms 990, examination and upgrading of charitable gift acceptance policies and improvement of governance practices. It appears that Fidelity has already adopted some of these measures.  

(Michael J. Kline, Esq., the author of this entry and a co-author of this blog, is a partner with Fox Rothschild LLP, based in our Princeton, NJ office, and is a past Chair of the firm's Corporate Department. He concentrates his practice in the areas of corporate, securities, and health law, and frequently writes and speaks on topics such as corporate compliance, governance and business and nonprofit law and ethics.)

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Installments 66 and 65 in this blog series were earlier postings of aspects of the effects and aftermath, three years after disclosure, of Hadassah’s unfortunate decades-long involvement with Bernard Madoff (“Madoff”).

This posting will utilize recent publicly-available consolidated financial statements and Forms 990 of Hadassah, the Women’s Zionist Organization of America, Inc. and its related affiliated entities (collectively, “Hadassah”) to review the impact over the last several years of the Madoff scandal on the membership and dues and legal fees of Hadassah.

Membership and Dues

The following information on membership and dues is gleaned from the Hadassah Forms 990 for the respective indicated years:

The information above bears some further analysis. The short seven-month year ended 12/31/2008 resulted from a change in fiscal year by Hadassah to a calendar year. The disclosure of the Ponzi scheme of Madoff occurred December 11, 2008, so that almost all of the dues money had been received for 2008 by that time. Hadassah had a major increase in membership revenues in 2009 that perhaps was attributable, at least in part, to early sympathy that may have resulted from initial reports of millions of dollars in losses suffered by Hadassah in the Madoff scandal. Later in 2009 it surfaced that Hadassah had benefited in cashing out at least $77,000,000 in “fictitious profits” from Madoff.

Perhaps as a consequence of increased information about Hadassah’s involvement with Madoff made 2010 a relative disaster for Hadassah membership revenues as compared to the earlier years. It had such an impact that, as reported in at least one Hadassah publication in South Jersey to members in early 2012,

Hadassah had an amazing 2011 membership year with its “once in a lifetime” $100 deal for life memberships. Over 38,000 life memberships and associate enrollments were processed nationwide.

That membership drive may have yielded as much as $3,800,000 for 2011. However, it was clearly a one time event that was achieved by mortgaging potential future life and annual membership dues, as dues will no longer be generated from the 38,000 new life members. There may be an enduring positive benefit, however, of an increase in the total membership rolls and in volunteer enthusiasm through the 2011 life membership drive. The Hadassah web site quotes $212 as the cost of a life membership during 2012.

Finally, it is clear that Hadassah responded differently in the short fiscal year ended 12/31/2008 as compared to 2009 and 2010.

Legal fees

The following information on legal fees paid is reflected in the Hadassah Forms 990 for the respective indicated years:

Clearly, the costs of legal services for Hadassah were driven up substantially in 2009 and 2010 following the disclosure of the Madoff scandal. However, the legal fees had already started to subside in 2010, as Hadassah was moving toward its settlement with Picard that was completed in 2011.

In conclusion, the effects of the Madoff scandal on Hadassah and its mission have been materially adverse. It will take Hadassah some time for a complete recovery and reduce the effect to nothing more than a bad memory.

(Michael J. Kline, Esq., the author of this entry and author of an on-going analysis of the concerns of Madoff stakeholders. Mr. Kline is a partner with Fox Rothschild LLP, based in our Princeton, NJ office, and is a past Chair of the firm's Corporate Department. He concentrates his practice in the areas of corporate, securities, and health law, and frequently writes and speaks on topics such as corporate compliance, governance and business and nonprofit law and ethics.)

(To be continued in Installment 68)
 

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Installment 65 in this blog series was Part 1 of a review of the effects and aftermath, three years after disclosure, of Hadassah’s unfortunate decades-long involvement with Bernard Madoff (“Madoff”).

Several days after our posting of Part 1, ynetnews.com published a report from Calcalist (the “Calcalist Report”) about Hadassah Medical Organization (“HMO”), the Hadassah hospital in Israel that is supported and owned by Hadassah Medical Relief Association, Inc., which is the non-profit Hadassah affiliate that actually paid the $45,000,000 in cash settlement to Trustee Irving Picard in the Madoff bankruptcy, as reported in earlier Installments in this blog series. The Calcalist Report stated that

several of the [Hadassah] hospital's suppliers have been complaining that the center has yet to transfer payments worth tens and even hundreds of thousands of shekels, due weeks ago. Hadassah's debt to suppliers is said to amount to nearly NIS 10 million (about $2.65 million).

For its part, Hadassah was quoted by Calcalist as responding as follows:

[U]nlike other hospitals, Hadassah does not receive any budgeting from the government or the State health system. This is a temporary setback in a minor portion of the payments due to the fact that Hadassah has not received all of its due payments from various parties.

Those familiar with hospital finances in the United States and the delays in revenues from third party payers that can often exist, thereby causing adverse cash flow effects and the necessity to delay vendor payments, can appreciate the unfortunate plight of HMO. Nonetheless, the fact that HMO’s delay in payments is deemed newsworthy underscores the adversity that continues to beleaguer the Hadassah organization in the aftermath of Madoff. The Calcalist Report cannot serve to generate confidence among HMO patients, professionals, support staff, donors and vendors that Hadassah has successfully put the effects of the Madoff scandal to rest.
 

(Installment 67 will provide Part 3 of this Hadassah report.)

(Michael J. Kline, Esq., the author of this entry and a co-author of this blog, is a partner with Fox Rothschild LLP, based in our Princeton, NJ office, and is a past Chair of the firm's Corporate Department. He concentrates his practice in the areas of corporate, securities, and health law, and frequently writes and speaks on topics such as corporate compliance, governance and business and nonprofit law and ethics.)

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Numerous Installments, including Installments 48 and 42, in this blog series about the Ponzi scheme of Bernard L. Madoff (“Madoff”) have discussed Hadassah, its unfortunate decades-long involvement with Madoff and the aftermath. The matters covered include Hadassah’s original potential “clawback” exposure of up to $77,000,000 or more; the payment in early 2011 by Hadassah of $45,000,000 (the “Payment”) in a final settlement (the “Settlement”) with Irving H. Picard, the Trustee in the Madoff bankruptcy, who thereby permitted Hadassah to keep $32,000,000 in “fictitious profits” from the Ponzi scheme; the limited public transparency by Hadassah of developments in the Madoff scandal, especially in its filings of Forms 990 with the Internal Revenue Service (“IRS”) and other matters.

With the recent passage of the third anniversary of the arrest of Bernard Madoff, it appears appropriate to review where Hadassah currently stands in light of the Settlement and the Payment, as reflected in publicly available documents. Last week we obtained from Hadassah copies of its Forms 990 for the fiscal year ended December 31, 2010 (the “2010 Forms 990”) that were recently filed with the IRS, as they are not yet available on GuideStar. Along with the 2010 Forms 990, we obtained from Hadassah its consolidated financial statements for 2010 as audited by KPMG (the “2010 Financial Statements”). Hadassah should be commended for its commitment to make available its annual audited consolidated financial statements upon request, as there is no legal obligation for it to do so.

The Settlement and Payment by Hadassah to Trustee Picard is reflected in the financial statements for 2010 in both the 2010 Forms 990 and the 2010 Financial Statements. The actual disbursement of the Payment was made by Hadassah Medical Relief Association, Inc., one of the affiliated Hadassah entities (“HMRA”) included in the 2010 Financial Statements, and did not occur until the first quarter of 2011. Nevertheless, in line with Hadassah’s history of minimal public reporting on the Madoff matter, which, to say the least, constituted a major watershed event in recent Hadassah history, Hadassah’s discussion of the Settlement and the Payment in the 2010 Financial Statements is terse and is even less descriptive in the 2010 Forms 990 filed with the IRS.

The following is “Footnote (14) - Subsequent Event” to the 2010 Financial Statements that describes the Settlement and the Payment:

In December 2008, Hadassah learned that it had been a victim of the fraudulent scheme perpetrated by Bernard L. Madoff Securities LLC (Madoff). Madoff has been placed in bankruptcy. The bankruptcy trustee (the Trustee) has informed creditors that substantially all amounts recorded in accounts with Madoff, like those of Hadassah’s, were worthless. The Trustee’s responsibilities include the recovery of Madoff’s assets from any available sources. Under certain circumstances, the Trustee may be able to recover amounts from account holders who, like Hadassah, received direct or indirect distributions from Madoff within the six-year period prior to the date of the commencement of the bankruptcy case. Hadassah has communicated with representatives of the Trustee concerning its accounts with Madoff. On February 16, 2011, Hadassah and the Trustee reached a final nonappealable settlement in the amount of $45,000,000, which is included in accounts payable and accrued expenses in the accompanying consolidated balance sheet as of December 31, 2010. The settlement payment was made to the Trustee in March 2011.

In contrast, the following is the disclosure of the Settlement and Payment in the 2010 Form 990 of HMRA (“Form 990 Disclosure”):

SETTLEMENT PAYMENT
FORM 990, PART IX, LINE 24A
PART IX, LINE 24 A "SETTLEMENT PAYMENT" IN THE AMOUNT OF $45,000,000 WAS A PAYMENT MADE TO TRUSTEE OF THE MADOFF BANKRUPTCY ESTATE TO SETTLE ALLEGED CLAIMS OF THE ESTATE AGAINST HADASSAH PURSUANT TO A SETTLEMENT AGREEMENT.

The Form 990 Disclosure does not give context or background to the $45,000,000 Payment as did Footnote (14) to the 2010 Financial Statements. The abbreviated Form 990 Disclosure does not seem to do justice to a sum which dwarfs the figures in the 2010 Financial Statements reflected for total 2010 Hadassah consolidated (i) program services expenses of $29,051,633 and (ii) fund-raising and management and general expenses of $25,956,921. The total shown in the 2010 Financial Statements for all Hadassah consolidated expenses for 2010, which excludes the Payment, was $55,008,554, only 22% higher than the Payment.

As discussed in Installment 42 of this series, the December 2008 Forms 990 of Hadassah (the “2008 Forms 990”), which reported a short-year seven-month period ended December 31, 2008 because of a fiscal year change to the calendar year, contained a detailed statement of the Madoff matter. The statement was similar to that contained in the 2008 audited consolidated financial statements. Ironically, however, the 2008 Forms 990 have never been posted on GuideStar to this point, although I have brought the fact to GuideStar’s attention in the past. While Hadassah is not responsible for the omission by GuideStar, the result is that none of the Forms 990 of Hadassah posted to date on GuideStar has any reference to the Madoff matter.

(Installment 66 will provide Part 2 of this Hadassah pulse report.)
 

(Michael J. Kline, Esq., the author of this entry and a co-author of this blog, is a partner with Fox Rothschild LLP, based in our Princeton, NJ office, and is a past Chair of the firm's Corporate Department. He concentrates his practice in the areas of corporate, securities, and health law, and frequently writes and speaks on topics such as corporate compliance, governance and business and nonprofit law and ethics.)

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Several Installments in this series about the long-running, global Ponzi scheme of Bernard L. Madoff (“Madoff”), the most recent of which was Installment 42, have discussed Hadassah and its unfortunate involvements with Madoff. The matters covered include Hadassah’s potential “clawback” exposure, the questionable approach that Hadassah has used to disclose its investments with Madoff in Forms 990 filed with the Internal Revenue Service (the “IRS”), its proposed settlement with the Madoff Trustee and other matters.

On December 21, 2010, my spouse, who has been a life member of Hadassah for decades, received in the mail (the “Mailing”) from Nancy Falchuk, National President of Hadassah, the letter respecting the Madoff scandal that Installment 42 reported Hadassah had posted on its website (the “Posting”). The Mailing and the Posting (collectively, the “Falchuk Letter”) reported the $45 million Hadassah settlement in the Madoff matter (the “Settlement”).

The Mailing is identical to the Posting with one notable exception. In the Mailing the second sentence of the following paragraph is in bold type while it is not in bold type in the Posting:
“Hadassah’s fiscal discipline will allow it to pay this obligation from existing unrestricted funds. As always, Hadassah gifts will continue to be used for their intended purpose.”

The paragraph, and especially the bold sentence, suggest that the payment of the Settlement will be made from funds other than gifts to Hadassah. In my view, the suggestion is specious, almost to the point of being disingenuous. Hadassah’s “existing unrestricted funds” are the aggregation of gifts over many years from the generosity of past donors to the mission of Hadassah, together with the income earned on such gifts.

In addition, the Falchuk Letter does not shed light on the entire Settlement picture, as the costs of achieving the Settlement go far beyond the actual payment of the $45 million dollars to be made to the Madoff bankruptcy estate. Statement 4 of the Hadassah Form 990 for the fiscal year ended December 31, 2009 (the “2009 Form 990”), which has not yet been posted on GuideStar, reports the compensation of the five highest paid independent contractors that received $100,000. The 2009 Form 990 reveals that during 2009 Hadassah spent an aggregate of $2,753,922 on legal, accounting and consulting fees.

In contrast, Statement 4 of the Form 990 filed by Hadassah for its newly-designated fiscal year ended December 31, 2008 (the “December 2008 Form 990”), revealed a total of $497,280 for legal and accounting fees for the seven month short period that was covered. (The Madoff scandal did not come to light until December 11, 2008.) The December 2008 Form 990 was the first year that the Form 990 required reporting of compensation for professional services of the type reported on Statement 4.

Even if the amount for professionals reported in the December 2008 Form 990 is doubled to $1 million to take into account a full year, the huge increase in 2009 in professional costs for Hadassah must be largely attributable to the legal, accounting, governance and public relations issues flowing from the Madoff matter.

One can only speculate as to the amount of professional fees that are likely to be reported by Hadassah for 2010, as the Falchuk Letter points out that the Settlement of the “clawback” issue involved “many months of negotiation.” This would certainly translate into substantial professional fees, again perhaps running into the millions of dollars. The professional fees, like the Settlement itself, will have to be paid, presumably from “existing unrestricted funds.” Hadassah should be forthcoming in revealing such costs of the Settlement to its donors.

Nonetheless, the professionals will have certainly earned their fees if, as noted in the Falchuk Letter, the required bankruptcy court approval is obtained by Hadassah. However, even that remains to be seen. For example, Thom Weidlich reported on January 6, 2011, in businessweek.com that a group of Madoff victims has already objected in the bankruptcy court to a settlement in which the estate of Jeffry Picower agreed to return $7.2 billion he allegedly made in the Madoff scandal. An objection to the Settlement could be filed in the Hadassah case as well.

Many, like my wife, who support or belong to this venerable charitable organization should be acutely disappointed that Hadassah has not been more accurate and forthright with its donors in its public statements and IRS filings. As stated in earlier Installments, I believe that Hadassah would be far better served to make prompt, visible, clear and consistent disclosures to regain the confidence of its loyal supporters who faithfully fund its historic mission.

[To be continued in Installment 45]

(With appreciation to Michael J. Kline, Esq., the author of this entry and author of an on-going analysis of the concerns of Madoff stakeholders.  Mr. Kline is a partner with Fox Rothschild LLP, based in our Princeton, NJ office, and is a past Chair of the firm's Corporate Department. He concentrates his practice in the areas of corporate, securities, and health law, and frequently writes and speaks on topics such as corporate compliance, governance and business and nonprofit law and ethics.)

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Several Installments in this blog series about the long-running, global Ponzi scheme of Bernard L. Madoff (“Madoff”) have discussed Hadassah and its unfortunate involvements with Madoff. The matters covered include Hadassah’s potential “clawback” exposure, the questionable approach that Hadassah has used to disclose its investments with Madoff in Forms 990 filed with the Internal Revenue Service (the “IRS”) and other matters.

Now, on the eve of the expiration of the two-year statute of limitations for Trustee Irving Picard to bring a lawsuit for clawback against Hadassah, in the midst of the holiday season for multiple faiths and the rush to generate end-of-year donations, Nancy Falchuk, President of Hadassah, published a letter on the Hadassah website in which she reported the following:

Hadassah was introduced to Bernard Madoff Securities in 1988 by a French donor, through a $7M gift. In addition to the gift, between 1988 and 1996, we deposited $33M in our accounts, and by April 2007 had withdrawn $137M. . . .

Like so many, for those who withdrew more than they had invested, we faced a “clawback.” After many months of negotiation, and as a direct result of good faith cooperation of Irving Picard, the Madoff Trustee, and his counsel, we arrived at an agreement, allowing us to continue our commitment to Israel. According to that agreement, subject to approval of the bankruptcy court, Hadassah will pay back $45M (emphasis added).

Therefore, Hadassah is voluntarily paying $45 million to settle a potential clawback claim by Mr. Picard of as much as $97 million. This follows two years of perplexing and conflicting public statements and filings by Hadassah. Originally, as reported in Installment 14 of this series, Hadassah reported publicly a loss from Madoff investments of $90 million. In contrast, more recently Installment 32 stated the following:

Installment 16, posted in September 2009, discussed the fact that it is alleged that Hadassah had received $40 million more in distributions from Madoff than it had invested with him. Additionally, an article by Diana B. Henriques in The New York Times was quoted in Installment 16 as having said, “[t]here is the widespread fear among some — unfounded, Mr. [Irving] Picard [the trustee in the Madoff bankruptcy proceeding] says — that he will sue struggling charities or people of limited means for money they withdrew in the past but no longer have.”

Apparently the fear has been anything but unfounded in the case of Hadassah.

The continuous shifting of public information made available by Hadassah has been exacerbated by the mystifying disclosure or lack thereof in the Hadassah Form 990 filings with the IRS. Installment 14 of this series reported that the Form 990 of Hadassah posted on GuideStar for the fiscal year ended May 31, 2008 (the “May 2008 Form 990”) was filed with the IRS in April 2009. This filing was well after the Madoff scandal broke on December 11, 2008, and after publication of reports in the media that Hadassah had withdrawn $130 million from its Madoff account. While the May 2008 Form 990 had no reference to the Madoff scandal, Installment 23 of this series reported that

the [Hadassah] financial statements audited by KPMG for the fiscal year ended May 31, 2008 (and the [newly-changed] fiscal year ended December 31, 2008), disclosed in a lengthy footnote that Hadassah wrote off, as of May 31, 2008, $88,725,362 of carrying value of Madoff-related investments.

Installment 23 went on to observe that the Form 990 filed by Hadassah for its newly-designated fiscal year ended December 31, 2008 (the “December 2008 Form 990”) reported the following:
in a lengthy footnote (substantially similar to those in the financial statements audited by KPMG for the years ended May 31, 2008 and December 31, 2008) . . . Hadassah wrote off, as of May 31, 2008, $88,725,362 of carrying value of Madoff-related investments. . . . Hadassah management was unable to determine whether, or the extent to which, distributions to Hadassah from Madoff-related investments are recoverable by the trustee for Madoff.

(As an aside, for some unknown reason the December 2008 Form 990 has never been posted on GuideStar to this date, although I have brought the fact to GuideStar’s attention.)

I have this week obtained from Hadassah copies of its Form 990 for the fiscal year ended December 31, 2009 (the “2009 Form 990”) that was recently filed with the IRS. Again, as was true of the 2008 Form 990, there is perplexingly no reference to the Madoff scandal or its potential impact on Hadassah.

Along with the 2009 Form 990, I obtained from Hadassah its audited consolidated financial statements for 2009 (the “2009 Financial Statements”). The date of the Independent Auditors’ Report of KPMG in the 2009 Financial Statements was November 29, 2010, just days before the letter from Ms. Falchuk was posted and a stipulation between Mr. Picard and Hadassah on December 9, 2010. entered in the Madoff bankruptcy case (the “Stipulation”) to toll the statute of limitations on potential clawback claims against Hadassah (Case Number: 08-01789-brl Document Number: 3327 in the United States Bankruptcy Court for the Southern District of New York). Presumably, the Stipulation was necessary to preserve Mr. Picard’s right to file suit against Hadassah should the settlement not become final.

In stark contrast to the 2009 Form 990, the second paragraph in Note 14 “Contingency” to the 2009 Financial Statements gives the following information as to the Madoff scandal:

Hadassah has begun settlement discussions with the Trustee [Mr. Picard] with respect to any claims that the bankruptcy estate believes it can assert against Hadassah for the recovery of any amounts previously received. The Trustee has not commenced litigation at this time. These discussions are in the early stage and the outcome is not reasonably estimable. If a settlement is reached in the present discussions, the amount of the settlement could be material to Hadassah. Hadassah intends to defend vigorously if no settlement is reached and the Trustee attempts to enforce the claims. If Hadassah is not successful in its defense of the claims, should they be made, the amounts recoverable by the Trustee could be material (emphasis added).

The limited disclosure in the 2009 Financial Statements is better than no disclosure at all in the 2009 Form 990, especially since the December 2008 Form 990 raised a question of uncertainty as to the effect of the Madoff scandal on Hadassah’s financial statements. I believe that, in light of the preliminary nature of the December 2008 Form 990 disclosure, Hadassah has a duty to make a full, fair and accurate clarification and update in the 2009 Form 990 and succeeding Form 990 filings. The lack of consistency between the 2009 Form 990 and the 2009 Financial Statements is also a concern.

Nonetheless, the limited disclosure in Note 14 to the 2009 Financial Statements is itself seriously deficient. The date of the auditors’ report of KPMG is November 29, 2010. In her letter, Ms. Falchuk wrote that the discussions that led to the $45 million settlement followed “many months of negotiation.” By November 29, 2010, the discussions were clearly no longer “in the early stage” and the outcome “not reasonably estimable” as stated in Note 14.

Many who support or even belong to this charitable organization must be acutely disappointed that Hadassah has not been more accurate and forthright with its donors in its public statements and IRS filings. During 2009 Hadassah received $32.3 million in contributions and bequests according to the 2009 Financial Statements. How would those donors have felt had they known that their contributions would in effect fund a $45 million settlement with Mr. Picard, and not promote the mission of Hadassah? How should 2010 donors feel about the settlement? I believe that Hadassah would be far better served to make visible, clear and consistent disclosures to regain the confidence of its loyal supporters who faithfully fund its historic mission.

[To be continued in Installment 43]

(With appreciation to Michael J. Kline, Esq., the author of this entry and author of an on-going analysis of the concerns of Madoff stakeholders. Mr. Kline is a partner with Fox Rothschild LLP, based in our Princeton, NJ office, and is a past Chair of the firm's Corporate Department. He concentrates his practice in the areas of corporate, securities, and health law, and frequently writes and speaks on topics such as corporate compliance, governance and business and nonprofit law and ethics.)
 

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