William Rapfogel charged in $1 million kickback scheme

The former chief executive of one of New York City's most influential charities was arrested Tuesday and charged with stealing more than $1 million from his nonprofit group for himself and funneling other funds to political donations, state authorities said.

William Rapfogel, who led the Metropolitan Council on Jewish Poverty until his firing in August, was charged with grand larceny, money laundering and criminal tax fraud for an alleged scheme stretching back to the early 1990s. According to a complaint filed in Manhattan Criminal Court, Mr. Rapfogel pocketed more than $1 million and, with others, stole a total of more than $5 million over the course of two decades at the Met Council by inflating the rate of insurance policies paid by the nonprofit, and siphoning off the difference in cost.

Mr. Rapfogel, a fixture of city and state political circles for 21 years at the Met Council, is a longtime ally and personal friend of state Assembly Speaker Sheldon Silver, a Manhattan Democrat whose chief of staff is Mr. Rapfogel's wife, Judy.

Mr. Rapfogel, 58 years old, made no comment as he was led out of the First Precinct station house in the Financial District in handcuffs Tuesday morning. At an arraignment, Judge Kevin McGrath set bail at $300,000 bond and $100,000 cash and ordered Mr. Rapfogel to surrender his passport and to stay in the tri-state area.

Mr. Rapfogel didn't enter a plea. His attorney, Paul Shechtman, said his client "hopes for a fair resolution of this case and will continue to make amends to the Met Council."

The joint probe by the attorney general's office and state comptroller's office started in August, around the time Mr. Rapfogel was fired. The probe was prompted by an internal investigation by the nonprofit.

The complaint said there were unnamed co-conspirators, including one person employed by the Met Council and another employed by a Long Island insurance company, Century Coverage Corp. Prior to the start of Mr. Rapfogel's employment at the Met Council, the complaint said, those two co-conspirators devised a scheme to inflate the insurance policies and then pocket the difference. After Mr. Rapfogel's hiring in the early 1990s, the complaint said, he "was informed of the scheme and began receiving proceeds from the scheme, mostly in cash."

Investigators found more than $400,000 in cash hidden in Mr. Rapfogel's homes during searches in August, the complaint said.

he attorney general's office also accused Mr. Rapfogel of having directed Century Coverage to give him checks for donations to politicians and political organizations using money laundered through the insurance premium inflation scheme.

A spokeswoman for the Met Council didn't immediately respond to a request for comment. At the time of Mr. Rapfogel's firing, the Met Council said its board "recently became aware of specific information regarding financial irregularities and apparent misconduct in connection with the organization's insurance policies."

A woman who answered the phone at Century Coverage on Tuesday declined to comment and declined to provide her name.

"It's always sad and shocking when we discover that someone used a charity as their own personal piggy bank—but even more so when that scheme involves someone well-respected in government and his community," Attorney General Eric Schneiderman said in a news release.

For years, the Met Council has received contracts and grants from the city and state governments, and has boasted its close relationships with politicians, hosting a high-profile annual breakfast that regularly draws elected officials such as Mayor Michael Bloomberg, Comptroller John Liu, Public Advocate Bill de Blasio, and others.