SALEM — The Robert I. Lappin Foundation, a charitable organization dedicated to strengthening Jewish culture, abruptly shut down yesterday in the wake of a multibillion-dollar Wall Street scandal.
The five-member staff was let go, and all the programs offered at its Shetland Park office were discontinued.
"It's very emotional," said a stunned director Deborah Coltin, explaining that this development came without any warning.
"It's been a terrible day," said the charity's press spokeswoman Amy Powell. "We do unbelievable work, and we touch so many lives, and it's devastating to have to stop doing it."
The foundation and its driving force, Robert Israel Lappin, 83, had been providing more than $1.5 million per year to various charities. The foundation listed more than $7 million in assets on a 2006 tax filing.
"It is with a heavy heart that I make this announcement," according to a press release from Lappin. "The Foundation's programs have touched thousands of lives over many years in our efforts to help keep our children Jewish."
Lappin was unavailable for comment yesterday. But Coltin described him as "sad and devastated."
"It's very emotional. On so many levels. Personally. Professionally. For our Jewish community. For Mr. Lappin, who is an angel on this Earth for all he's given," Coltin said.
Tom Kent, who runs Shetland Park, the industrial property Lappin owns in Salem, stressed that the Wall Street losses will have no impact on his operation.
"Everything here is business as usual," Kent said. "We don't have any interaction with the Foundation."
The Foundation's statement revealed, briefly, that money necessary to fund its programs had been entrusted to Bernard L. Madoff Investment Securities. Madoff was arrested on Thursday by the U.S. Securities and Exchange Commission and any remaining investment funds frozen.
The government has alleged that Madoff told two employees that his company was "all just one big lie" and "basically a giant Ponzi scheme" with losses totaling $50 billion. (A Ponzi scheme involves paying out to the first investors money from later investors, while earning no real income.)
"The money needed to fund the programs of the Lappin Foundation is gone," said the charity's press release.
Among the programs that the Foundation funded were trips to Israel for teachers and students. Since 1996, Powell said, Lappin offered a trip to Israel to every Jewish child in the area.
"He did this out of a sense of mission," Powell said. "Of wanting to give back to his community. He felt very passionate that our mission was to keep children Jewish."
"I'm just shaken and horrified and saddened," said Rebecca Gray, 17, of Nahant, who went on the last trip. She spent the visit to Israel amazed at all she learned. "It was life-changing. It was actually life-changing."
Additionally, she was heartened to know that her three younger sisters would one day get the chance to do the same thing. "Now they won't be able to experience that. ... I can't stop thinking about it."
Lappin warned against assimilation and intermarriage — unless the children were raised Jewish. He offered programs to facilitate that. He also contributed money for civic causes benefiting the community at large, Powell said.
The Jewish Federation in Salem enjoyed Lappin's support, says director Liz Donnenfeld. "He was one of our most generous supporters," she said, noting that she'd been hearing from people all day, shocked and dismayed at the news.
"I'm sad for the community," Donnenfeld said. "Heart broken for Bob himself." Via e-mail, she had already offered him whatever help the Federation can provide. "We'll be there."
Recently, Lappin celebrated the 50th anniversary of Shetland Park with an interview for The Salem News. His father, John Lappin, was a peddler and Talmudic scholar who arrived from Jerusalem in 1910.
John Lappin soon suffered what now seems an ironic setback.
"He accumulated some money, which was under the mattress in 1914," Lappin said, referring to the year of the great Salem fire that wiped out much of the downtown. "He lost it all. ... It was not inconsiderable. He had done well."
John Lappin later recovered from the loss, however.
Robert Lappin's employees were uncertain if he lost any of his personal savings to the alleged Madoff scam. Neither were they clear on what the future might hold.
"It's going to change the landscape of the Jewish community," Powell said. "He touched so many people." She declined to speculate on what it might mean that the Foundation funds are "frozen." Could something be salvaged?
"A lot of this is still unfolding for us," Powell said. "There's always a chance. But we don't know yet."
The Foundation had supported one full-time and four part-time employees.
"We are moving quickly and decisively to stop the fraud and protect remaining assets for investors," said Linda Chatman Thomsen, director of the SEC's Division of Enforcement.
The Commission also noted that $17 billion was listed in Madoff's 2008 filings before adding "virtually all assets of the advisory business are missing."
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