A settlement agreement announced by New York state’s attorney general reveals drastic efforts to reform New York City’s largest Jewish poverty agency following a $7 million insurance fraud.
The Metropolitan Council on Jewish Poverty has fired or reassigned two additional top executives in the ongoing fallout of the fraud uncovered at the organization, according to the settlement agreement between the charity and the office of New York State Attorney General Eric Schneiderman.
State regulators will have sweeping oversight powers over the management of the organization for a period of five years and will impose wide-ranging reforms on the venerable Jewish social welfare agency, according to the 14-page settlement signed December 19.
The settlement sheds new light on what went dramatically wrong at the Met Council — and how it failed to prevent the massive insurance scam by William Rapfogel, its former executive director. It also suggests that the vast majority of the money allegedly stolen Rapfogel came from donors, not state or city government.
In return for promises to impose new controls, the repayment of stolen funds, and a system of oversight by government agencies, the Attorney General’s office has agreed to release frozen state grants and not to pursue certain categories of civil claims against additional Met Council board and staff.
“At this stage of the Investigation, it is apparent that Met Council failed to adopt a number of critical processes and controls which could have mitigated or avoided the loss of its charitable funds,” the AG’s office wrote in its settlement agreement.
Neither the AG’s office, the city’s Department of Investigation, or the Met Council would answer specific questions about the settlement.
“We have been working extremely hard to restore the credibility and integrity of the organization to ensure that Met Council is able to continue to serve the thousands of New Yorkers in need who depend upon us for a variety of essential human services,” the Met Council said in an emailed statement.
The agreement comes two months after Rapfogel was arrested and charged with the theft of $7 million through an insurance fraud scheme perpetrated over the course of nearly the entirety of his 20-year term as executive director of the group. On December 11, insurance salesman Joseph Ross pled guilty to grant larceny, money laundering, and tax fraud for his role in the plot. Rapfogel’s predecessor at the Met Council was fired from his ongoing consulting position at the Met Council and his job running a not-for-profit Jewish ambulance service.
The settlement reports that these are not the only people who have faced consequences as a result of the scandal.
According to the agreement, the Met Council “has terminated and/or reassigned certain other staff members, including the chiefs of staff and operations.” The former chief of staff, Ilene Marcus, is no longer listed on the group’s website. The chief operating officer, Peter Brest, is still listed as chief operating officer; his current status is unclear. A spokesman for the Met Council would not answer questions about the employment status of either senior officer. There is no indication that either have been accused or are suspected of any wrongdoing.
In addition, at least two members of the 28-member board — who do not appear to have been selected yet — will be forced to leave by June.