The Met Council on Jewish Poverty announced today that it has fired longtime CEO and President William Rapfogel, who is under investigation for alleged financial misconduct.
The influential social services organization, with strong ties to the Lower East Side, released a statement that read, in part:
The board of directors of Met Council recently became aware of specific information regarding financial irregularities and apparent misconduct in connection with the organization’s insurance policies… The board retained outside counsel to conduct a full investigation. Based on that investigation, which is ongoing, the board has terminated Mr. Rapfogel, effective immediately, and notified the proper authority. To date, the investigation has not revealed evidence that any current employees of Met Council engaged in any wrongdoing.
The New York Attorney General is investigating the case. According to the New York Times, “people familiar with the matter declined to comment as to the exact nature of the allegations.” A source with knowledge of the situation told the Daily News that “Rapfogel is believed to have purchased insurance policies using council money and then received kickbacks from the insurance agents who sold them.” Rapfogel’s wife, Judy, is Assembly Speaker Sheldon Silver’s chief of staff. According to the News there is no evidence in the early stages of the investigation that she was involved in the financial dealings that led to her husband’s dismissal. The News added:
The Met Council has been a regular recipient of millions of dollars in state funds, mostly coming in the form of pork project funding from individual lawmakers, including Silver. Currently, according to the state controller’s office, there are 23 open contracts with the council worth $16.6 million.
Rapfogel has run the Met Council since 1992. For the past few years, the non-profit has been the umbrella organization for the United Jewish Council of the East Side. As the Atlantic Yards Report pointed out a short time ago the Met Council teamed up with Forest City Ratner, one of New York’s biggest developers, on a proposal to develop the Seward Park residential and retail site on Delancey Street. The city is expected to choose a winning bid for the project in the next several weeks.
UPDATED 2:32 p.m. In a statement released by his attorney, Rapfogel said:
After 21 years at the Metropolitan Council on Jewish Poverty, I deeply regret the mistakes I have made that have led to my departure from the organization… I apologize to our dedicated officers and board, our incredible staff, and those who depend on Met Council. I let them all down… I pray that my family and friends and all who care about Met Council can find it in their heart to forgive me for my actions. I will do everything possible to make amends.
The Times has more details concerning the investigation:
Investigators are, among other angles, looking at the relationship between Mr. Rapfogel and Century Coverage Corporation, an insurance company based in Valley Stream, N.Y., according to people familiar with the investigation. Investigators are focusing in particular on generous contributions that the company’s chief executive, Joseph Ross, and other employees have made to candidates for New York City offices. The company’s employees have given almost $120,000 to various candidates since the late 1990s, including $26,175 to several candidates in 2013. Company officials could not immediately be reached for comment.
Channel 4 reports the following:
Sources familiar with the investigation said the probe is examining what happened to some of the organization’s funds and whether any of that money might have been improperly funneled into the political campaigns of some New York City mayoral candidates… A source… said the investigation is looking to see where the money went and which mayoral candidates might have received improper funding. The source added it does not appear that any candidate was aware of any impropriety associated with campaign donations linked to Rapfogel’s alleged misconduct.
Click here for a list of the Met Council’s current state contracts.
UPDATED 3:30 p.m. Here’s a statement from Speaker Silver, via the Daily News:
I am stunned and deeply saddened by this news… While there is still much that we don’t know, we do know that the Metropolitan Council on Jewish Poverty has given tens of thousands of New Yorkers of all faiths and backgrounds lifesaving help over the past four decades. Met Council also played a critical role helping our communities recover from Superstorm Sandy, and its work should in no way be diminished by these developments.
UPDATED 3:42 p.m. More on Rafogel’s ties to Silver from Josh Nathan-Kazis of the Jewish Daily Forward:
Together with Silver, Rapfogel formed part of a powerful coterie of Lower East Side political heavyweights with its base in the Grand Street co-operative apartment complexes. “We put in time and effort for the people,” said Heshy Jacob, another member of their influential neighborhood cohort, in an interview with the Forward in March. “It’s not that we simply are despots.” Contacted (today), Jacob stood by Rapfogel. “He is one of the most decent human beings in the world,” Jacob said. “This is a man who has helped the poor his entire life.”
It’s all fine and well to blame Willie and Rabbi Cohen, and this whole affair saddens, disgusts and shocks me as a Jew, but why was this not caught for so many years. The Met Council board is filled with smart and successful people who I would think would be more vigilant. Take lawyer Joseph C. Shenker for example. He’s the Chairman of the Wall Street law firm Sullivan & Cromwell LLP and the co-Chairman of the Met Council board. He’s no dummy. How could he miss this? Were they all asleep at the switch? What a shanda fur die goy.
Board members aren’t responsible for auditing every detail of an organization’s finances. And like most kickback schemes, this scheme involved conspiring with a (presumably) legitimate vendor, so even the most thorough internal audit of the organization probably would have missed it (since the payments would have appeared to be legitimate expenses backed up by legitimate-looking invoices from the vendor). Also like most large-scale kickback schemes, it was only exposed by an anonymous tip, at which point the board DID do the right thing by taking the tip seriously and conducting a thorough investigation.