Prosecutors Interviewed FEGS Board Members and Former Staff

Government prosecutors have interviewed board members and former employees of the bankrupt Jewish social service agency FEGS amid ongoing investigations of the group’s financial collapse.

The new details of the investigations, which come from newly-released transcripts of a bankruptcy court hearing, show that the government probes are ongoing, more than a year after FEGS’s baffling implosion.

FEGS attorney Burton Weston discussed investigations by both the Manhattan District Attorney’s Office and the Charities Bureau of the New York State Attorney General’s office at a February hearing in the FEGS bankruptcy case held at the United States Bankruptcy Court for the Eastern District of New York in Central Islip, Long Island.

“While our forensic audits at the outset of the case didn’t reveal fraud, certainly [FEGS] is not the final arbiter of that,” said Weston.

Weston did not respond to a request from the Forward to elaborate upon or update the comments he made in open court.

FEGS declared bankruptcy in March 2015 following a rapid unraveling that began the previous fall, when the massive charity quietly told insiders that it had lost $19 million in 2014.

The Forward’s reporting on the crisis has raised questions about transfers of millions of dollars to a for-profit subsidiary, large bonuses paid to senior executives even after the group’s financial problems were apparent, and rampant mismanagement throughout the organization.

Now, both the Attorney General’s Charities Bureau and the Manhattan District Attorney appear to be actively investigating the collapse.

Weston said that the Attorney General’s office had interviewed “a number of present and former employees, board members, and perhaps others we are frankly not aware of.” Weston told the court that he didn’t know the status of the Attorney General’s investigation, or what might come next.

The District Attorney’s office has also interviewed present and former employees and board members, Weston said. “Where that will end up remains to be seen, if anything,” he said.

Federal investigators from a U.S. Attorney’s office also initially requested documents from FEGS, but Weston said that they had not followed up with further requests.

Weston said that FEGS has cooperated fully with the investigators. “We’ve reviewed and produced hundreds of thousands of pages of documents, have made files available, former officers,” Weston said. “Anything that they’ve asked for, we’ve given.”

Neither the Attorney General’s office nor the District Attorney’s office responded to inquiries about the status of their investigations.


Josh Nathan-Kazis

Josh Nathan-Kazis

Josh Nathan-Kazis is a staff writer for the Forward. He covers charities and politics, and writes investigations and longform.

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Prosecutors Interviewed FEGS Board Members and Former Staff

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