Ponzi Schemer Bernie Madoff 's Reverse Non-Profit Robin Hood
Friday, June 26, 2009SUSIE GHARIB: On Monday, Ponzi schemer Bernie Madoff goes before a judge to be sentenced for his crimes. But those crimes affect far more than just Madoff and his individual investors. Many of his victims were nonprofit groups hoping to do good with the money Madoff made them. Erika Miller profiles one of those groups and the people Madoff hurt.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: For most people coming home is not a big deal. It is for Marou Famous. Yes, that's his real name. For the past four months, he has been the proud owner of a bed and a kitchen. Before that he spent 23 years homeless, struggling with drug addiction.
MAROU FAMOUS, SUPPORTIVE HOUSING PARTICIPANT: I went from the cardboard on the sidewalk to here. I had to make a change, the in and out of the shelters. The this and the that and the fooling myself thinking that I'm going to make it work my way without assistance. But it doesn't work like that.
MILLER: The assistance came from a supportive housing program called Fuse.
FAMOUS: It has meant a new beginning to come back to where I left off years ago.
MILLER: But thanks to Bernard Madoff, Fuse could be burning out. Much of the funding came from the JEHT Foundation, which operated out of this building in Manhattan. JEHT was forced to close this year because its major donors invested with Madoff. That led to a million-dollar budget shortfall for the program, a program Deborah de Santis had hoped to expand.
DEBORAH DE SANTIS, PRES., CORPORATION FOR SUPPORTIVE HOUSING: Losing the JEHT money was really just awful because it funded important work now but it was also going to give us the opportunity to begin to reach into communities that we hadn't reached into and begin to serve individuals who so desperately needed housing.
MILLER: The foundation gave away about $30 million a year. JEHT President Robert Crane says its mission was unique.
ROBERT CRANE, PRESIDENT, JEHT FOUNDATION: Even though we weren't the largest foundation in the country by any measure in the areas that we funded, we were either the number one funder in the case of criminal justice or in the case of voting work and international justice work, we were in the top three funders.
MILLER: The closure of JEHT has also had a serious impact on Manhattan's Vera Institute. It researches ways to make the justice system fairer and more effective. Now, chief program officer Dan Wilhelm is struggling with a $3 million funding gap.
DANIEL WILHELM, CHIEF PROGRAM OFFICER, VERA INST. OF JUSTICE: We've had to downsize. We've had to lay staff off. We've had to significantly scale back our activities in the hopes that we can keep the projects on life support until other funders were able to step in and support them.
MILLER: These are far from the only programs that are suffering as a result of Madoff's scam. Over 200 charities and foundations have identified themselves as Madoff victims, although the amount of their losses is still not known. Crane is not optimistic the JEHT funded organizations will be able to raise money easily or quickly.
CRANE: I think it's not realistic to assume that this money will be in any way quickly recoverable for the not for profit community. My guess is it won't be recoverable at all for the next five to 10 years.
MILLER: For his part, Marou Famous is praying the Fuse program won't close the doors on others in need.
FAMOUS: It could hold back a lot of people who might get that same chance as I've have. I hope they find some new ways that those who want to change, who've made the choice that they want to change and want to make change can continue or proceed.
MILLER: Erika Miller, NIGHTLY BUSINESS REPORT, New York.
