Ex-CEO admits stealing from prominent NYC charity

Published April 23, 2014 6:46PM (EDT)

NEW YORK (AP) — The politically connected former CEO of a prominent city charity admitted Wednesday he helped steal more than $9 million from the organization in an insurance scheme that authorities linked to campaign contributions.

William Rapfogel pleaded guilty to grand larceny, money laundering and other charges in a case that had rattled city and state political circles.

He formerly led the Metropolitan Council on Jewish Poverty, which has long enjoyed close ties to politicians and has collected more than $26 million in state and city grants in recent years, and his wife is Assembly Speaker Sheldon Silver's chief of staff.

Rapfogel became the executive director of the Met Council, as it is known, in 1992. He soon joined several conspirators in conniving to overcharge the charity for insurance so they could pocket the difference, ultimately splitting more than $9 million over 20 years, Attorney General Eric Schneiderman said.

"I knowingly stole more than $1 million from the Metropolitan Council on Jewish Poverty as part of a scheme in which insurance premiums were inflated," Rapfogel said in court, speaking softly but firmly and wearing a yarmulke.

He used $27,000 of that money to pay a contractor working on his home, and he had more than $400,000 in cash hidden in his home when investigators searched it in August 2013, Schneiderman has said.

Rapfogel, 59, is to be sentenced to 3 1/3 years to 10 years in state prison if he pays more than $3 million in restitution. He already has turned over nearly $1.5 million.

Rapfogel's admission came after insurance company owner Joseph Ross pleaded guilty in the scheme in December, and former Met Council executive director David Cohen did so earlier Wednesday. Former chief financial officer Herbert Friedman is awaiting trial; he hasn't entered any plea.

Together, Rapfogel and the others "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," Schneiderman said in a statement.

Rapfogel and Cohen also directed Ross to use money reaped from the insurance scam to make donations to candidates Rapfogel believed could help the Met Council, the attorney general said.

Candidates for New York City, state and federal offices received campaign contributions of tens of thousands of dollars from the insurance company owners and employees, Schneiderman has said. His office declined Wednesday to identify the recipients; none has been accused of wrongdoing.

After the allegations emerged, several New York City Democratic mayoral candidates decided to return contributions related to the insurance company, mostly received years ago. Among them was now-Mayor Bill de Blasio, whose campaign gave back $1,650 given in the 2009 election cycle.

No official made any connection between the donations and Silver's office. Both Silver and Rapfogel's wife, Judy, have said they knew nothing about Rapfogel's misdeeds.

Rapfogel was fired in August from his $340,000-a-year job, with the charity citing "financial irregularities" and "apparent misconduct."

At the time, he said, "I deeply regret the mistakes I have made" but didn't give specifics.

He was charged the next month, in a case investigated by Schneiderman and state Comptroller Thomas DiNapoli. Both are Democrats.

The Met Council's work includes career counseling, handling donated clothes and installing safety equipment in the homes of the elderly. Its board includes some of New York's most influential Jewish leaders, and its annual legislative breakfast is one of the major events of the political calendar in the city.

The organization didn't immediately respond to a request for comment Wednesday.

In 2012, Rapfogel supported Gov. Andrew Cuomo's order limiting salaries at nonprofit social service agencies, saying there some "bad players" taking advantage of the system. Rapfogel was also a prominent appointment to Schneiderman's Leadership Committee for Nonprofit Revitalization in 2011.


Reach Jennifer Peltz on Twitter @ jennpeltz.

By Jennifer Peltz

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