I NEWS I
Orthodox Rabbis Named
In Default Case
TOM TUGEND
Special la The Jewish News
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56
FRIDAY, AUGUST 4, 1989
undreds of private
investors, including a
considerable number
of prominent Orthodox rabbis
and laymen, were shocked to
learn last week that a
respected Jewish community
figure with whom they had
deposited their savings
stands in default of $90
million in bank loans.
The central figure in the
complicated case is Alexander
Spitzer, a 70-year old
Holocaust survivor, who
recruited most of his investors
from the Orthodox circles
with which he has been pro-
minently identified for some
30 years.
The shock follows an earlier
one this year, when Spitzer,
who runs a number of in-
terlocking loan companies,
was named a defendant in a
landmark civil suit brought
by the Los Angeles city at-
torney. The suit charged 142
persons with racketeering
and fraud in the financing of
some of the worst slum hous-
ing in Los Angeles.
Among the private note
holders and limited partners
in Spitzer's companies, accor-
ding to a front page story in
the Los Angeles Times on on
July 22 are Dr. Norman
Lamm, president of the
Yeshiva University in New
York; his brother Maurice,
former rabbi of Beth Jacob
Congregation in Beverly
Hills and a past president of
the Southern California of
Rabbis; and author and film
critic Michael Medved, presi-
dent of the Pacific Jewish
Center, an Orthodox con-
gregation. A number of other
investors came from the
Soviet Jewish emigre
community.
Private investments in
Spitzer's financial groups
stand at $40 to $50 million,
and all payments on these
funds have been stopped, ac-
cording to Joseph Eisenberg,
a bankruptcy attorney
representing Spitzer. Of the
$90 million in defaulted bank
loans, $60 million are owed to
the Bank of America.
However, most of the in-
vestors have not lost con-
fidence in Spitzer, who tried
to reassure 150 of them at a
friendly meeting on last
Thursday and vowed to make
good on his debts to the last
dime.
Medved, who has put more
than $100,000 in one of
Spitzer's loan companies, pro-
bably spoke for most of his
fellow investors, whom the
writer and critic described as
"a blue-ribbon array of some
of the most prominent names
in local traditional Judaism."
"This has all come as a
shock," Medved told the
Times. I believe the charges
against him (Spitzer) are pro-
bably in error. I maintain a
belief to the contrary that
Alex — Mr. Spitzer — is an
honorable man . . . I think it
is not only right but prudent
to allow him to work through
his current difficulties — with
our support."
Spitzer himself said he
blamed his problems on the
suit in March by the city at-
torney and public-interest
lawyers, and he has declared
that he never knowingly in-
vested in slum properties.
However, records in the case
indicate that some of his big-
gest borrowers came from the
ranks of the city's most
highly publicized slum lords.
In the civil suit, several of
Spitzer's loan companies are
accused of issuing loans on
slum buildings in excess of
their true value to reap short-
term gains in high loan fees
and high interest rates.
Last week, Spitzer reached
a partial out-of-court settle-
ment with the city attorney,
but he remains a defendant in
the law suit.
State Dept.
Wary Of Shift
Washington (JTA) — The
State Department warned
last week against putting too
much credit in news reports
that the Palestine Liberation
Organization has eased its
conditions for accepting
Israeli Prime Minister Yit-
zhak Shamir's peace
proposal.
Such reports may be cir-
culating to the media as
"trial balloons or for other
reasons," State Department
spokeswoman Margaret Tut-
wiler said.
"History shows that one
should not make judgment,
policies or actions on what
may be inaccurate or
unauthorized statements,"
she said. "We deal with of-
ficial statements and actions
as they are related to us
through official channels."
But Tutwiler said the
Shamir plan is being taken
seriously both inside and out-
side the Middle East.
The PLO's more relaxed
conditions were revealed in
Jerusalem Post and Ha'aretz.