Palm Beach - The collapse of an alleged investment scheme run by Bernard Madoff has wiped out the Picower Foundation, which was based in Palm Beach and distributed almost $270 million over two decades, including significant gifts to dozens of local programs. Barbara Picower, who started the foundation with her husband, investor Jeffry Picower, in 1989, sent an e-mail Friday to charities she supported, telling them she had no more money to make grants. The foundation will close within months.
The Picower Foundation is the largest so far to announce it was ruined by an alleged Ponzi scheme that might total $50 billion in losses. It was the second-largest foundation in Florida, with assets previously listed at $1 billion.
Almost all of its assets were managed by Madoff, whose "act of fraud has had a devastating impact on tens of thousands of lives as well as numerous philanthropic foundations and nonprofit organizations," Picower wrote in her statement.
Since 1989, Barbara Picower had supported a host of charities in the Northeast and South Florida. She gave to the Palm Beach County School District, the South Florida Science Museum and the Boys & Girls Clubs of Palm Beach County. At the Kravis Center in West Palm Beach, the foundation built the Picower Foundation Arts Education Center, with studios, art laboratories, classrooms and 4,500 square feet of rehearsal space.
Tana Ebbole, chief executive of the Children's Services Council of Palm Beach County, had four projects paid for in part by Picower. Those projects included a program that sends nurses to the homes of local mothers and an organization that helps improve the quality of after-school programs.
http://www.sun-sentinel.com/news/local/palmbeach/sfl-flpalmadoff1221pndec21,0,4725782.story
The landscape is littered with these "foundations and charities." Brooklyn, NY residents registered some 800 rax-exempts in Lakewood-----a small flea-bitten central New Jersey town.
The IRS has asserted that tax-exempt "foundations and charities" are the locus classicus for tax evasion and IRS fraud.
Investigators may be looking at the legal parameters of prosecutable crimes including making false statements to state and federal officials, filing falsified documents, obstruction of proceedings before state and federal agencies, fiduciary negligence, and obstruction of US justice.
The N/P's might have facilitated IRS fraud by integrating:
1. Secret control over N/P fund-raising committees.
2. Requiring only one signature on tax-exempt N/P bank checks.
3. Utilizing pre-signed tax-exempt bank checks.
4. Using secret bank accounts to keep secret the actual financial position of tax-exempt N/P's.
5. Assigning bank deposit and account reconciliation functions of tax-exempts to one person.
6. Conspiring to hide oversight of expenses and supporting vouchers from public view.
7. Having no outside auditor to review tax-exempt N/P's statements.
8. Cashing unusually large amounts of tax-exempt checks.
9. Having no official tax-exemp deposit and withdrawal control system.
Authorities should investigate the Madoff-invested tax-exempts's US Postal Service mailings, wire transfers, computer transfers, electronic submissions, and unregulated money transfers, and all bank transfers connected to secret tax-exempt non-profits’ bank accounts.
Fraudulent tax-exempt non-profit activities might have involved using checks passed from one account to another in multiple conspiracies to launder monies.
The stratagem could have been international in its scope due Madoff's worldwide connections.
Authorities need to determine the extent to which donors to Madoff-invested N/P's colluded in schemes that may have included misusing reserve bank accounts, concealing transfers, inflating asset values and improperly accounting for transactions.
A formal inquiry should be conducted into the Madoff-invested tax-exempts and their financial activities with officers of publicly-held companies) including (1) Enron-style accounting frauds by manipulating N/P records, (2) bundling contributions into the pockets of politicians, (3) the extent to which networks of companies are financing political candidates in the names of business partners without their knowledge or consent, (4) the extent to which officers of publicly-held companies used accounting fraud to hide illegal campaign contributions, and, (5) the extent to which campaign donations exceeded campaign-finance limits.
Charges might include Madoff-invested tax-exempt charities' accounting managers misappropriating funds to cover personal expenses, fraudulently overcharging for management services, diverting non-profit funds, then converting them to campaign accounts, or in the style of WorldCom greed spending thousands of non-profit dollars on organization credit cards for personal expenses.
A formal inquiry should be undertaken with respect to the Madoff-invested N/P's relatives, associates, co-conspirators or subsets of them, and donors (particularly officers of publicly-held companies), the business dealings between recipients, employees and elected and appointed officials and the extent to which influence-peddling is taking place, and more specifically the extent to which relatives, associates, and principles of the Madoff-invested foundations and charities and their co-conspirators or subsets of them, directed political activities from tax-free non-profit organizations in illegal arrangements.
The BIGGEST FRAUDS are between foundation and foundation .....writing checks to each other (which is the MO for laundering tax-exempt monies).
Authorities need to determine the extent to which the Madoff-invested charities manipulated philanthropic transactions, such as:
(1) loans, the (2) sale, (3) exchange or (4) leasing of property to related organizations, and donors, and the extent to which organizations reported (5) "excess benefit transactions" on Form 990, and, (6) the extent to which executive pay properly accounted for with the IRS.
The Madoff-invested charities need to reveal the dimension of contributions these organizations that may have been illegally redirected to political activity and be requested to explain:
(1) how the Madoff-invested charities solicit non-profit contributions,
(2) how non-profit donations are made, and,
(3) the manner in which donors to the Madoff-invested N/P's (particularly officers of publicly-held companies allocated company assets).
The Madoff-invested N/P's should be asked for details about who inside, and outside, these organizations is soliciting contributions, how the various subcommittees are funded, and the extent to which the Madoff-invested N/P's their donors (particularly officers of publicly-held companies) are colluding to perhaps finance political campaigns surreptitiously, and are engaging in other illegal transactions.
Almost all of its assets were managed by Madoff, whose “act of fraud has had a devastating impact on tens of thousands of lives as well as numerous philanthropic foundations and nonprofit organizations,” Picower wrote in her statement.
So the foundation had $1 billion in assets, but she gave back $6 billion. Interesting that her private stash was so much larger...:^)
Thanks..I’ll try to find the story which stated that they still had about $ 3 billion in assets left. BTW..check out today’s Daily Beast..good story about Bernie’s “ short, fat” secretary, and her day of reckoning today...