Great news for Yeshiva University! The school says it didn’t lose $110 million — as originally reported — but rather a mere $14.5 million. Seems like a pretty big descrepency, right? Was it a big accounting error? Nope. All the school is saying is that since all of its profits with Madoff — actually through Madoff feeder J. Ezra Merkin — were fictitious. And since those profits were never real, how can they actually lose that much? Clever.
Crain’s: The university said in a prepared statement that it had $14.5 million invested with Mr. Madoff at the time of his arrest. The administration had thought that figure had grown to $110 million, thanks to Mr. Madoff’s investing acumen. However, “it now appears that any ‘profits’ above the $14.5 million were fictitious,” said Yeshiva’s vice president for business affairs and chief financial offer, J. Michael Gower.
While the university faces a much less severe loss than previously estimated, it still doesn’t possess the $110 million administrators were counting on. The university will likely have to restate its $1.2 billion endowment, a person familiar with the matter said.
So the change is just semantics. The school had been operating under the assumption that it had that $110 million, as Crain’s notes, so its disappareance will have an effect whether they choose to call it a loss or not. There are probably a lot of folks that could knock down their Madoff losses by 90% just by thinking of things the way Yeshiva did, but we doubt anyone will take much comfort in that.
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