More Madoff fallout

When the scandal first broke, all the attention focused on big names that got snookered - Steven Spielberg. Elie Wiesel. Mort Zuckerman. Frank Lautenberg. But I'm hearing more and more stories of lesser-known folks - and especially Jewish-oriented non-profits - that face big losses. A local organization losing $700,000 might get lost in the shuffle of a pressing news day, but to that group it will mean major retrenchment. Translation: folks who need help aren't going to get it. Ronald Cass, dean emeritus of Boston University School of Law, writes in the WSJ on how affinity can play such an insidious role in this kind of fraud. "The Holocaust and generations of anti-Semitic laws and practices around the world made reliance on other Jews, and care for them, a survival instinct. As a result, Jews are often an easy target both for fund-raising appeals and fraud," Cass writes. Here's more:

My father received bad news by asking first, "Was it a Jew?" My father coupled sensitivity to anti-Semitism with special sympathy for other Jews. In contrast, Mr. Madoff, it seems, targeted other Jews, drawing them in at least in some measure because of a shared faith. The Madoff tale is striking in part because it is like stealing from family. Yet frauds that prey on people who share bonds of religion or ethnicity, who travel in the same circles, are quite common. Two years ago the Securities and Exchange Commission issued a warning about "affinity fraud." The SEC ticked off a series of examples of schemes that were directed at members of a community: Armenian-Americans, Baptist Church members, Jehovah's Witnesses, African-American church groups, Korean-Americans. In each case, the perpetrator relied on the fact that being from the same community provided a reason to trust the sales pitch, to believe it was plausible that someone from the same background would give you a deal that, if offered by someone without such ties, would sound too good to be true.