Met Council Agrees to Oversight and Reforms To Win Funding After $7M Scandal

Two More Officials Axed — Board Changes Coming


By Josh Nathan-Kazis

Published December 20, 2013.
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The agreement also suggested that a third former employee of the may be a target of the Attorney General’s investigation. In the settlement letter, the A.G. exempts three people from its pledge not to bring certain categories of civil claims against Met Council personnel. Those three are Rapfogel, Cohen, and Herb Friedman, who was the Met Council’s chief financial officer from 1992 to 2009.

Friedman has not previously been named in connection to the fraud. He served as CFO during most of the period in which Rapfogel is alleged to have been participating in his insurance fraud scheme. Both Friedman and Rapfogel worked as aides to Harrison Goldin when he was City Comptroller under Ed Koch.

Friedman could not be reached for comment. The phone number at his home has been temporarily disconnected. He has not been charged with any crime.

The agreement lays out a handful of new policies the Met Council will be required to implement, suggesting that such policies did not exist before. The group will have to draft a whistleblower policy, a basic piece of not-for-profit governance that it apparently lacked.

The agreement also will require new anti-nepotism rules and term limits for board members.

Most surprisingly, the terms of the agreement require that the group add a new item to its bylaws that will ban the expenditure of Met Council funds for political purposes, such as campaign contributions or fundraisers. IRS rules for not-for-profit organizations such as the Met Council already bar these sorts of activities; that the AG’s office is specifically requiring that they be spelled out in the bylaws raises questions about whether the Met Council was improperly participating in political activities, although no allegations to that effect are included in the document.

The agreement requires that the Met Council reimburse the state and the city a combined $1.1 million to compensate for the funds stolen by Rapfogel. Yet the total amount alleged in court filings that was stole in the insurance fraud was $7 million. Much of the balance presumably came from donors, either through individual donations or through grants from other foundations or corporations.

It’s also possible that some of the stolen funds came from federal grants, though the vast majority of the organization’s government funding comes from Albany.

In addition to all these terms, the Met Council will be watched by an outside monitor appointed by the government, will submit audits to government agencies, and will approve at least two new board members.


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