Rapfogel, Cohen Admit to Roles in Met Council Embezzlement Scheme

In Manhattan State Supreme Court this morning, William Rapfogel, former head of the Met Council on Jewish Poverty, pleaded guilty in a $9 million insurance kickback scheme. In a separate courtroom, his predecessor, David Cohen, also entered a guilty plea, in connection with the audacious embezzlement plot.

Here’s how the New York Times reported today’s developments:

The plea marked a stunning downfall for a man once considered one of the city’s most respected philanthropists, whose work and close ties to (Assembly Speaker Sheldon) Silver, a Manhattan Democrat, gave him influence and prominence in political circles. But in the end, Mr. Rapfogel entered his plea alone: His wife, Judy, the longtime chief of staff to Mr. Silver, was not there, and neither was Mr. Silver. Mr. Rapfogel sat grim-faced and quiet, reading a well-thumbed copy of the Torah, just before his guilty plea to grand larceny, money laundering, tax fraud and filing false documents to the city campaign finance board.

Rapfogel will be sentenced July 16.  As part of his deal with the state attorney general, the longtime Lower East Side power broker faces anywhere between 3 1/3 and 10 years in prison.  He also must pay $3 million in restitution ($1.8 million has already been paid). The Times noted that Rapfogel “did not apologize publicly as he pleaded guilty and gave only a short explanation of what he had done, saying he had ‘knowingly helped steal more than $1 million from the Metropolitan Council on Jewish Poverty as part of a scheme in which insurance premiums were overstated.'”

In a statement, State Attorney General Eric Schneiderman said:

These defendants abused positions of trust to steal millions of dollars from a taxpayer-funded charitable organization — one that is dedicated to serving New York City’s poor… Those who rip off taxpayers and charitable organizations will be prosecuted. While New York has the greatest nonprofit sector in the country, this case reminds us that we must vigilantly protect it. I want to thank Comptroller DiNapoli for his continued partnership in our mission to root out public corruption and ensure that taxpayer money is protected. I also thank the Met Council board of directors for bringing this activity to light and cooperating with our investigation.”

And Comptroller Thomas Dinapoli added:

This was a troubling and sad case of personal gain at the expense of important community services. I commend Attorney General Schneiderman and his staff for their diligence in prosecuting this matter and recovering millions of dollars in stolen funds.  We will continue to work with the Attorney General through our Joint Task Force to root out public corruption.

In a joint press release, they summarized the case against Rapfogel and Cohen:

Rapfogel and Cohen admitted engaging in an elaborate kickback scheme to steal money from Met Council. The scheme began in 1992 when Cohen devised a scheme with Joseph Ross of Century Coverage Corporation in which the company would submit inflated invoices for insurance coverage to the nonprofit. Met Council paid the inflated premiums, and then Ross paid cash kickbacks to Cohen and Herb Friedman, Met Council’s chief financial officer. Ross previously pleaded guilty to Grand Larceny in the First Degree and other charges for his role in the conspiracy and is awaiting sentence. About six months after Rapfogel took over as executive director in 1993, he joined the conspiracy and received kickbacks, either in envelopes of cash or through payments of personal expenses by Ross. Initially, Ross paid Rapfogel and Cohen each $20,000 to $30,000 per year, but the inflated amount on the insurance policies increased over time, with Rafogel ultimately receiving approximately $30,000 per month. Cohen admitted to receiving approximately $650,000 in cash kickbacks and payments for personal expenses. Rapfogel obtained the largest share of the kickbacks. As part of his plea, he admitted that from approximately January 1993 to August 2013, while working with Cohen, Friedman, and Ross, he stole over $1 million from Met Council as part of the kickback scheme. In August 2013, investigators from the Attorney General’s Office recovered more than $400,000 in cash that was hidden in Rapfogel’s homes. As restitution for his crimes, Rapfogel agreed to repay over $3 million to Met Council. As part of the scheme, Rapfogel and Cohen also directed Ross to make political donations to various candidates for elected office from Century or from straw donors, using money obtained from the inflated payments for the insurance policies. These campaign contributions were made to politicians whom Rapfogel and Cohen believed could help Met Council.

Cohen has agreed to pay back $650,000; he has already returned $500,000. He will serve one year in prison. In court, Cohen said, “Today I take responsibility for my role in a nearly 22-year kickback scheme at the Metropolitan Council for Jewish Poverty, an organization I once led.”

Neither Silver nor Judy Rapfogel have been implicated in the Met Council scandal. In a recent interview, Silver said of his longtime friend and neighbor, “I have nothing to do with Willie Rapfogel.”