The swindler and the philanthropist: A tale of two men

Five hundred and forty-five million dollars. Fifty billion dollars. Money that most people could not fathom possessing, much less losing in the blink of an eye.

But Carl Shapiro and Bernard “Bernie” Madoff aren’t most people.

Despite the vast difference in their current lives – Madoff serving out a life sentence in North Carolina’s Butner Federal Correctional Complex while Shapiro, now 97, still hands out grants and endowments – they have much more in common than meets the eye.

Although the two men were born 25 years apart, Shapiro in 1913 and Madoff in 1938, they became close friends as adults. Both Jewish, both successful, both had homes in Palm Springs as well as the northeast and both made waves in philanthropy circles. One of Shapiro and wife Ruth’s daughters, Ellen, married a close associate of Madoff’s, Richard Jaffe, further uniting the two families.

Carl and Ruth Shapiro (on right), with daughter Ellen and Robert Jaffe (left)

As they matured, it seemed that both Shapiro and Madoff were on the path to greatness, both financially and philanthropically. Shapiro built his fortune on the women’s clothing brand Kay Windsor, which he later sold to Vanity Fair. Then, through investments largely handled by Madoff, Shapiro continued to grow his millions to over $1 billion. He and his wife founded the Carl and Ruth Shapiro Family Foundation in 1961 and established themselves as some of the leading Boston philanthropists.

The foundation, which lists its grant-making interests as “Arts and Culture, Education, Health and Hospitals, Jewish Causes and Social Welfare,” has over 40 years given millions to Brandeis University, the Dana-Farber Cancer Institute and other Boston area hospitals, the Breast Cancer Research Foundation, Jewish Federation of Palm Beach County, Combined Jewish Philanthropies of Greater Boston and many other organizations.

Meanwhile, Madoff was enjoying success of his own, on Wall Street, as his investment firm Bernard L. Madoff Investment Securities LLC grew to rank in the top 1% of US securities firms. An archived copy of his firm’s website proclaims that Madoff Investment Securities LLC, founded after Madoff left law school, was different than other firms because “the owner’s name is on the door.”

“In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world[…]” the website stated. “Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm's hallmark.”

Madoff, too, was making his name by donating millions to various charities and causes. Both Madoff and Shapiro were on top of the world, or so it seemed. Soon, though, it would all come tumbling down.

In July of 2008, the multi-million Carl J. and Ruth Shapiro Cardiovascular Center opened at Brigham and Women’s Hospital. It was a peak moment for the Shapiros and their foundation. The center is the most advanced facility for cardiovascular research and medicine in the world, the first Leadership in Energy and Environmental Design (LEED) certified hospital building in New England, and hosts one of the foremost cardiovascular teams available.


However, just five months later, Shapiro, his investor and thousands of other Americans all received a terrible blow. On December 11, 2008, Madoff was arrested and charged with securities fraud. In the days that followed, a huge Ponzi scheme was unraveled. Madoff had lost his clients $50 billion.

Madoff's mug shot

Investors all over the country lost significant amounts of money. Jewish organizations and nonprofits were particularly affected, as many of them entrusted their entire endowments to Madoff. The Shapiros have stated they lost $545 million of personal money, with the foundation itself losing nearly half of its assets, some $145 million.

The family and foundation attempted to distance themselves from Madoff, releasing a statement. "Though I have had a personal relationship with Mr. Madoff for more than 50 years, any decisions I or my family foundation made to invest with him were based on his apparent business acumen, sense of integrity and commitment to sound investing principles,” Shapiro said. “I also want to be abundantly clear that at no time did I ever formally introduce individuals as potential investors with Mr. Madoff. In fact, we agreed when our friendship began that I would not introduce him to potential clients. I wanted to avoid putting him in the awkward position of having to say no to a friend of mine."

After losing nearly half their assets, the Shapiro Foundation was forced to tell 80 Boston nonprofits, as well as several in Florida, that its wallet was closed for 2009. A benignly-worded statement released by the Foundation announced, “The Carl and Ruth Shapiro Family Foundation regrets to announce that it will not award any new grants or make any new capital pledges in 2009. The Foundation made this difficult decision as a result of losing a significant portion of its assets due to the fraudulent actions of Bernard Madoff, head of Bernard L. Madoff Investments, LLC. At this time the full impact of the Foundation’s financial losses is still being determined.”

Still, the foundation fulfilled its promise to honor its existing grants, totaling nearly $13 million. Information for 2010 is not publically available.

On March 12, 2009, Madoff pled guilty in court to eleven offenses. He was charged with counts of securities fraud, investment advisor fraud, mail fraud, wire fraud, international money laundering to promote fraud in the sale of securities, international money laundering to conceal the proceeds of fraud in the sale of securities, money laundering, making false statements, perjury, making a false filing with the Securities and Exchange Commission and theft from an employee benefit plan.

That summer, on June 29, 2009, Madoff received the maximum sentence of 150 years in federal prison, where he remains today with a release date of Nov. 14, 2139. His assets, including multiple homes, were sold to begin the long process of paying back his victims.

At Madoff’s sentencing, several of the people who lost their life savings told their stories. One man’s testimony illustrated just how far Madoff had fallen from an esteemed businessman and philanthropist. “What can we say about Madoff,” said Burt Ross. “That he was a philanthropist, when the money he gave to charities he stole from the very same charities he ultimately devastated; that he was a good family man when he leaves his grandchildren a name that mortifies them?”

Ross became increasingly heated, adding, “What Bernard L. Madoff did far transcends the loss of money. It involves his betrayal of the virtues people hold dearest – love, friendship, trust – and all so he can eat at the finest restaurants, stay at the most luxurious resorts, and travel on yachts and private jets. He has truly earned his reputation for being the most despised person to be in America today.”

Other victims called Madoff inhuman or “a beast,” or told the judge, “The man sitting in this courtroom robbed me. […] He discarded me like road kill.” Michael Schwartz summed up the sentence Madoff would receive, imploring, “Your honor, I say this without any malice […] I only hope that his prison sentence is long enough so that his jail cell becomes his coffin.”

Cartoon of Madoff after sentencing, via toonpool.com

Although federal authorities investigated Shapiro due to his close relationship with Madoff, to determine if he had any prior knowledge of or part in the fraud, charges have never been made against him and the family has largely escaped the kind of scathing hatred Ross exhibited toward Madoff. The Shapiros and Shapiro Foundation have been able to continue on without extensive damage to their family name.

At least, until recently. Just days ago, it was announced that Shapiro will be forced to forfeit $625 million to authorities, more than he allegedly lost in the collapse of Madoff’s firm and more than he and Ruth are currently worth.

Ruth and Carl Shapiro

In a statement released by the Department of Justice and the US Attorney for the Southern District of New York, Manhattan U.S. Attorney Preet Bharara said: "For almost 40 years, Carl Shapiro invested hundreds of millions of dollars with Bernie Madoff but withdrew far more. By requiring him to forfeit this money -- more than he is currently worth -- the Government and the SIPA Trustee have sent an important message: those who profited as a result of Bernard Madoff's fraud should disgorge those profits, which are rightfully other people's money.”

Bharara promised investigators will continue to track down the profits of Madoff’s scheme to return to the rightful owners, adding “And, to be clear, the criminal and civil forfeiture investigations relating to the Madoff fraud are very much ongoing."

Reiterating Bharara’s sentiments, FBI Assistant Director-in-Charge Janice K. Fedarcyk added, “The investigation of prodigious fraud, like that of Madoff, remains one of the FBI's top priorities. From robbers to fraudsters, the FBI will continue to bring to justice crooks who steal."

It is too soon to know whether Carl Shapiro and his family will have to lose their homes and property as Madoff did to pay back the government, or whether their family name will be forever written next to Madoff’s in the history books, or if their charitable Foundation will stand the $625 million test put before them.

Two men, two billionaires, two philanthropists. The world has labeled one a treacherous swindler, the other, a generous benefactor. At least for now.


By Kathleen Morrison



The Carl and Ruth Shapiro Family Foundation's website can be found HERE.
For information on the Shapiro Cardiovascular Center at Brigham & Women's Hospital, go HERE. 
To view an archived copy of Madoff's investment securities firm website, go HERE.
For documentation of US v. Madoff and related cases, go HERE.
To read a transcript of Madoff's guilty plea, go HERE.
To read a transcript of the sentencing and victim's stories, go HERE.
For details on Madoff's prison facilities, go HERE. 

For financial information on The Carl and Ruth Shapiro Family Foundation, go HERE.

To view the press release announcing Shapiro's $625 million forfeiture, go HERE. 

Read the latest from the Boston Globe about Shapiro HERE. 

For up-to-date news on Madoff and the payouts, go HERE.

Some photos courtesy of the Boston Globe and Boston Herald websites. 

Stephen Kurkjian: Reflections of a lifelong news man

Kurkjian

Great journalism can change the world. It takes a rare combination of curiosity, dedication, cunning and a certain unwillingness to back down – but luckily, that is just what Stephen Kurkjian, three-time Pulitzer Prize winner, has.

Kurkjian is proud of his craft. “I’m not full of myself, but I am full of being a journalist,” he says, adding, “[But] it has to be practiced, dammit, the right way!” Practicing it “the right way” has allowed Kurkjian to do some world-changing himself, at least in his home state of Massachusetts.

Kurkjian began working in the newsroom of Boston Globe in 1968, which he hails as “the best room in Boston.” There, Kurkjian has worked as a reporter, ran the Globe's Washington bureau, acted as chief of the Spotlight team and served as senior assistant metropolitan editor.

While a member of the Globe Spotlight team, Kurkjian won his two Pulitzers. In 1972 he received the Local Investigative Specialized Reporting award for exposing corruption in Somerville, Mass., and in 1986 he won in the same category for a series of articles on Boston’s transit system. Kirkjian was also part of the team that uncovered sexual abuse in the Catholic Church that won a Public Works Pulitzer in 2003 and has received over 20 other regional and national journalism awards.

The Pulitzer-winning Globe team of 2003 (Kurkjian far right)

But, like anyone, it took work to get to the top. Kurkjian remembers tackling his first story, a fire in an empty warehouse. “I had no idea how to cover fire,” he recalls. “I had been at the state house. I knew how to file a bill, I knew how to talk to the governor, I knew how to wink and nod at the staff… But cover a fire? I didn’t know what to do so I just started walking up and down, talking to people and somebody said there had been fires in other abandoned warehouses in the neighborhood recently.”

Kurkjian double checked with the fire department and wrote up his story, including the fact that there had been other fires in the neighborhood. But soon he found himself at another fire, with the same story unfolding around him. “What am I missing?” he remembers asking himself. That experience taught him to “push information,” to bring value to the paper. “Value to the paper is determining, ‘is this just one incident or something bigger?’” he says.

Writing the fire story also taught Kurkjian the importance of research. Each story he writes is relentlessly researched, a process which has remained vital but changed drastically over the years. “The library was our ‘google,’” he laughs. He remembers spending hours preparing for interviews. “I’d stay up nights going through my questions,” he says. “You want to be able to hold your own and the only way to hold your own is to know everything.”

He also learned that the most crucial tool a journalist can have is his or her brainpower. “It’s not about sources, it’s about thinking on your feet,” he says. “You cannot out-report your competition on every story. Your competition is going to have a brother-in-law on the police force […] but you can out-think your competition.”

Another valuable lesson about journalism came to Kurkjian in a somewhat unlikely place: Woodstock. There, Kurkjian says, he “was convinced of the value of what we do.” After walking 20 miles to the concert site, Kurkjian remembers looking around and thinking to himself, “this is a story.”

He went to the press tent but found it utterly empty. “I was the first reporter there,” he recalls. Kurkjian called into the city governor’s office, where he was told that outside reports were saying Woodstock would be shut down, the National Guard was getting called in and more. But what Kurkjian saw outside the tent didn’t match up with the reports. He sent his version of the story to the Globe, who “cover[ed] the immensity, but the panic was not in our coverage,” Kurkjian says.

That day, Kurkjian realized how essential being on-location is. “By being at that scene and applying all the skills you have, you are going to provide unvarnished, unhysterical information to your readers, and that is valuable,” he says.

Kurkjian, who is 67 this year, has retired from the Globe but still works for a weekly paper, the Dorchester Reporter. Even in semi-retirement, the journalist inside Kurkjian refuses to quit. He is independently working on two major side projects involving some high-profile topics.

One of these projects has been a three-year investigation into one of the most infamous art heists in history. On the morning after St. Patrick’s Day in 1990, men posing as police officers gained access to the Isabella Stewart Gardner Museum in Boston, subdued security and stole 300 to 500 million dollars worth of paintings, including ones by Rembrandt, Vermeer, Manet and more.

Kurkjian says his interest in the theft came out of the fact that, two decades later, the culprit remains unfound and all 13 pieces remain missing. Conducting his own investigation, including over 200 interviews, Kurkjian believes he may be able to determine who did it – but is keeping his theories to himself until he knows enough to publish.

Frames still hang empty where the stolen paintings used to reside.

The other project is of a quieter, more personal sort, one Kurkjian becomes visibly emotional discussing. After coming across a decades-old photograph of several Armenian men taken just before they were forced on a “death march,” Kurkjian, who is Armenian himself, felt an urge to tell the story of the men so like his own grandfather. He has traveled to Europe gathering biographical information about them and the other victims of genocide like them.

A photo similar to this one inspired Kurkjian's investigation.

Kurkjian tackles these stories the same way he has pursued every piece he has written – with great curiosity, thorough research and the mindset that journalism is for the people. “The media works,” he says “The public responds. They read this stuff. They care.”

By Kathleen Morrison

Many of Kurkjian's Boston Globe articles can be read HERE.
More information about  Kurkjian's Pulitzer Prizes can be found HERE. 
Listen to an interview with Kurkjian about his Pulitzer Prizes HERE. 
Read Kurkjian's reflection on covering Woodstock HERE.
Visit the Dorchester Reporter website HERE. 
More information about the Isabella Stewart Gardner Museum or the art heist HERE.