ZOA Faces Doubts About Management

Board Backs Klein Despite Budget Woes, Loss of Tax Status

Management Doubts: Zionist Organization of America members listen to radio host Glenn Beck at the group’s 2011 gala dinner.
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Management Doubts: Zionist Organization of America members listen to radio host Glenn Beck at the group’s 2011 gala dinner.

By Josh Nathan-Kazis

Published September 12, 2012, issue of September 21, 2012.
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Klein said that he personally informed the group’s major donors of the lost exemption. “I was really scared calling some of my major people that they would respond very uncomfortably, but they didn’t, not a single one,” Klein said in a telephone interview from his home.

One current ZOA employee accused Klein of asking her to keep the loss of the tax exemption a secret. In a September 5 memo to Drimer, Goldberg, board chair Michael Goldblatt and ZOA Western Region executive director Orit Arfa wrote that Klein “has mentioned to me several times that we must remain secretive about the tax-exempt status issue.”

Arfa confirmed that she had written the memo. Goldberg said that he had distributed it to the board.

When asked about the memo, Klein said that he was feeling ill and had to get off the phone.

Drimer dismissed Arfa’s charge. “I 100% deny that,” Drimer said.

The group’s national website currently refers donors to an outside not-for-profit that accepts donations on the ZOA’s behalf. That not-for-profit, FJC, maintains a collective giving account unofficially tied to the ZOA. The funds in the account legally belong to the FJC, but Lenny Glickman, the FJC’s CEO, said that he expected they would be granted to the ZOA once the group regains its exempt status.

The FJC receives 2% of all donations to the fund as a fee, plus roughly 1% of the account’s total balance each year. The funds are invested in a money market account.

An outside counsel retained personally by Goldberg argued in a memorandum circulated to board members that they could be held personally liable for failing to fully disclose the loss of the group’s exemption. Written by a California lawyer named Kent Seton, the memorandum was emailed to board members by Goldberg in late August.

The ZOA disputes the notion of any potential liability. “I do not agree that the ZOA had or has an affirmative duty to broadly publicize to donors the loss of exemption,” Korn wrote in the email provided to the Forward. “I also do not agree that donors would, in general, have any valid, corresponding claim for damages against the ZOA or its Board.”

Drimer noted that Seton is a California lawyer and the ZOA is a New York corporation, and asserted that the ZOA had done nothing wrong. “We have a legal opinion from our tax attorney that the ZOA has done nothing illegal, immoral, or unethical in dealing with this situation from the time we were aware of the revocation,” he said. “There is no affirmative duty required. We didn’t keep it a secret.”

In an August 8 memorandum to Korn and the group’s leadership, Drimer outlined steps the ZOA would take to ensure future compliance with reporting requirements. The memo outlines infrastructure changes to develop consistency in bookkeeping between ZOA regional offices and announces the hiring of a full-time staff accountant.

In an email to the Forward, Goldberg condemned the ZOA and the board’s response to the ongoing crisis. “That the ZOA failed to file required information returns for three consecutive years is itself reflective of gross negligence,” Goldberg wrote. “I truly believe it is both illegal and unethical, and I expect more from the ZOA, an organization that until very recently has stood for telling the truth, even when it’s unpopular.”

Contact Josh Nathan-Kazis at nathankazis@forward.com or follow him on Twitter @joshnathankazis


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