Ten years ago this week, Bernard "Bernie" Madoff was arrested and charged with operating the biggest Ponzi scheme in American history. A Ponzi scheme brings in new investors and uses their money to pay off earlier investors. When it all collapsed, hundreds of investors had lost billions of dollars to Madoff's scheme. Many of the victims were nonprofits, and quite a few of them were from around here, including the Lappin Foundation of Salem. It had to shut down the day after the arrest of Madoff, the foundation's $8 million endowment wiped out. Deborah Coltin was head of the foundation, and she lived through it all. She spoke with WGBH All Things Considered anchor Barbara Howard. The following transcript has been edited for clarity.
Barbara Howard: So the Lappin Foundation supports Jewish education and culture with a focus on the North Shore, including youth trips to Israel. Take us back. You got a phone call from the foundation's founder, Robert I. Lappin. What did he say to you?
Deborah Coltin: Yes, I did. There was actually a voice message on my home phone in the evening, the same day Madoff was arrested. I was at a Christmas party with my husband that Thursday evening, got home late, and saw we had a message on the machine. I played it, and it was from Bob Lappin, and he sounded distraught. And the message was, "Don't call me back, we'll talk in the morning." I couldn't sleep well, got up early, was in the office a little after 6 a.m., and people were already there. The phone rang, and it was Mr. Lappin. He said, "We've lost all our money. The foundation is shut down. Nobody has a job. Do you understand what I'm saying, Debbie?" We had to cancel all of our programs. We were planning to take close to 100 teens to Israel. So that was already in the works. I had to write a press release, post it on the web site, and close our doors.
Howard: Now I know your press release read in part, "The money needed to fund the programs of the Lappin Foundation is gone." And the Salem News picked up the story. It said, "The Robert I. Lappin Foundation has ceased to exist." And it quotes you, Deborah, as saying that you were very emotional that day. So take us back. You had to go to the staff and lay people off.
Coltin: There were five of us at the time, and it was devastating. It was devastating. I mean, everybody had families. Also, our retirement accounts were wiped out. Everything we had worked for was wiped out, and to tell everyone they had no jobs was heartbreaking.
Howard: You had to talk one by one to your staffers. Do you remember any particular responses that you had from them?
Coltin: I just remembered everyone said, "What can I do to help?" We didn't want to just walk out the door. We could have, and just closed the door and left everything behind us. But there were lives involved here, and plans that had to be made to cancel and be in touch with people. But everybody asked, "What can I do to help?" And I had to reiterate, "Understand, you will not get paid."
Howard: So the day after you had to lay everyone off, did they all come back to work?
Coltin: They all came back and volunteered.
Howard: How did you let the kids know that the program wasn't going to take them to Israel?
Coltin: We sent e-mails out. The word gets out. It's a small community, bad news travels fast.
Howard: But then the day after announcing the closure of the Lappin Foundation, there was an anonymous gift?
Coltin: There was. Mr. Lappin got a call from a person he knew in the community who said, "The trip to Israel is too important, too powerful. Can't let it die," essentially. He said, "I would like to give you $100,000," which is incredibly generous. Mr. Lappin was in Florida at the time and was packing up to come home, and he said to the donor, "Let me speak to Debbie Coltin." And he called me, and he said "What do you think?" I said, "Let me go have a meeting." And I went to the donor's home and we talked about what to do with that gift.
Howard: That was $100,000. But was it enough?
Coltin: It wasn't nearly enough to fund all the teens, never mind the rest of the programs.
Howard: Is the donor still anonymous, or can you say who it was?
Coltin: I can say who it was. His name is David Lederman, of blessed memory. Unfortunately, he has since passed away.
Howard: Where was he from?
Howard: So you took that, though, as seed money, and went to work?
Coltin: We were not being paid. We did this, the staff did this, as volunteers, and people from the community came in as volunteers, and we launched a fundraising campaign. None of us were professional fundraisers. I have to say, for me personally, I jumped right into it, so I didn't think about my retirement and what that might have meant. I was devastated, because my job was my life, in a sense. I was on more than a decade, and Mr. Lappin believed in the mission. It wasn't just a job, it was a passion. And I have to say of my colleagues, too. So we were dealing with a lot of loss at the time, and having the fundraising to jump into actually was a bit of a diversion, believe it or not.
Howard: I can imagine that.
Coltin: We had to ask, and that's what we did, and it came in all different shapes and forms: e-mails, phone calls, face to face. We had a phone-a-thon.
Howard: Sounds like you had contributions both large and small.
Coltin: We did. As I recall, I believe even $10 came in from children. It was word of mouth.
Howard: So within about two weeks, you had raised $300,000?
Coltin: We did, we did.
Howard: And that could fund about half the kids on the trip?
Coltin: More than half the kids.
Howard: And then by May?
Coltin: We had enough for all the kids, and some of our other programs as well.
Howard: It was enough of an outpouring, it sounds like, for Mr. Lappin to relaunch the foundation, to pull it out of the hole it was in.
Howard: How is it doing now, 10 years out?
Coltin: It's so exciting, the foundation is incredibly successful. In terms of the operating budget, it's larger. In terms of the number of people we reach, more.
Howard: Robert I. Lappin, who started your foundation, was 86 years old back then when this happened 10 years ago. Is he still with us?
Coltin: He is, he is, and he is working every day. He comes to the office, and he's very much involved in the fundraising and the details of the foundation and the programs. He gets such joy from the work of the Lappin Foundation, and he is with us.
Howard: Was any of the Madoff money ever recovered?
Coltin: For the foundation? No. And we'll never see a dollar of it.
Howard: What's this week been like for you? Because you must be thinking about what happened 10 years ago, to your foundation.
Coltin: I think about it, and naturally we were reminiscing about it this morning. We were all saying, "Look at where we were, how far we've come." It's incredible to think that in a decade we were able to pull this off. And our future looks really bright and awesome.
Howard: That's Deborah Coltin, executive director of the Lappin Foundation in Salem. It was 10 years ago this week that the foundation was dealt a nearly fatal blow with the arrest of Bernie Madoff and the revelation that Madoff had been operating a Ponzi scheme, defrauding hundreds of investors, including the Lappin Foundation. Ten years later, the Lappin Foundation is still operating. This is WGBH's All Things Considered.