One Jewish charity CEO hid allegedly stolen cash in his apartment closet. Another had an affair with his assistant while the assistant’s son-in-law stole from the CEO’s organization. A third covered up sex abuse charges for decades.
Scandal after scandal has hit New York’s top Jewish charities this year. Experts blame lax oversight, saying that the multi-decade leadership tenures common among Jewish charity CEOs have corroded governance at some of the Jewish community’s largest not-for-profits.
The four major Jewish charity scandals over the past 10 months come just five years after some of the same organizations lost a fortune in Bernard Madoff’s Ponzi scheme.
“It has definitely shaken a lot of people’s confidence,” said Rabbi David Teutsch, who heads the Center for Jewish Ethics at the Reconstructionist Rabbinical College, referring to the repeated blasts of bad news. “The response clearly needs to be greater controls and better training.”
Two-decade terms are common for the men who run the nation’s largest Jewish organizations. Wealthy families hold seats on multiple boards of trustees. Several professionals who specialize in Jewish charity management told the Forward that fixes exist for the governance problems facing the Jewish not-for-profit sector, but they require structural changes. Executive suites need to turn over faster, the experts said. Trustees need to be better trained, and to be selected with an eye toward oversight skills, not just deep pockets.
Those interviewed were careful to state that most Jewish charities are well managed. But they said that governance improvements are important even without an apparent problem.
The worst year for Jewish charities since the Madoff debacle in 2008 started in late December 2012, when the Forward reported that Yeshiva University’s longtime former president Rabbi Norman Lamm had admitted to covering up allegations of sex abuse of high school students from the 1970s through the ’90s. Alleged victims soon filed a $380 million lawsuit against the school.
Then, in May, the Forward reported that top officials at the Conference of Jewish Material Claims Against Germany, which distributes aid to Holocaust victims, had been warned of fraud being perpetrated by employees eight years before a full investigation uncovered a multi-million dollar scam.
Things got even darker over the summer. In July, the 92nd Street Y fired its executive director, Sol Adler, after learning of Adler’s affair with his assistant, Catherine Marto. His affair, though embarrassing, wasn’t the worst of it. Marto’s son-in-law was the Y’s head of facilities, and was accused of taking kickbacks from vendors on construction projects. The Y shouldn’t have been surprised: He had pleaded guilty in 1999 in a Mafia-backed Wall Street fraud.
All those scandals were just a warm-up for the firing in August of William Rapfogel, CEO of the Metropolitan Council on Jewish Poverty and one of the largest figures on the New York Jewish not-for-profit scene. Rapfogel was charged in September with stealing $5 million from Met Council in a two-decade kickback scheme. His predecessor at Met Council, Rabbi Dovid Cohen, resigned in September from his current job running the Jewish ambulance service Hatzolah.
These weren’t the first embarrassing scandals in recent memory for Y.U. or for Met Council, both of which lost donor money in the 2008 Madoff fraud. Madoff was chairman of the board of Y.U.’s business school and a former treasurer of the university; J. Ezra Merkin, who managed funds that secretly fed millions into Madoff’s Ponzi scheme, was on Y.U.’s investment committee.
That Merkin was on the board committee charged with overseeing the university’s investments didn’t keep Y.U. from investing in his fund, a conflict that received heavy criticism after the Madoff fraud was revealed. Y.U. lost $105 million invested with Madoff through Merkin.
Met Council lost an account invested with Madoff through Merkin with a purported value of $1.4 million.
By Josh Nathan-Kazis - Read moreat: forward.com