By Josh Nathan-Kazis April 4, 2017

An accounting firm that audits dozens of Jewish charities is now facing legal claims that its negligence led directly to the spectacular collapse of the Jewish social service agency FEGS in 2015.

In a complaint filed in bankruptcy court in late March, FEGS’s creditors claimed that the charity’s auditors, the accounting firm Loeb & Troper LLC, allowed management to carry millions of dollars in receivables on their books for years that should have been written off as bad debt.

According to the lawsuit, FEGS claimed for years that it was awaiting payment for its work on a New York City-funded program called WeCare. Yet FEGS had missed performance goals and failed to file for payment in connection with the program.

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For years, FEGS claimed in its financial reports that it was awaiting millions in payments for the program. The claims helped the group break even, at least on paper.

FEGS did not acknowledge that the money wasn’t coming until 2014. The lawsuit blames the auditors for not noting the problem sooner.

“If the losses had been recognized as they were occurring, FEGS could have addressed the problem,” the suit claims.

Contact Josh Nathan-Kazis at [email protected]

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