In the wake of criminal financial allegations at the top of the Syrian Jewish community’s leadership, the larger Sephardic community is working to reform the way its charities operate, demanding more transparency and oversight, The Jewish Week has learned.
In a series of conference calls and meetings in recent days, Sephardic lay leaders and rabbis have proposed stringent measures that would discourage the widespread practice of individual rabbis holding sole control over discretionary charitable funds, and call for routine audits of charities, sources told The Jewish Week.
At the same time, an international network of 800 donors to Jewish charities — including major family foundations — is considering barring grants to nonprofits that use a federal tax law loophole for religious organizations to avoid filing full financial disclosures.
“We are considering recommending to our members that they demand a higher level of accountability for religious organizations before making grants,” said Mark Charendoff, president of the Jewish Funders Network. “Our community has an obligation to exceed the standards that the government is imposing specifically in the areas of transparency and governance.”
The proposal is a direct result of last week’s allegations that five rabbis misused charitable funds to launder questionable cash, he said.
Three of the 17 people charged last week with money laundering, in a sweeping federal roundup that included 27 other people, are highly respected Sephardic leaders.
They are accused of using a small network of charitable funds, including one controlled by Syrian Chief Rabbi Saul Kassin, to launder money in a sting operation. The FBI and U.S. attorney for New Jersey, Ralph Marra, Jr., allege that Rabbi Kassin, 87 and the leader of Brooklyn’s Shaare Zion congregation, laundered $200,000, including funds provided by a federal informant who said the cash came from a bank fraud and the sale of counterfeit handbags.
Another defendant, Rabbi Eliahu Ben Haim of Congregation Ohel Yacob, in the Syrian enclave of Deal, N.J., is accused of laundering $1.5 million from illegal sources through several charitable funds in exchange for a 10 percent fee, while Rabbi Edmond Nahum of the Deal Synagogue is accused of laundering $185,000 in charitable funds with Rabbi Kassin.
Believed to number close to 100,000 in Brooklyn, Long Island, New Jersey and elsewhere, the local Sephardic community includes families of Lebanese, Moroccan, Egyptian, South American and Israeli origin or descent, in addition to the Syrians, a large share of whom are wealthy but also count among them a segment of poor, recent immigrants.
If approved by all segments of the diverse community, the charitable reforms would affect the disbursement of tens of millions of dollars distributed between the community’s haves and have-nots.
“The Sephardic Jewish community prides itself on upholding the highest standards of both religious and civic ethics and law,” David G. Greenfield, executive vice president of the Sephardic Community Federation, an umbrella public policy group, told The Jewish Week Tuesday. “While the community knows that most nonprofit organizations already operate in accordance with these high standards, in light of recent events the community is taking the unprecedented step of having an independent accounting firm affirm that community charities are operating at the highest legal and ethical standards.”
Sources said Sephardic leaders are in the process of launching an oversight certification program for charities involving “significant organizations” that want to enhance transparency and accountability.
The reforms, which are awaiting approval from the boards of directors of several prominent community organizations, include:
# the formation of an independent committee of legal and financial experts to develop a set of guidelines for all tax-exempt organizations;
# the selection of a national accounting firm that will independently certify that organizations meet those guidelines;
# and the establishment of conflict-of-interest policies and annual audits.
“We will be recommending strongly that every charity in the community abide by these rules and also encourage individuals who contribute to these charities to look for, for lack of a better term, a Good Housekeeping accounting seal of approval,” said one community source who spoke on condition of anonymity.
Charendoff of the Jewish Funders Network said that accountability must go hand in hand with governance.
“No single individual should have the authority to make significant financial decisions for a nonprofit,” he said.
Board members of the Funders Network discussed adding new requirements in a conference call on Tuesday afternoon. While they are not calling for a revision of the religious corporation law that excludes such groups from reporting requirements, there was a growing sense that the provision is outdated.
“That provision may have had some kind of a historic rationale, but I’m not sure that rationale is still good,” said Charendoff. “In this day and age it’s very inexpensive to provide information over the Web. Personally, I would need to see a compelling reason for a nonprofit, even a religious nonprofit, as to why they can’t provide me with an audited financial statement before I would consider any type of significant grant to that organization.”