Feb 1, 2009 12:00 PM

, By David T. Leibell & Daniel L. Daniels, partners in the Stamford, Conn. office of Wiggin and Dana LLP

By David T. Leibell & Daniel L. Daniels, partners in the Stamford, Conn. office of Wiggin and Dana LLP

Charities may not only have been Bernard Madoff's victims but also his enablers, most probably unknowingly — but some, possibly, knowingly.

Mitchell Zuckoff of Fortune magazine, in an article on CNNMoney.com dated Jan. 5, 2009, “Charities: The Foundation of Madoff's Scheme?” hypothesized that it was money from the charitable foundations and endowments that helped Madoff continue his Ponzi scheme for decades, when most Ponzi schemes typically fail within a year or two as withdrawals exceed deposits. According to Zuckoff, Madoff used the stability of the billions of dollars invested in his funds by these foundations and endowments (which typically withdraw between 4 percent and 6 percent a year to satisfy grantmaking requirements) to build up a rainy day fund available to pay off withdrawals from less predictable non-charitable investors.