Wednesday, March 16, 2005

Central Conference of American Rabbis discovers $1 Million missing

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At 11:26 AM, Blogger jewishwhistleblower said...

http://www.thejewishweek.com/news/newscontent.php3?artid=10646
March 16, 2005

CCAR Uncovers $1 Million Shortfall
Reform rabbinical group launches independent audit, takes severe cost-cutting steps.
Stewart Ain - Staff Writer

It was a routine personnel change: The comptroller for the Reform movement’s New York-based rabbinic arm resigned at the beginning of the year. But what the new comptroller found — or rather did not find — was anything but routine.

The discovery that $1 million was missing from the Central Conference of American Rabbis has sent shockwaves through the 1,500-member organization and led to some drastic cost-cutting measures there.

The CCAR’s finding comes at a time when Jewish organizations are under increasing financial scrutiny in the wake of alleged improprieties plaguing another prominent Jewish organization, the World Jewish Congress. State Attorney General Eliot Spitzer has launched an inquiry into the WJC matter.

A letter dated March 7 informing CCAR members of the missing, though apparently not stolen, money — sounded an ominous tone.

“This is a difficult letter for me to write,” Rabbi Paul Menitoff, the group’s executive vice president, began.

He said the discovery was made shortly after comptroller Mohan Sawh resigned and that although the organization is audited annually, the auditors had not detected the shortfall.

Consequently, Rabbi Menitoff said, to save money he had agreed to retire at the end of June rather than Dec. 31; that major budget cuts would be made this year; that $200,000 would be withdrawn from the group’s $1 million rainy-day fund; and that the board had authorized seeking a $500,000 line of credit.

In the letter and in an interview, Rabbi Menitoff said there is “no reason to suspect” that the missing money was used for anything but “legitimate CCAR expenses.” But he said an independent accountant has been hired to “conduct a thorough examination of our finances and to provide a clear explanation of what has happened, where we stand and what systems are needed to administer our finances in the future.”

“We don’t believe there was any fraud involved, but we want to make sure,” he said.

Rabbi Harry Danziger of Memphis, Tenn., who is scheduled to assume the CCAR presidency on March 30 at the group’s convention in Houston, said the independent auditor also would be seeking to learn why the annual audit failed to detect that money was missing. Rabbi Danziger said he hoped to reveal some results from the independent audit at the convention.

The CCAR, according to Rabbi Danziger, has between 1,500 and 1,800 members and a $4 million budget.

Sawh said in an interview that he had worked at the CCAR for nine years and that he resigned on the advice of his doctor. Sawh said he had had a heart attack in 1997 and working at the CCAR “was very stressful.”

Asked why he had withdrawn the $1 million from specially designated accounts, Sawh said he needed the money to pay the organization’s operating expenses.

“Membership dues didn’t always come in [on time] and I used 2005 [income] to pay 2004 [expenses],” he said. “That’s how I normally did it. I don’t think there is a major problem. The cash is there. They have money coming in. They are not operating over their heads. I don’t see a problem. If they maintain their budget expenses normally, they will have the money to pay back [the depleted accounts].”

But Rabbi Menitoff said Sawh was not authorized to tap into those special accounts “and didn’t indicate that he was doing that.”

“Over time he was asked about the checks and whether he was making sure that funds were used” from the proper accounts, the rabbi said.

Rabbi Menitoff suggested that Sawh had made “unauthorized decisions and then lied about it.”

The rabbi added that the organization has run at a deficit the last two years because synagogues have not ordered prayerbooks in anticipation of a new prayerbook being published by the movement later this year. But he said that was to be expected.

“It’s part of the normal cycle,” Rabbi Menitoff said.

The four special accounts from which money was taken were created to collect deposits for new publications and special fund-raising drives.

Rabbi Menitoff said the board intends to immediately replenish two of the funds. One is designed to raise money to support Reform rabbis in Israel, and the other is money sent as a deposit by congregations for the new prayerbook. He stressed that the money set aside for rabbinic pensions was not touched.

The money shortfall has also caused the CCAR to delay its search for a successor to Rabbi Menitoff until at least the end of the year. In his letter, the rabbi said that time is needed to “assess the impact of this situation, the results of the cuts in the 2005 budget and the income from sales of the new [prayerbook].”

“Prudent decisions will then be able to be made regarding the salary and nature of the executive vice president’s position,” he wrote.

Rabbi Danziger said no budget cuts would be made until the independent audit is completed and the scope of the problem is determined.

In a letter to colleagues, Rabbi Danziger and the CCAR’s current president, Rabbi Janet Marder of Los Altos Hills, Calif., wrote that when they learned of the missing money, they and the rest of the CCAR leadership “responded with shock and distress, and with many questions about how this could have happened.”

They said that once the magnitude of the problem is determined, changes would be instituted “in the CCAR’s financial oversight system so that this situation cannot happen again.”

“We express profound regret at this sad turn of events,” they wrote, adding that they now recognize that decisions of the board had been made based on incorrect information.

One member of the CCAR, Rabbi Steven Moss of Oakdale, L.I., said many of the rabbis he has heard from believe that better oversight is needed in the future and that “there needs to be better information given to the CCAR members.”

“The letter raises more questions than it answers and we’ll have to see where it leads,” he said.

Rabbi Danziger, 66, who retired from his pulpit in 2000, said he plans to stay in Memphis but devote more attention to the CCAR once Rabbi Menitoff retires.

“It’s fortunate that I’m retired and have more flexibility” to devote time to the organization, he said.

 

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