Tuesday, January 11, 2005

N.C. Hebrew academy settles lawsuits: funder accused of diverting $100 million of 9-11 money to school


At 8:09 AM, Blogger jewishwhistleblower said...

$100 million? Why are kids being charged $15,000 tuition?


Tuesday, January 11, 2005
N.C. Hebrew academy says it's settled lawsuits
Associated Press

GREENSBORO, N.C. - An elite Jewish prep school said it has settled lawsuits by three Japanese insurance companies squeezed by the terror attacks of Sept. 11, 2001 _ a settlement its founder says leaves the academy's future secure.

Officials at American Hebrew Academy on Monday announced a settlement that "quiets all pending claims" against the school, yet allows the academy to keep "a significant financial endowment."

"The academy's viability is no longer in doubt," said Maurice "Chico" Sabbah of Greensboro, one of the school's two main benefactors.

Neither academy officials nor attorneys for the Japanese companies in New York would elaborate on the settlement, which they said was confidential.

For nearly two years, the school had been entangled in a billion-dollar fraud lawsuit that involved Sabbah, business partner Kenneth Kornfeld and their aviation reinsurance company, Fortress Re.

Fortress Re managed a risk-sharing insurance group for the three Japanese companies, which paid Fortress Re management fees in addition to premiums to cover potential claims.

Fortress Re was the reinsurance manager for the four airplanes hijacked and destroyed on Sept. 11, 2001.

The three Japanese companies claimed they couldn't pay the estimated $3 billion in losses related to the attacks because Sabbah and Kornfeld kept hundreds of millions for themselves instead of saving it to cover claims.

In December 2003, an arbitration panel awarded the companies $1.12 billion, finding that Fortress Re engaged in fraud and "wilful and deliberate misconduct." Sabbah and Kornfeld settled last year for $400 million.

The Japanese companies also claimed Fortress Re wrongly diverted about $100 million to the academy, a lavish, state-of-the-art boarding school where tuition is $15,000.

BusinessWeek magazine estimated Sabbah's donations to the academy at $100 million when the publication named him to its list of the 50 most generous American philanthropists in 2003.

The school had assets of $127 million in June 2003. Officials haven't disclosed the amount in the endowment.

The school said with its legal affairs settled, it can now develop a long-term plan for growth and development. The plan had been suspended.

The school named prominent New York philanthropist Michael Steinhardt to the academy's board of directors. Steinhardt has given millions to various charitable causes, including $10 million to New York University's School of Education. Other new trustees include Brandeis University President Jehuda Reinharz.

The school also announced on Monday a new academy advisory board, including scholars from Harvard, Duke and the University of North Carolina at Greensboro.

Glenn Drew, Sabbah's nephew and former attorney for his business, has been named the academy's interim executive director.

Greensboro News & Record
February 6, 1998

A quarter of Jefferson-Pilot's New Garden property will become home to a private Jewish boarding school.

A private Jewish boarding school for high school students is being planned for 100 acres of Jefferson-Pilot's high-profile New Garden Road property, with the land purchase made possible by a small group of anonymous donors from Greensboro's Jewish community.

The purchase will enable the founding of the American Hebrew Academy, which hopes to have a ninth grade class in place by fall 1999. One grade will be added in each successive year. The school will first draw students from Greensboro and later recruit students nationally.

Tuition costs and school enrollment have yet to be determined.

"This is a one-of-a-kind school," said Glenn Drew, a lawyer and spokesman for the group. "While you can search this country and find parochial schools for different religions, to the best of my knowledge you cannot find a traditional boarding school for the Jewish faith."

The location of the nonprofit boarding school on one of Greensboro's most valuable and controversial pieces of undeveloped land underscores the significance of the project.

For more than two years, New Garden area residents fought Jefferson-Pilot over its plans for its pristine 420-acre parcel. The fierce battle seemed to define Greensboro's ambivalence toward economic development, and made a pariah out of one of the city's most prominent corporate citizens.

After both sides sued each other, a compromise plan that reduced the overall density of the development was agreed to last April.

With the American Hebrew Academy purchasing 100 acres - nearly 25 percent of the total parcel - the density of the JP property will be further reduced. The school will occupy land along Jefferson Road now zoned for offices (23 acres), town houses (37 acres) and single-family homes (40 acres). No new zoning is required.

"The design of the campus will be truly a parklike setting with a significant emphasis placed on preserving the natural areas," Drew said. "We will keep natural buffers around the perimeter of the property, and access will be limited to one or two entrances."

Although a contract to buy the land was signed Wednesday, the Jewish group has not yet hired an architect to design its school and boarding homes. A small synagogue also may be planned for the site, Drew said. Traffic on the campus will be geared toward pedestrians and bicycles, and the adjacent lake will be a focal point for campus design.

Mary Moon, who lives in nearby Jefferson Gardens and participated in the fight against JP, was incredulous when told Thursday about the plans for the 100 acres.

"It seems like an extremely positive idea for keeping with the neighborhood theme and keeping the beauty of the land," she said. "I wonder if we could encourage JP to sell the rest of the land this way!"

Next week, JP will deed 26 acres of its New Garden land to the Guilford County Schools, as previously promised. The land will be used to build an elementary school and public soccer fields. The insurance company also is negotiating with companies interested in developing the 80 acres along New Garden Road zoned for office and retail use.

Drew declined to identify the Greensboro donors underwriting the land purchase and founding of the boarding school. He also declined to disclose the land purchase price.

However, because JP sold the 100 acres at market value, it's likely that land costs alone exceed $5 million, based on the overall estimated value of the JP's New Garden property.

"In the Jewish tradition, the highest form of charity is to give anonymously," said Rabbi Fred Guttman of Temple Emanuel in Greensboro, who has been consulted about the project. He said the donors are committed to remaining anonymous.

Mayor Carolyn Allen, who recently learned about the boarding school and agreed to serve on its community advisory board, praised the project.

"I think this is a very fine addition to a city that is already blessed with a very excellent education spectrum," she said. "The Hebrew Academy brings another dimension to our educational scene that very few places are fortunate to have."

The idea for a Jewish high school in Greensboro began about three years ago with a small group men and woman with children ranging in age from preschool to college graduates. Their motivating force was simple: to fill a void.

"The ultimate reason this came about is because Jewish families who wanted their children to continue their Jewish education could not do so after the eighth grade," Drew said. "Unlike communities with much larger Jewish populations that have Jewish high school day programs, that program doesn't exist in Greensboro."

Susan Cook heads B'nai Shalom, the Jewish day school in Greensboro that enrolls children from age three through the eighth grade. The school has 187 students, including 11 students in the eighth grade and eight students in the seventh grade.

"On the national level, I've been witness to this growing trend toward Jewish day schools for the American Jewish community," Cook said. "With the current rise in enrollment in Jewish day (primary) schools, there has come a demand for Jewish high schools."

Rabbi Guttman, who said both Jewish congregations in Greensboro are growing rapidly, sees the desire for Jewish secondary education as part of a reawakening among Jewish adults.

"I think Jews are rediscovering their roots and finding a lot of meaning in Jewish culture and religion and heritage," Guttman said. "Jewish spirituality is based on bringing God's presence into the here and now. I really think we are experiencing a religious reawakening among American Jews."

About 18 months ago, the Greensboro group began looking for land in both the city and county. Greensboro attorney Jim Phillips later assisted the group in its search.

About a year ago, Drew said he approached Jay Yelton, JP's chief investment officer who was leading the negotiations with the New Garden residents. They discussed some options, but Yelton and Drew did not begin seriously discussing a land purchase until last fall.

"My attorneys here told me that in their opinion, the existing zoning was compatible with the use proposed," Yelton said. "So we started to talking with them. Before long, we were able to reach mutually agreeable terms."

With a signed contract to buy the land, Drew said the American Hebrew Academy is now turning its attention to developing policies and curriculum for the school, and how to develop the land. A preliminary search for a headmaster is under way.

Drew said he hopes to have at least 25 students in the first freshman class, with most coming from the Greensboro and the Triad. The boarding component will be necessary because Greensboro's Jewish community isn't large enough to fill an entire school, he said.

"We plan to have a high-level secular curriculum with courses and extracurricular offerings similar to other top private schools," Drew said. "And there will be required study in Hebrew, Jewish history and theology.

"Students will also be given an opportunity to travel to Israel to gain a sense of their Jewish identity."

Although tuition costs are unknown at this point, they will likely be very expensive, given the school's commitment to state-of-the-art educational resources, science equipment and computers. It's possible the school will accept non-Jewish students as well.

"We want to create student houses that are more like homes than dormitories," Drew added. "Students will live with faculty members and their families. Part of the boarding school experience is not just educational, but in creating a sense of camaraderie with the people you live with."

Although no market studies have been done to gauge the demand for a Jewish boarding high school, Cook, of B'nai Shalom, said attracting students should not be difficult.

"When word got out a year ago that we were considering this, I got a call from a family in Denver that wanted an application for their son," she said. "We've also received several calls from the Raleigh-Durham area. I think the demand will be there."



Board members of American Hebrew Academy Inc.

Glenn Drew, attorney, Fortress RE Inc.

Bill Cassell, private developer, Cassell Properties

Victor Ackerman, retired furniture executive with Bernards Inc. of High Point.

Freddy Robinson, certified public accountant, Bernard Robinson & Co.

Chico Sabbah, chairman, Fortress RE Inc.

Rabbi Eli Havivi, Beth David Synagogue

Rabbi Fred Guttman, Temple Emanuel

Who Is Chico Sabbah?; How last year's terror attacks uncovered--and imperiled--a long-secret fortune.
by Edward Cone
Forbes Magazine
September 30, 2002

How last year's terror attacks uncovered--and imperiled--a long-secret fortune.

On Sept. 10, 2001 the American Hebrew Academy welcomed the first students to its 100-acre campus in Greensboro, N.C. The only Jewish boarding school in the U.S. with a non-Orthodox curriculum, AHA had a secret benefactor--one Maurice (Chico) Sabbah. Sabbah had accumulated immense wealth in the reinsurance business and poured $100 million of it into the school. As Sabbah took in the excitement of opening day, he had the extra satisfaction of knowing that he had succeeded in creating both AHA and the fortune behind it while remaining almost completely unknown to the public.

The next day put an end to Sabbah's anonymity and destroyed the companies that had made him rich. Fortress Re, based in nearby Burlington, had dominated a critical niche of the commercial aviation reinsurance business, while a sister company, a Bermuda-chartered reinsurer called Carolina Re, was distributing a small fortune in dividends to Sabbah and his partner, Kenneth Kornfeld. The terrorist attacks devastated Fortress and the big Japanese reinsurers it represented. One of those companies, Taisei Fire & Marine Insurance, has filed for bankruptcy, and another, Nissan Fire & Marine Insurance, is suing Fortress and its principals for fraud. Fortress says it did nothing wrong.

Sabbah, 73, had never spoken with the press, and for three years he rebuffed our requests for an interview. This summer, though, with his cover blown and his school in need of publicity, he agreed to speak. He says that anonymity always seemed the natural course for him, a private man in a secretive business. "I don't hide, but I don't advertise," he says. "I don't get satisfaction for what I did by having you tell me it was good."

Sabbah did not become rich until late in life. At 45 he was making a good living at an obscure unit of a big insurance company, but there was nothing to suggest that he would one day be making nine-figure gifts to anything. When the big money hit, he wasn't interested in yachts or a trophy wife. "I was faced with all this wealth, and I just wasn't geared for it. I wasn't about to change my lifestyle," he says. "I came into this world with nothing, and I will leave with nothing."

The demise of Fortress and Carolina Re raises the question of Hebrew Academy's future. It appears that Nissan's lawyers want to learn more about Sabbah's charitable contributions and personal wealth, suggesting that they would come after those assets if given the chance. Other donors may step up to the plate: Members of the school's board of trustees include p.r. guru Gershon Kekst and financier Michael Steinhardt.

Sabbah insists that the school is here to stay. He says that at least $50 million, covering the next ten years of operating expenses, is in the bank, and that his (for now) ample estate will go to the school. If other donors can be persuaded to finish the $250 million construction plan, he can focus on creating an endowment of up to $500 million, he says.

Everything about the AHA has been conceived on a grand scale, in keeping with Sabbah's vision of a boarding school that could compete almost overnight with the elite New England prep schools. In 1998 the school paid $10 million for prime acreage in a high-end Greensboro neighborhood and commissioned Aaron Green, a protege of Frank Lloyd Wright, to design the campus (Green died last year). Buildings constructed of imported Jerusalem stone are heated and cooled by a massive network of geothermal wells. The first academic building completed, a behemoth rising from the North Carolina clay, has electronic whiteboards in every classroom. Dorms are spacious; the swimming pool will be 25 yards long. Sabbah's grant allowed the school to cover tuition for the first classes of ninth- and tenth-graders, about 80 kids in all, who started last fall. Students joining this fall are paying $15,000, including room and board. The plan is to have 200 students spread across four grades a year from now.

Grandiose philanthropy had not been the style for Chico Sabbah and his wife, Zmira, who live modestly in a ranch-style house within walking distance of their Greensboro synagogue. Their previous giving included endowing homes for handicapped people in Israel (the Sabbahs have a retarded adult daughter). If Sabbah was all but unknown, though, his partner, Kenny Kornfeld, cut a higher profile. Kornfeld entertained lavishly and lives in an old textile baron's mansion across from the second fairway of the Greensboro Country Club.

Sabbah, raised in Brooklyn and suburban Great Neck, N.Y. by an Egyptian-born father and an idealistic Zionist mother, attended the University of California, Davis to study agronomy of subtropical environments-those similar to the climate of the land that became Israel halfway through his college years. "I wanted to be a farmer in Israel," says Sabbah. His voice still suggests Brooklyn, and it is easy to see that his frame, though frailer with age, was hardened by his days cutting alfalfa on a kibbutz in Israel. After that (and after serving in both the Israeli and U.S. armies) he joined Public Service Mutual Insurance in New York. There he helped build a reinsurance business that thrived as a series of disasters, including Hurricane Betsy in 1965, laid low many competitors.

In 1972 he was working in a Burlington, N.C. office of Penn General Agencies, where he replaced the traditional high-fee structure for placing reinsurance with low fees plus commissions on profits. Fortress Re, as the business was eventually called, escaped the notice of regulators because it was only a managing agent, not an insurer. In 1979 Penn General sold the business to Sabbah and Kornfeld for $700,000. Sabbah and his family kept two-thirds, Kornfeld the rest. "We had been making maybe $35,000 per year, but we paid off our debt in a few years by working our butts off," says Sabbah.

Sabbah and Kornfeld built strong relationships with the Japanese reinsurers they represented--Nissan, Taisei and Aioi Insurance. Sabbah and Kornfeld made annual trips to Tokyo to stroke them. Insurers and other reinsurers dealt with Fortress in order to do businesses with the Japanese firms it represented, and because Fortress had a good reputation for claims payment. But why stop at being a mere agent when you could get a piece of the action? In 1984 Sabbah and Kornfeld created Carolina Re as a risk-taker in airline liability. Following the common practice in the reinsurance industry, they got a Bermuda charter for Carolina. State insurance regulators in North Carolina paid no mind to its potential liabilities or the assets covering them.

By the 1990s aviation had become the predominant business of Fortress. In time, it was acting as middleman for nearly half of the reinsurance premiums covering losses amounting to $50 million to $400 million per crash. Profits flowed, for both Fortress and the insurers it represented. Fortress claims it produced $2 billion of profits for its clients.

Companies Sabbah and Kornfeld represented were on the hook for a portion of the liability on all four of the planes hijacked on Sept. 11, including liability on the ground. Carolina Re was supposed to cough up about 25% of the $843 million in claims against the Fortress pool, according to court documents. It had but $62 million in capital and surplus. Bermuda authorities declared it bankrupt on Dec. 3, 2001. Fortress is still operating, but not underwriting new business.

Nissan claims in its suit, pending in federal district court in Greensboro, that it was unaware of the extent of the obligations to which Fortress had committed it, and that Fortress had relied too heavily on so-called financial reinsurance. That peculiar beast is like a line of credit reinsurers draw on from other reinsurers to pay claims. But in this arrangement little risk is transferred. Nissan also alleges that while Carolina Re lacked the funds to pay its obligations, Sabbah and Kornfeld had managed to extract, over the years, on the order of $400 million in the form of commissions and dividends from their companies. Nissan wants the two men to put that money back on the table. Glenn Drew, Sabbah's nephew and general counsel of Fortress Re, says the Japanese companies got all the information they requested and that Fortress and Carolina played by the rules.

If Sabbah's fortune and his charitable endeavor survive the legal battle, it still remains to be seen whether America needs a non-Orthodox Jewish boarding school. Sabbah puts this daring venture in self-deprecating terms: "We want others to participate, but it always helps to have a crazy person to get things started."

Cover Story
The Secret Givers; These big-time contributors try to share their wealth while shunning the spotlight
By Michelle Conlin and Jessi Hempel, with David Polek in New York and Ron Grover in Los Angeles
December 1, 2003

The country's most secretive philanthropist avoided the world of private Gulfstreams and bespoke tailors, of society columns and personal attendants, in favor of flying coach and buying his clothes off the rack. It wasn't that the publicity-shy mogul wanted to hoard his stash for his children -- or that he feared losing it all and having to sell sandwiches out of a basket, the way he did when he was a scholarship kid at Cornell University.

Rather, his frugality -- the plastic bag that served as a briefcase, the drugstore reading glasses, his $15 plastic watch -- stemmed from an urgent desire to take the fortune that he sacrificed years of his life making and give it, nearly every cent, away. For nearly 15 years, this entrepreneur and silent benefactor wasn't even working for himself anymore: He had secretly transferred his share of the company that he co-founded and ran to his offshore foundation. It would become one of the biggest and most unusual philanthropic feats in history. But it came with one ironclad caveat: that no one should ever know his name.

To keep his identity secret, he went to obsessive lengths, incorporating his charitable foundation in Bermuda and attaching highly lawyered confidentiality agreements and cabal-like vows of secrecy to his foundation's grants. After the cashier's checks cleared, there were no black-tie galas, no self-effacing speeches.

It seemed like something out of Charles Dickens. Yet for more than a decade, New Jersey-born airport-gift-shop magnate Charles F. Feeney pulled it off, even concealing the fact of his giving from his longtime business partner. It was only when his Duty Free Shoppers was sold, in 1997, that the full extent of his largesse became clear. The shares that he had transferred 13 years earlier fetched $1.6 billion when the company was sold. Because Feeney, now 72, donated his stake in the company nearly 20 years ago, he doesn't qualify for inclusion in our ranking, although a gift of $1.6 billion today would land him at No. 4 on this year's list of the most generous philanthropists.

Chuck Feeney may be an extreme case, but he's far from alone in wanting to shield himself from the public's view. Operating alongside philanthropic superstars such as William H. Gates III and George Soros is a seldom-glimpsed group of contributors -- people who prefer to remain in the shadows rather than having their names carved in stone.

To give without a speck of recognition in a culture that worships self-celebration is seen as refreshingly, almost Biblically, altruistic. Indeed, anonymous gifts are one of the most ancient and esteemed philanthropic practices the world over. Christians, Jews, and Muslims have long considered blind donations the highest form of giving. That's because the donor gets no self-enriching ego dividend, no chance at reaping political or social favor -- and the receiver no sense of shame-ridden indebtedness. ``Anonymity dissolves the power imbalances in these relationships,'' says Georgetown University philanthropy professor James Allen Smith. Organizations, meanwhile, don't carry the burden of having to put on thank-you galas or commissioning a bust of the donor.

This year, BusinessWeek sussed out a handful of these secret Medicis. They include such people as Tulsa oil-and-banking baron George Kaiser. At No. 22 on our list, this son of World War II refugees gave $287 million to early antipoverty programs but refuses all public accolades, including inductions into the Oklahoma and Tulsa Halls of Fame. There's also Maurice ``Chico'' Sabbah at No. 48, who pledged $100 million of the fortune he made in reinsurance to fund the country's first-ever non-Orthodox Jewish boarding school, the American Hebrew Academy in Greensboro, N.C. He managed to keep his philanthropy hidden until September 11 imperiled his fortune and outed his giving in the process. The terrorist attacks hit his company, Fortress Re, hard. Since then, Sabbah has been named as a defendant in a lawsuit filed in North Carolina by a Japanese insurance company, which alleges that Sabbah and his partner deceptively siphoned off millions from the insurance pool, a claim Sabbah denies.

The Simple Life

Many of our stealth givers are united in an utter distaste for publicity and a rejection of life as an acquisition spree. Some lead lives that are a striking foil to the consumption culture that surrounds them. Sabbah lives in a modest ranch house. Kaiser, who made his fortune in energy, banking, and real estate, described himself in a rare interview with Tulsa People Magazine as ``anti-materialistic'' and ``uncomfortable and guilty about receiving recognition.'' For years, he tooled around town in a company beater. When he finally bought his first new car, in 1999, he splurged on a no-frills, two-door BMW. Feeney wonders aloud about the need for more than one pair of shoes. When he's in New York, he likes to eat the $10.95 chicken pot pie at Annie Moore's tavern. ``It has always been hard for me to rationalize a 32,000-square-foot house or someone driving me around in a six-door Cadillac,'' says Feeney in his soft New Jersey staccato. ``The seats are the same in a cab. And you may live longer if you walk.''

Then there are other people for whom the full extent of their giving is still unknown. Fred Eychaner, founder of media company Newsweb Corp., remains an elusive force in Chicago charity circles. But he hasn't been shy about pledging more than $73 million over the years to Chicago-area causes, including AIDS, arts institutions, and Northwestern University's Medill Innocence Project, which helps free wrongly convicted death-row inmates. He is also one of the biggest contributors to the Democratic Party. Or Univision Communications Inc. CEO A. Jerrold Perenchio, one of Los Angeles' most generous invisible patrons and political donors. He has given heavily to the University of California at Los Angeles, although he keeps his name off lists of benefactors and, according to Los Angeles Magazine, insists that his wide-ranging circle of famous and influential friends keep mum when queried by the press.

If anything, giving in secret is even harder than just giving. Sometimes the sheer size of the gift makes anonymity impossible. After all, it's hard to move millions of dollars around without attracting attention. ``That was not an option my son had,'' says Bill Gates Sr., co-chair of Gates's foundation.

Anonymity may help donors to blend into their communities and shield them from a barrage of requests and pleas, but it can bring its own set of problems, says Georgetown University's Smith. Secret gifts can undermine the social bonds that rise up between the giver and recipient. Anonymous givers can't become leaders who inspire other people with their charitable behavior, and they deprive foundations of the chance to use the gift as leverage to attract other donors.

All the problems of anonymous giving eventually came to bear on Chuck Feeney. When he first transferred to his foundation his 39% stake in a small, privately held chain of airport shops in 1984, hardly anyone noticed. After all, the shares were unpriced, and the company unremarkable. It was only when Duty Free Shoppers was sold 13 years later that Feeney drew attention. He should have been America's newest billionaire, but his $1.6 billion stake belonged to Atlantic Philanthropies. After long ago bestowing modest sums on each of his five children, Feeney is now worth just $1.5 million. Meanwhile, thanks to his astute management on behalf of Atlantic, the foundation's assets have ballooned to $3.7 billion, far too much to go undetected.

Feeney gave a single interview in 1997, then clammed up and disappeared again -- disappeared until recently, that is, when he showed up on our radar thanks to a little-noticed announcement by his foundation. At a time when other charities were resisting pressure from lawmakers to dispense more than the usual 5% of their endowments annually, Atlantic made an astonishing declaration: It planned to spend itself out of business over the next 12 to 15 years, giving away $350 million annually to four causes: disadvantaged children, aging, health, and human rights.

Feeney knew the announcement would eventually bring on the media. Besides, the requirement to protect his anonymity was causing greater and greater hardship for grantees. After months of interview requests, Feeney was finally ready to talk, confirming to BusinessWeek his gifts and philanthropic endeavors. His remarkable story, as well as those of our other philanthropists, show that whether it's done quietly or as a call to arms, the tradition of giving in America still runs deep.

(available online)
The Secret Givers

Outstanding contributors who neither seek recognition nor want any thanks


Duty-free airport shops Billion**
DETAILS: ``Life is awfully unfair,'' says Feeney. ``And nobody is getting out of this world alive.'' That's why he gave away his 39% stake in his company nearly 20 years ago. It wasn't worth much then -- but has since grown to $3.7 billion. Feeney, who kept what now amounts to only $1.5 million for himself, owns no house or car and hails his own cabs. ``I just don't get my jollies by flaunting money,'' he says.

Oil & gas, banking, real estate Million
DETAILS: Hates publicity. The only communication with BusinessWeek was an e-mail saying: ``Sorry, no details. If I thought I could convince you to excise my name from your article entirely, I would do so.''

Reinsurance Million
DETAILS: Sabbah's reinsurance business got hit hard after September 11. But at least half his reported $100 million pledge to the American Hebrew Academy, the first non-Orthodox Jewish boarding school, is allegedly safe, having already made it to the bank. Now, though, Sabbah and the school face a lawsuit from business partners.

Media $73 Million
DETAILS: ``I've never heard of him,'' says fellow Chicagoan Ann Lurie, No. 43 on our list. ``I don't know Mr. Eychaner at all,'' says one Chicago Community Trust executive. Eychaner is indeed elusive. We weren't able to find a single photo of him.

Media $50 Million
DETAILS: When the Univision CEO led a campaign in 2000 to raise $150 million for a medical center for the University of California at Los Angeles, he insisted on naming it after his neighbor Ronald Reagan. That's classic Perenchio. His wide circle of famous and influential friends have long been asked not to talk to the press about him.

Data: BusinessWeek
* Pledged or given
** Value of shares of Duty Free Shoppers at time of company sale in 1997. The shares were originally donated in 1984.

Photograph: KAISER: A Tulsa baron of oil and banking, he has given $287 million to antipoverty programs but avoids accolades PHOTOGRAPH BY COURTESY OF TULSA PEOPLE MAGAZINE| Photograph: THE PERENCHIOS: Univision CEO Jerrold and his wife, Margie, are top ``invisible'' Los Angeles patrons PHOTOGRAPH BY ALEX BERLINER/BERLINER STUDIO/BEIMAGES| Photograph: FEENEY: When Duty Free Shoppers was sold in 1997, the extent of his giving became known PHOTOGRAPH BY CRISPIN RODWELL| Photograph: SECRET GIVER: FRED EYCHANER: MEDILL INNOCENCE PROJECT: Funded in part by Newsweb Corp. founder Eychaner, this Northwestern University program helps free wrongly convicted death-row inmates. Aaron Patterson (above) was released in January, 2003, after serving nearly 17 years. PHOTOGRAPH BY KELLY CULPEPPER| Photograph: SECRET GIVER: MAURICE ``CHICO'' SABBAH: AMERICAN HEBREW ACADEMY: The first non-Orthodox Jewish boarding school is located in Greensboro, N.C. Reinsurance mogul Sabbah managed to keep his philanthropy secret until September 11 imperiled his fortune and outed his giving. PHOTO BY NANCY STONE| Photograph: SECRET GIVER: CHUCK FEENEY: EXPERIENCE CORPS: This mentoring program hooks up adults over 55 and young kids -- such as this pair in Dorchester, Mass. PHOTOGRAPH BY CHICAGO TRIBUNE

BusinessWeek lists philanthropist for funding Hebrew prep school
Associated Press Newswires
December 18, 2003

GREENSBORO, N.C. (AP) - BusinessWeek magazine's list of the 50 Most Generous Philanthropists in America includes a reclusive Greensboro multimillionaire who nearly single-handedly endowed an elite Hebrew prep school.

Maurice "Chico" Sabbah was ranked No. 48 on a list that named Microsoft founder Bill Gates as the country's top philanthropist.

According to BusinessWeek, Sabbah donated $100 million from 1999 to 2003 -- primarily to Greensboro's American Hebrew Academy -- making him more generous than the Hyatt hotel heirs and the founder of the Internet browser company Netscape.

Tax forms from 2001 -- the most recent available -- show the school holds assets of $108 million, according to Guidestar, an online database of nonprofits. Tuition, room and board at the school cost $15,000 a year.

The magazine also adds Sabbah to its five-man sublist of "Secret Givers," which it defines as "outstanding contributors who neither seek recognition nor want any thanks."

The spotlight is uncomfortable for Sabbah, who lives in a ranch-style home hidden by trees on West Friendly Avenue in Greensboro. He has long shunned publicity for his charitable giving, which has also supported a hospital in Israel.

"For years I operated anonymously. I really don't consider myself newsworthy," Sabbah said Wednesday. "I'm just a private individual who lucked up and earned a bunch of money.

"I guess my ego is good enough that I don't need you telling me, 'Chico Sabbah, you're a nice guy,'" he said.

Sabbah earned his fortune through reinsurance, the business of lining up insurance companies in a shared-risk pool. The pool covers potentially huge liability while exposing each company to a fraction of the payout for a catastrophic event.

One of Sabbah's reinsurance companies, Burlington-based Fortress Re, has been sued by a Japanese insurer battered by losses caused by the Sept. 11 attacks.

Sompo Japan Insurance, formerly Nissan Fire and Marine Insurance Co., in November added the prep school to a federal lawsuit against Sabbah and his Fortress Re co-owner Kenneth Kornfeld. Sompo contends that American Hebrew Academy's accounts hold $104 million in wrongfully diverted funds.

Fortress Re was the reinsurance manager for the four airplanes hijacked and destroyed on Sept. 11, 2001. The pool suffered millions of dollars in losses from the terrorist attack that Fortress Re's attorneys said no one could have anticipated.

Greensboro News & Record
December 18, 2003


Seen BusinessWeek magazine's new list of the 50 Most Generous Philanthropists in America? Bill Gates is No. 1, of course. He lives in a 66,000-square-foot "house" in Redmond, Wash.

Michael Dell of the computer Dells is No. 6. He lives in a 33,000- square-foot house in Austin.

No. 8 is Ted Turner, who owns 316,000 acres in Nebraska.

Then there's No. 48, Maurice "Chico" Sabbah. According to BusinessWeek, he's more generous than the Hyatt hotel heirs and the founder of Netscape, donating $100 million from 1999 to 2003.

Sabbah lives on West Friendly Avenue in Greensboro, by the way. Nothing fancy. A little ranch-style number hidden by trees.

The millionaire philanthropist - some might add the adjectives "nondescript" and "press-shy" - has ended up in the spotlight again, much to his dismay. In its Dec. 1 issue, BusinessWeek says Sabbah has donated and pledged a whopping $100 million to the American Hebrew Academy, the Jewish boarding school he founded off Jefferson Road in Greensboro.

That generosity catapults him into the company of Gates, Turner, billionaire Warren Buffett, New York Mayor Michael Bloomberg and other fabulously rich members of the jet set.

BusinessWeek also adds Sabbah to its five-man sublist of "Secret Givers," which it defines as "outstanding contributors who neither seek recognition nor want any thanks."

Sabbah says he can live without either one.

"For years I operated anonymously. I really don't consider myself newsworthy," Sabbah said Wednesday in a rare telephone interview. "I'm just a private individual who lucked up and earned a bunch of money.

"I guess my ego is good enough that I don't need you telling me, 'Chico Sabbah, you're a nice guy.'"

Sabbah's fortune, earned through reinsurance, has been the subject of several recent lawsuits.

Through Fortress Re, Sabbah and his partners managed an aviation- reinsurance "pool," a risk-sharing insurance group, for three Japanese companies. The companies paid Fortress Re premiums to cover potential claims.

Fortress Re was the pool manager for the four airplanes hijacked on Sept. 11, 2001, leading accountants to estimate $2 billion in losses. Pool members have claimed in lawsuits that Fortress Re can't cover the losses because Sabbah and his partners kept hundreds of millions for themselves instead of saving it to cover claims.

Sabbah, who has refused to discuss the suits, has denied the charge.

Recently, one Japanese company added the Jewish school to its suit, drawing more unwanted attention to his philanthropy.

Local attorneys for the Japanese companies didn't return telephone calls Wednesday.

Sabbah has long shunned publicity for his charitable giving, which has supported scores of causes: A hospital in Israel. The Eastern Music Festival. And the American Hebrew Academy, which Sabbah never took credit for founding when it opened in September 2001.

In fact, he wasn't even introduced when members of the local Jewish community initially announced their plans to open the school, the first non-Orthodox Jewish school in the nation. For that, BusinessWeek has labeled Sabbah one of a "handful of secret Medicis," a reference to the famous art patrons.

Behind the scenes, however, Sabbah was bankrolling the school. And it was clear he intended to spend whatever it took to create a first-class academy, though he downplays his involvement.

"What I knew about education, you could put on the head of a pin," he said, laughing. "I didn't know what I was doing."

His actions showed otherwise.

To design his pet project, Sabbah reached across the continent to hire Aaron Green, an 82-year-old San Francisco architect and one of Frank Lloyd Wright's last surviving associates.

Green attended a ceremony to show the campus design, which called for more than 50 buildings spread across 100 acres along Hobbs and Jefferson roads.

Today, the academy's campus includes an $11.6 million athletic center and pool, complete with $3.9 million bleachers and concession stands. Every classroom in the lab-science building has a smart board that can function as a conventional blackboard or as a computer with Internet connections. The five dorms each cost $1.7 million.

Tax forms from 2001 - the most recent available - show the school holds assets of

$108 million, according to Guidestar, a database of nonprofits. Tuition, room and board are $15,000 a year.

"It's going great guns," Sabbah said of the school. "It's among the best facilities in the country. It has technology on the cutting line.

"I would guess some universities don't equal what we have."

The student body now totals 103, including 15 seniors. Sabbah is a fixture on campus, chatting with faculty members, befriending students, acting more like a favorite relative than a Gates or Buffett.

"We have one of the best faculties in the country. And the caliber of children we have," he said.

"I look at them as my grandchildren."

Contact Margaret Moffett Banks at 373-7031 or mbanks@news- record.com

Contact Jim Schlosser at 373-7081 or jschlosser@news-record.com

GENEROUS PHILANTHROPISTS Donors Background Millions pledged Causes 1. Bill and Melinda Gates Microsoft co-founder $22,906 Health, education 2. Gordon and Betty Moore Intel co-founder $7,010 Conservation, education 3. George Soros Investor $2,431 Open and free societies 4. Eli and Edythe Broad SunAmerica founder $1,463 Public education, arts, science 5. James and Virginia Stowers American Century founder $1,345 Biomedical research 11. Michael Bloomberg Bloomberg founder, NYC mayor $401 Education, health care, arts 21. Frank and Jane Batten Landmark Communications founder $285 Higher education 26. Warren and Susan Buffett Berkshire Hathaway CEO $230 Reducing nuclear weapons, population control 48. Maurice "Chico" Sabbah Reinsurance $100 Jewish secondary education Source: Business Week

Kenny Kornfeld
Global Reinsurance
February 1, 2004

Japanese insurance goliath Sompo and its fellow post-merger monolith Aioi Insurance are to see Mr Kornfeld in the civil court, to answer charges of fraud. The insurers allege that Mr Kornfeld creamed off millions for personal gain, through accounting trickery and bogus reinsurance. Standing alongside him in the dock will be his partner in cream, Fortress Re Chairman Maurice (Chico) Sabbah, plus family members and other beneficiaries of the Japanese pool members' involuntary largesse. In the frenzy to recover lost billions, Fortress Re auditors Deloitte & Touche LLP are also being sued.

Mr Kornfeld's agency was in many respects a very successful aviation reinsurer. Backed with cash provided exclusively by distant Japanese insurers, Fortress was almost alone in writing reinsurance layers such as $400m excess of $50m of original loss. Most other underwriters refused to play in such low-level territory, so Fortress had about two-thirds of that entire strata of airline risk. Mr Kornfeld's stratum appears to have been to keep the premiums flowing in by charging much less than the technical price of the cover, in the insurance equivalent of the classic Ponzi scheme.

Cedants would have paid 10% more for better security, one broker said while Fortress was still in business, but there were scant markets even at that price: it would still have been below burning cost.

The findings of the arbitration panel (which included such luminaries as Caleb Fowler, the former President of CIGNA's property/casualty business) were damning. They declared that Fortress Re, under the guidance of Kenny and Chico, had engaged in actual and constructive fraud and material misrepresentation.

They artificially inflated the financial picture of Fortress Re in several ways. First, it is alleged that Mr Kornfeld and his partner purchased financial reinsurances which transferred no risk, and failed to account for the reinstatement premiums related to them. Second, they ceded 25% of all assumed risk (along with the accompanying premium) to Carolina Re, a Bermuda vehicle which they owned. Carolina Re owes Fortress a large fortune, but the bankrupt company has capital of just $62m. Mr Kornfeld and his associates were alleged to have siphoned away its earnings through dividends payable to themselves.

Fortress Re itself paid out hundreds of millions in unwarranted profit commissions, the arbitrators found. They were unwarranted because Fortress Re did not, in fact, make any profits. Sompo accused Mr Kornfeld and Mr Sabbah of extracting about $408m from the business in this way. Sompo attorney Elizabeth Sandza said in court: "This is not an ordinary commercial dispute. A few individuals skimmed off hundreds of millions of dollars from the pool." Fortress Re's lawyer countered with the claim that Fortress Re had paid profits of nearly $2bn to the Japanese pool backers over the years, but now that losses were due, they were crying foul.

Both parties appear to have been at fault. While the documents which Fortress Re sent to its pool members were incomplete, non-standard and misleading, the Japanese backers of the pool were naive in failing to demand better disclosure, and should have realised that the business Fortress Re was writing could only be uneconomic in the long run (and indeed, had they asked any aviation reinsurer other than Kenny Kornfeld or his colleagues, they would have been told as much). When Carolina Re was formed, the Japanese were informed by Mr Kornfeld and Mr Sabbah there would be no cost whatsoever to the pool's backers, according to Aioi. It seems that the regular profits the agency did remit to the underwriters were sufficiently large to prevent such questions being asked until it was far too late.

Now, with the Fortress in ruins, everyone is queuing up for any booty left to loot, including the liquidators of Fortress Re and of Carolina Re, as well as the underwriters of the pool. It is not yet clear how deep Mr Kornfeld's pockets will prove to be, but it looks very likely that he will have to empty them. And it will take a lot longer than fifteen minutes.

by Margaret Moffett Banks Staff Writer
Greensboro News & Record
February 4, 2004


Six weeks after losing a $1.1 billion arbitration award brought by a Japanese insurer, Fortress Re has paid $265 million to that company and two others.

The payment is a signal the Burlington reinsurer is ready to settle fraud charges with all three companies, which could happen in late February, an attorney says.

The $265 million includes a partial payment to Sompo Japan Insurance of Tokyo, which won the arbitration award against Fortress Re in December. It also includes more than $196 million to two other companies, neither of which have won any suits against Fortress Re.

In the ongoing settlement negotiations, the three Japanese companies are asking for "a lot more than (Fortress Re) has paid already," said Cliff Schoenberg, an attorney for Sompo Japan.

Glenn Drew, Fortress Re's attorney, declined to answer questions Tuesday, including whether the company or its owners - philanthropist Maurice "Chico" Sabbah and Kenneth Kornfeld of Greensboro - paid the $265 million.

In December, an arbitration panel in New York ruled that Fortress Re engaged in fraud and "wilful and deliberate misconduct" when doing business with Sompo. The $69 million Fortress Re has paid to Sompo represents only 6 percent of the $1.1 billion arbitration award.

The other two companies - Aioi Insurance Co. and Taisei Reinsurance Co. - also are pursuing civil fraud cases against Kornfeld, Sabbah, his family and the American Hebrew Academy, the Greensboro boarding school Sabbah founded.

Schoenberg said the companies hope to settle within weeks. He declined to say how much money the companies want.

Fortress Re was a reinsurance manager, a complicated business that provides insurance to insurance companies. For years, it was virtually unknown outside of reinsurance circles, operating from a nondescript brick building near downtown Burlington. Few people knew the company was a thriving, multibillion dollar business.

Even fewer understood what Fortress Re did: manage an aviation- reinsurance "pool," a risk-sharing insurance group, for the three Japanese companies. The company was the pool manager for the four airplanes hijacked on Sept. 11, 2001; accountants estimated $3.4 billion in losses on that day.

The Japanese companies claim the tragedy revealed years of deception by Fortress Re: It couldn't pay those losses because Sabbah and Kornfeld kept hundreds of millions for themselves instead of saving it to cover claims.

Sabbah is best known in Greensboro for his philanthropy.

He recently was named by BusinessWeek magazine as one of the 50 more generous philanthropists in America.

In 2001, he founded the American Hebrew Academy in Greensboro, the country's only non-Orthodox Jewish boarding school.

BusinessWeek estimated Sabbah's donations and pledges to the school at

$100 million.

Sompo and the other Japanese companies claim Sabbah funded the school with their money, which explains why the school is named as a defendant in various lawsuits.

Contact Margaret Moffett Banks at 373-7031 or mbanks@news- record.com

Greensboro News & Record
February 15, 2004


Lior Gilo knows how good she's got it.

The 17-year-old is sitting in a hallway, a school-issued laptop balanced on her knee. She has the world at her fingertips at the American Hebrew Academy, where computerized microscopes, wireless Internet access, interactive chalkboards that project online encyclopedias and Israeli TV in every classroom are part of the school day.

"In the beginning, we were like,

'Oh my God, this stuff is so crazy,"' said Lior, a senior and the student body president. "For me, I'm still amazed."

Six years ago, it was little more than one man's dream: Take 100 acres off Hobbs Road and build an elite boarding school - the Jewish Exeter, the Jewish Andover, the Jewish equivalent of New England prep schools famous for producing Fortune-500 CEOs. Hire Frank Lloyd Wright's partner as the campus architect. Import Jerusalem stone for every building. Stock classrooms with technology direct from Silicon Valley.

And above all, nurture future Jewish leaders so they may always retain their Jewish identity.

Today, the academy is considered one of America's top Jewish schools, a place where students receive an Ivy League education in a Jewish-centered setting.

But the school's financial stability might be in jeopardy because of a billion-dollar fraud case, which could be settled this month. Attorneys claim Maurice "Chico" Sabbah of Greensboro built the academy with $104 million "wrongfully diverted" from three Japanese insurers who were clients of Sabbah's Fortress Re reinsurance company. Sabbah has denied the charges, but his lawyers are participating in settlement talks.

Lawyers for the insurers are coy about how they hope to recover the money. Cliff Schoenberg, an attorney for one Japanese company, won't say what his clients want - cash, land, buildings. But what he does say makes clear his position: The Japanese want their money back.

The company is "respectful of the fact (the academy) is an institution that's trying to do good," he said. "That obviously will be taken into account."

Built for success

Springsong Cooper's dorm room is dark, save the florescent light brightening her desk. It's midmorning and she's finishing homework, making use of the one open period that's built into students' schedules every other day.

Springsong, 17, hails from Republic, Wash., population 954. The nearest synagogue is three hours away. Before arriving at the academy, she spoke little Hebrew. She never attended a Jewish service until a week before her bat mitzvah, a ceremony marking the passage from childhood.

And as the only Jewish children in town, Springsong and her younger brother, Lev, had no outlet for Jewish activities and social events. So, they attended Christian camps with friends, sharing their Judaism with others students only on holidays.

"I was always in the position where I felt a little out of place," she said.

It was for children like Springsong that the academy was created.

In 1998, organizers announced plans to turn $8.3 million worth of land into a lavish boarding school, with million-dollar dorms, highly trained teachers, classrooms wired with the latest technology. Architect Aaron Green unveiled a Prairie-style design that's textbook Frank Lloyd Wright, including light-filled classrooms and green roofs.

Trustees would say only that the money - there would need to be lots for their ambitious plan - was coming from a "small group of anonymous donors."

Yet many in Greensboro's tight-knit Jewish community suspected Chico Sabbah was bankrolling the project almost exclusively, something tax and court records later revealed. Between 1997 and 2000, records show, the academy received $99.6 million, most from Sabbah's private charity and an anonymous fund he established.

Sabbah declined to be interviewed for this article but allowed his daughter to give a tour of the normally intensely private school grounds. Few people in Greensboro have visited the campus, heavily guarded by Greensboro police, private security officers and a black metal gate that surrounds the school.

Even fewer people understand why Sabbah built the academy, the nation's only boarding school for non-Orthodox Jews. It was his deep love of his Jewish faith and tradition, and a fear that fewer and fewer young people were embracing it, said his daughter, academy spokeswoman Leeor Sabbah.

"He wanted to create an environment where (students) could feel tied to Judaism," she said. "Part of the vision of Mr. Sabbah is to create an environment to nurture future Jewish leaders of the world."

Springsong, whose interest in Judaism spiked after her bat mitzvah, learned about the academy through a brochure. She said she was reluctant to leave Republic, filled with her family and lifelong friends. But she was more reluctant to leave her interest in Judaism unexplored.

"Something was missing," she said. "I never knew what it was."

For that very reason, Judaism is the heart of campus life. The academy "keeps Kosher," meaning there is strict separation of meat and dairy products, a religious tradition not every Jew observes.

Students must attend Sabbath services on Friday nights, along with daily prayer meetings. Those with shaky Hebrew must practice until they become fluent enough to chant prayers. And juniors spend 12 weeks in Israel, studying and practicing their Hebrew as they explore the country.

The academy offers what it calls a "dual curriculum," which includes traditional and Jewish-centered course work. Students enroll in seven classes a semester, three more than the average Guilford County student taking a block-style schedule. Hebrew- language and Judaic study courses are mandatory, as is the two-hour study hall Sunday through Thursday nights .

It all makes for long school days - squeezing in religious observances, sports and classroom studies, which happen around teardrop-shaped tables designed to inspire debate. Dori Chandler, one of 22 day students, often doesn't come home until after 6 p.m., said mother Marilyn Chandler.

Chandler, head of Greensboro's thriving Jewish federation, likens the curriculum to the International Baccalaureate program, a rigorous slate of college-prep courses taken by top students.

"She studies all the time," Chandler said of her daughter's life after school.

The academy's academic standards are so high that a student who succeeds there "can walk into any college and be socially, academically and theologically light-years ahead of their peers," said Marc Kramer, head of RAVSAK, an association of U.S. Jewish day schools.

He credits a slow, measured plan for growth for the school's success. Instead of opening with 800 students, the academy's long- term goal, officials are gradually increasing enrollment, building dorms and classrooms as needed.

Most of all, he credits Chico Sabbah, who never strayed from his original goal: building the best Jewish school money could buy.

"It's absolutely unique as an educational experience for the American Jewish community," said Kramer, whose organization represents 25,000 students. "He just stuck to his guns. I think it's heroic."

Each of the five $1.7 million dorms includes spacious rooms for roughly 20 students. Because administrators believe in strict supervision of students, each dorm includes a 2,200-square-foot apartment for house parents, with four bedrooms and granite countertops. The headmaster will live on campus, too - in a $472,000 house being built this year.

Visitors aren't allowed to drive far past the entrance gate; gas- powered vehicles aren't allowed on campus for environmental and security reasons. Students either walk or ride electric-powered golf carts along the winding, wooded paths between buildings. They're driven off-campus in a school-owned shuttle.

And talk about supervision: Teachers have technology to monitor students' use of the Internet in their classroom by viewing the images on their screens.

As for Springsong - she's become quite well-versed in Hebrew, though she's reluctant to call herself fluent. She adores attending the mandatory services and treasures her three months in Israel, where she soaked up Jewish culture and, albeit briefly, considered becoming a rabbi.

"None of these things would have been available to me back home," she said.

Weathering the lawsuit storm

Sabbah, 75, made his fortune through Fortress Re - the "Re" stands for reinsurance. He and partner Kenneth Kornfeld managed an aviation-reinsurance "pool," a risk-sharing insurance group, for three Japanese companies. Those companies paid premiums to Fortress Re, which was expected to use that money to pay claims if any airplanes crashed.

On Sept. 11, 2001, one day after the academy opened, terrorists crashed four airplanes, all insured by Fortress Re's pool.

The Japanese companies say in multiple lawsuits that Sabbah and Kornfeld spent the money they were supposed to save for such an event. Fortress Re shareholders deny the charge. But in December, an arbitration panel found Fortress Re guilty of defrauding one of the companies, Sompo Insurance Co., and ordered Fortress Re to pay $1.1 billion.

Fortress Re has paid $265 million to Sompo and the two other Japanese companies. All three expect to receive hundreds of millions more through a settlement, which could be reached in late February, said Sompo attorney Schoenberg. It's unclear whether Sabbah and Kornfeld will use their personal fortunes to pay the settlement.

Schoenberg said "there's no accusation that the American Hebrew Academy acted improperly," only that Fortress Re gave the academy "illicitly gotten gains" the Japanese want back.

His tone changes when he mentions multimillion-dollar geothermal wells buried under the soccer field - the largest of their kind in the United States and the source of the academy's water.

"It appears that's where they spent all the pool members' money," he said.

The settlement does inspire thoughts of an "incongruity," as one British insurance publication wrote in November: "the Japanese owning the first ever American Hebrew boarding school." But it's unlikely the Japanese will take over the school; there won't be a Sompo Academy in Greensboro, Schoenberg said.

Meanwhile, trustees are moving forward - building an $11.6 million athletics center and pool, aggressively recruiting students, advertising jobs for teachers and house parents.

Sabbah's lawyers won't discuss the pending settlement or what that settlement might mean for the academy. Leeor Sabbah said its future will be unchanged regardless of the outcome of her father's legal problems, with one exception: Leaders are seeking high-dollar donors in America and abroad.

"My father isn't the only one who feels strongly about Jewish education," she said of "endowment opportunities" being created for donors. "There's no concern, just a realignment of finances."

In a 2002 interview for Forbes magazine with Greensboro writer Ed Cone, Sabbah said the school had $50 million in the bank, which would cover 10 years of operating expenses. He also told Cone he would leave his estate to the academy. What is left unspoken is that Sabbah, the school's primary benefactor, might not have as many millions to donate once the settlement is complete.

So, the academy's first-ever development campaign begins as expectations for the school, and the stakes for its future, have never been higher.

Contact Margaret Moffett Banks at 373-7031 or mbanks@news- record.com

Caption: Mug Photo; Photos; Map Graphic; Leeor Sabbah says her father, Maurice, had a vision of creating "an environment to nurture future Jewish leaders of the world."\ PHOTOS BY JOSEPH RODRIGUEZ/ News & Record Seniors Clare Hyre (left, on the floor) and Lior Gilo (far right) work alongside another student in the hallway of the Classroom Building at the American Hebrew Academy in Greensboro. There are 102 students attending the school.\ Students take part in a Jewish Studies class at the American Hebrew Academy. The school is the first liberal, pluralistic Jewish boarding school for non- Orthodox Jews in the United States.\ Instead of opening with 800 students, the American Hebrew Academy officials' long-term goal, officials will gradually increase enrollment and build dorms and classrooms only as needed. Stone from Jerusalem was imported to be used throughout the construction of the school.\ Springsong Cooper, a senior at the academy, studies in her dorm room. Well-versed in Hebrew, she conducted morning prayers during winter break back home in Republic, Wash. As a junior, Springsong spent 12 weeks studying in Israel, a requirement for all students.\ DOUG COX/ News & Record\ AMERICAN HEBREW ACADEMY

by MARGARET MOFFETT BANKS Staff Writer; Staff writer Jim Schlosser contributed to this report.
Greensboro News & Record
July 22, 2004

Two Greensboro businessmen and their now-defunct reinsurance company will pay more than $400 million - including proceeds from the sale of Irving Park's most distinctive mansion - to settle a billion-dollar fraud case.

Millionaires Maurice "Chico" Sabbah and Kenneth Kornfeld will hand over cash, antiques, luxury vacation homes and commercial property from the North Carolina coast to Israel to three Japanese insurance giants.

Those insurers are trying to reach a settlement with the American Hebrew Academy, the boarding school Sabbah financed with $100 million - money the Japanese claim Sabbah defrauded from them. The companies will pursue the lawsuit against the academy if they can't reach a settlement, said Howard Hawkins, an attorney for one of the Japanese companies.

"(Sabbah) didn't have the lawful ability to gift those assets," said Hawkins, a partner with Cadwalader, Wickersham & Taft in New York City.

Sabbah and Kornfeld declined to be interviewed.

Glenn Drew, their attorney and Sabbah's nephew, declined to discuss the settlement, saying it was confidential. He said the academy is working on a settlement and is planning for the upcoming school year. Forty-five new students will arrive in August, bringing the school's enrollment to 130 students, Drew said.

Hawkins said the $400 million from Sabbah and Kornfeld is only an estimate of the final total. The amount could be higher, he said.

He called the amount "tremendous. Greater than what we realistically expected. (Sabbah and Kornfeld) decided to live out their lives in peace rather than fight the action until all their assets were taken," he said.

Matthew Wulf, an attorney for the trade group Reinsurance Association of America in Washington, said "even in the insurance and reinsurance industry, $400 million is a lot of money." Wulf said it's an especially large sum for one company to pay.

The settlement ends a nearly three-year-long legal struggle between Sabbah and Kornfeld and the Japanese.

Fortress Re was a reinsurance manager, a complicated business that provides insurance to insurance companies. For years, it was virtually unknown outside of reinsurance circles, operating from a nondescript brick building near downtown Burlington.

Few people knew the company was a thriving, multibillion-dollar business.

Even fewer understood what Fortress Re did: manage an aviation- reinsurance "pool," a risk-sharing insurance group, for the three Japanese companies.

The company was the pool manager for the four airplanes hijacked on Sept. 11, 2001; accountants estimated that the pool lost $1.4 billion that day.

The Japanese companies claim the tragedy revealed years of deception by Fortress Re: It couldn't pay those losses because Sabbah and Kornfeld kept hundreds of millions for themselves instead of saving it to cover claims.

In December, a three-man arbitration panel in New York City awarded the Japanese companies $1.12 billion in damages. The $400 million, which includes a $265 million down payment the men made in January, represents what Sabbah and Kornfeld agreed to pay out for that billion-dollar award.

The process of paying the settlement already has begun. Hawkins said Kornfeld's Irving Park mansion has been deeded to the Japanese and is for sale.

The house at Country Club and Cleburne drives was built in 1936 by Cone Mills President Herman Cone, the son of Cone Mills co- founder Ceasar Cone. During their ownership, the Cone family kept the lawn open - convenient for gawking Sunday drivers. Kornfeld changed the 3.5-acre estate to suit his personality. An intensely private man, he landscaped the lawns with trees and shrubs that block the house from view.

The News & Record sought to interview the Kornfelds when they bought the home in 1992, and they declined through their attorney.

At the time, the $2.15-million sale price was believed to be the largest for a North Carolina residence.

The Kornfelds already have moved out of the house, said Alan Duncan, a local attorney representing one of the Japanese companies. Duncan said people have "expressed interest" in the house.

Realtor Katie Redhead, who has handled the sale of many Irving Park properties for Yost & Little Realty, says she estimates the Kornfeld house would bring $6 million to $6.5 million. "It's a signature Irving Park property and it speaks for itself," she said.

The price would be high but there are certainly people willing to pay it, Redhead said.

She said rumors about the house have been swirling for weeks and at least five clients have called her wanting to know the status.

Kornfeld will keep one of his four apartments in New York City's exclusive Millennium Tower, Hawkins said.

The fate of the American Hebrew Academy is less certain.

The school, which rests on 100 wooded acres along Hobbs and Jefferson roads, is lavish even by private-school standards. To design the academy, Sabbah reached across the continent to hire Aaron Green, an 82-year-old San Francisco architect and one of Frank Lloyd Wright's last surviving associates.

Hawkins said academy officials want to keep the school in business, but that his clients' want to get their money back.

Last year, BusinessWeek magazine named Sabbah to its list of the 50 most generous American philanthropists. The magazine cited his donations to the academy, estimated at $100 million.

Sabbah, who shuns publicity, was unfazed by the honor.

"For years, I operated anonymously. I really don't consider myself newsworthy," Sabbah said at the time. "I'm just a private individual who lucked up and earned a bunch of money.

"I guess my ego is good enough that I don't need you telling me, 'Chico Sabbah, you're a nice guy.' "

Contact Margaret Moffett Banks at 373-7031 or mbanks@news- record.com

FORTRESS RE SETTLEMENT A partial list of items included in the Fortress Re settlement and approximate value, if known: KENNETH KORNFELD - House at 806 Country Club Drive in Irving Park. Tax value: $4.15 million - Three apartments, each valued at about $900,000, in Figure Eight Island: $2.8 million - House in Aspen, Colo. Market value: $8 million to $9 million - Three apartments in New York City's Millennium Tower - Furnishings from homes in Irving Park and Aspen, including various antiques. Estimated value: $1.3 million - Gulfstream III jet - Automobiles: $120,000 - Cash and other securities MAURICE SABBAH - Cash and other securities, which comprised the bulk of his payment - Commercial and residential property in Pennsylvania, New York and Israel. Estimated value: $6 million Sources: Guilford County Tax Department; Lexis Nexis; Cadwalader, Wickersham & Taft

Caption: Photo; KIM WALKER/News & Record This house at 806 Country Club Drive , most recently owned by Kenneth Kornfeld, is part of a settlement involving Fortress Re .

Greensboro News & Record
August 22, 2004


In 1999, Nancy Anthony of Oklahoma City took a phone call from Greensboro that would bring millions to the charitable foundation she directs.

Freddy Robinson, a Greensboro accountant, was on the other end.

During that conversation and another one a year later, he asked: Could one of his clients establish a fund - somewhere between $10 million to $30 million - with the Oklahoma City Community Foundation?

Would the foundation, in turn, give that money to a Jewish boarding school being built in Greensboro?

And could the foundation protect his client's anonymity, so people in Greensboro wouldn't know how much money his private charity had?

Anthony agreed to the deal, which eventually earned her foundation $60,000.

By 2004, Maurice "Chico" Sabbah and his family had given nearly $53 million to the Oklahoma foundation, all earmarked for the American Hebrew Academy in Greensboro. And by then, the Oklahoma City Community Foundation was entangled in a billion-dollar fraud suit.

The arrangement, revealed in documents filed in the fraud case, shows the lengths to which Sabbah would go to protect his privacy. Though anonymous giving is common, Greensboro is more accustomed to millionaire-philanthropists named Bryan, Sternberger and Cone, who routinely attach their names to their legacies.

The city has never seen a man quite like Sabbah: rich, generous and determined to make million-dollar gifts without fanfare.

"It's only as a result of unwanted publicity in the past few years that Mr. Sabbah's philanthropic activities have become public knowledge," said Sabbah's nephew, Greensboro attorney Glenn Drew.

Sabbah declined to be interviewed.

In December 2003, when he was named one of America's Top 50 givers, he told the News & Record he has "the highest regards" for the late Joseph Bryan, a local businessman whose much publicized foundation continues to pour millions into Greensboro.

But Sabbah explained he's a different sort of philanthropist.

"I don't need your Good Housekeeping Seal of Approval," he said. "I don't care what people think. I'm not out there telling the world."

Anonymity has been impossible for Sabbah, who has been embroiled for nearly three years in several high-profile fraud suits.

Sabbah, business partner Kenneth Kornfeld and their reinsurance business, Fortress Re, agreed in July to pay $400 million to settle their involvement in the suits, filed by three Japanese insurance companies.

The settlement came seven months after an arbitration panel awarded the Japanese companies $1.12 billion, saying the men and their company engaged in fraud and "willful and deliberate misconduct." It was one of the largest fraud awards in American history.

The Oklahoma City Community Foundation and the American Hebrew Academy were named as defendants in the suits, though not because those organizations were accused of any wrongdoing. The Japanese companies claimed Sabbah gave the nonprofits tens of millions that rightfully belonged to them.

The Japanese companies are still pursuing a separate settlement with the academy.

Cliff Schoenberg, a New York attorney for one Japanese company, declined to be interviewed.

Fortress Re was an extremely profitable business for Sabbah and Kornfeld. Court records show the company and its subsidiary made about $500 million in its 29-year history.

Kornfeld spent his portion on million-dollar mansions, a corporate jet and luxury cars.

Sabbah became a silent benefactor to dozens of struggling nonprofits.

His foundation would give $25,000 to the Eastern Music Festival or $13,000 to the United Way of Greater Greensboro. Local Rotary clubs and arts organizations would receive $500 here, another $1,000 there, each gift courtesy of an affable yet seldom-seen man named Chico Sabbah.

In one four-year period, he gave about $675,000 to a Jewish camp near Atlanta - while living virtually unnoticed in a modest ranch house on West Friendly Avenue, valued today at $310,000.

It's impossible to tally his gifts because he so often gave anonymously.

Drew, who also is an attorney for the Sabbah Family Foundation and the Hebrew Academy, attributes that to a Jewish tenet strongly emphasizing silent charity. Sabbah believes that "through anonymous giving, no person in need of charity or who has requested help from others be beholden to those who are more fortunate and willing to give to his fellow man," Drew said.

That's what he tried to do with the American Hebrew Academy. When trustees announced plans to build the nation's only non-Orthodox Jewish boarding school, they cited a small group of anonymous donors in Greensboro's Jewish community.

In fact, Sabbah was bankrolling the academy almost single- handedly, while laying out a rigorous plan for Jewish education in Greensboro.

It was his deep love of his Jewish faith and tradition, and a fear that fewer and fewer young people were embracing it, that inspired him, his daughter, academy spokeswoman Leeor Sabbah, told the News & Record earlier this year.

The academy offers what it calls a "dual curriculum," which includes traditional and Jewish-centered course work. Students enroll in seven classes a semester, three more than the average Guilford County student taking a block-style schedule. Hebrew- language and Judaic study courses are mandatory, as is the two-hour study hall Sunday through Thursday nights.

Meanwhile, Sabbah was taking extreme measures to keep his donations secret.

In 1999, Nancy Anthony received her first call from Freddy Robinson, the accountant who handled business for the Sabbah Family Foundation.

Anthony later learned Robinson had arranged a similar deal with the California Community Foundation in Los Angeles, which tax records show received at least $31.4 million from Sabbah's charity. It's not clear through court records where that money went.

By October 2000, Anthony and the Oklahoma foundation were able to meet Robinson's requirements for establishing a fund: a multimillion- dollar gift, a private fund manager and, above all, anonymity.

Robinson, who said he hasn't read Anthony's deposition, declined to comment.

In her deposition, Anthony said Robinson's objective was to lessen the Sabbah foundation's "visibility in the Greensboro community for the size of its assets."

She also said she understood his need for privacy.

"A community like Greensboro ... (is) much smaller than communities like in New York," she said. "And when significant gifts like this are made, it is very difficult for anonymity to be maintained just because of the number of people who have knowledge of the gift.

"And even just how wire transfers are made and what account they came from. And it is just a small-town sort of process."

Robinson actually established five anonymous funds for Sabbah in Oklahoma: A $20 million endowment for the academy and four temporary funds for end-of-the-year donations. For three years, Sabbah and his family gave $32.7 million to the temporary funds in late December. In early January, the foundation would donate the same amount to the academy.

An attorney asked Anthony during her deposition why she would agree to such short-term donations. Anthony said there was "just a certain little ego of having an additional (amount) of assets on Dec. 31."

"I mean, in some respects passing these funds through gave us an opportunity to earn a little bit more fees and have a little bit bigger, you know, puff our chests out a little bit more on a national scale," she told the attorney.

Not everyone agrees with such a practice. Walker Sanders, president of the Community Foundation of Greater Greensboro, said his organization would suggest a more direct arrangement.

"We simply would not advise someone to wash money through Los Angeles to get it back to Greensboro," Sanders said. "We would advise going directly to that organization instead of using the foundation as a conduit."

But the practice isn't uncommon and certainly isn't unethical, said Janne Gallagher, vice president and general counsel for the Council on Foundations. The Washington-based organization offers information and legal advice to 2,000 charitable foundations worldwide.

Some community foundations are willing to accommodate big donors, Gallagher said. Others have stricter rules about allowing money to quickly pass through their accounts.

Nothing about Sabbah's arrangement with the Oklahoma City foundation appears to be out of the ordinary, she said.

"Community foundations are frequently a vehicle for a donor who wants to remain anonymous," Gallagher said.

It's not unheard of for Guilford County nonprofits to receive donations from secret sources. In 2003, High Point University announced an anonymous gift of $1.5 million for its sports center, but the university later revealed the source as High Point philanthropists Jim and Jesse Millis.

That same year, the adoption agency Children's Home Society received a $1 million anonymous gift. A year earlier, a nameless donor gave $1 million to the ARC of Greensboro, a nonprofit that helps people with mental retardation and developmental disabilities. And someone gave the Presbyterian Home of High Point $1.7 million anonymously in 2001.

But Sabbah's gift to the Hebrew school - estimated at $100 million - towers above those. And that doesn't take into account the millions more he's given to other charities.

Sabbah, a "deeply religious individual," still believes in the power of anonymous giving, Drew said.

"While Mr. Sabbah continues to maintain this belief, it is unfortunate that his personal desire for privacy has no longer been respected by many," he said.

Contact Margaret Moffett Banks at 373-7031 or mbanks@news- record.com

Caption: JOSEPH RODRIGUEZ/ News & Record\ Maurice "Chico" Sabbah has given millions to charities and has almost single-handedly covered costs for the American Hebrew Academy, a private Jewish school in Greensboro.

by Margaret Moffett Banks Staff Writer
Greensboro News & Record
October 19, 2004

OK. Next we've got a Charles X Aubusson carpet. About

12 feet by 15 feet. Made in the early 19th century. Perfect for the family room.

Let's start the bidding at, oh, $10,000? Sold!

Now the London-made, sterling swing-handled sugar basket. Dates to 1796. Do we hear $1,200?

So it will go Saturday morning, when auctioneers in

New York City hawk the fabulous contents of Kenneth and Ronda Kornfeld's Irving Park mansion.

The couple lost their stuff - mostly French Empire furniture, Louis XV this, Charles III that - in a $400 million fraud settlement with Japanese companies that did business with Kenneth Kornfeld.

Their Irving Park mansion, also part of the settlement, is available for $6.5 million.

Max Drazen, the auctioneer and an owner of Tepper Galleries, said some of the items are valuable, but like many used items, likely will fetch far less than what the Kornfelds paid.

Still, it ain't chipped beef. The Japanese companies could score $900,000 from Saturday's auction, even if all 652 items sell on the cheap end. If a bidding war breaks out over, say, the Syrian mother- of-pearl inlaid flip-top games table (estimated sale price, $2,000 to $2,500), then that figure could poke through seven figures.

Glenn Drew, an attorney and spokesman for the Kornfelds, declined to comment Monday on the auction.

The Kornfelds are living in New York City's Millennium Tower - the only one of four luxury apartments they were allowed to keep in the settlement.

Attorneys for the Japanese companies in New York also declined to comment.

Their suit accused Fortress Re and Carolina Re of skimming premiums from a reinsurance pool. They said Kornfeld and his business partner, Maurice "Chico" Sabbah of Greensboro, also paid themselves exorbitant management fees.

In December, a three-man arbitration panel awarded the Japanese $1.12 billion in damages. Kornfeld and Sabbah later agreed to the $400,000 settlement.

The Kornfelds spent years collecting their fine furnishings and bric-a-brac, having decorators scour England, New York, and even Greensboro for pricey urns (up to $4,000) and lamps (as much as $6,000).

They favored the dramatic: bright velvet fabrics, Queen Anne chairs and rich, mahogany wood.

Their art collection, including at least eight nudes, features a Venetian canal scene painted in the 1700s ($10,000 to $15,000), along with a collage of Marilyn Monroe memorabilia ($500 to $700).

Don't be fooled by the swankiness. Saturday's auction will offer a few cut-rate finds more appropriate for Lindley Park than Irving Park:

*A three-piece, custom-designed O. Henry House sectional (purple), with pull-out sofa bed. At $800 to $1,200, this couch is much cheaper than what's for sale at Rooms to Go.

*A painted wicker basket, perfect for geraniums, for about $100.

* Avid readers will appreciate five leather-bound volumes of Henry David Thoreau, with an estimated cost of $200.

Mostly, though, the Kornfelds' valuables come with a second- mortgage sized price tag. Some suggestions if you want the tax deduction:

*Park your 29-inch Zenith on one of two George II giltwood, marble-top console tables - a steal at $60,000 to $80,000 for the pair.

*For your next soiree, serve chicken nuggets on two George III sterling entree dishes, made in London around 1801, only $3,500 to $4,000.

*"Fall back" to Daylight Savings Time with a Charles X lyre-form clock, topped with a bronze sun-god medallion. Suggested price: $3,000 to $5,000.

Then there are some items that defy explanation:

*A pair of Louis XVI-style ormolu-mounted alabaster brule- parfums - $900 to $1,200;

*An antique Delamarche, Felix and Dien wooden orrery - $3,000 to $4,000;

*A pair of Louis XVI-style cream-painted and parcel gilt fauteuils - $2,000 to $3,000.

Contact Margaret Moffett Banks at 373-7031 or mbanks@news- record.com {SEND} YES

MORE ONLINE For photos and information about the auction, go to www.teppergalleries.com, click "Enter," then click "Next Auction."

Caption: Photos; Courtesy Tepper Galleries Items from the Kornfeld house are up for auction by Tepper Galleries. A George I wine table (left) should bring $10,000 to $15,000. The Lawson-style sofa should start at $800. The French art deco oval lamp table should fetch $1,200 to $1,800.\ Courtesy Tepper Galleries This set of six Neoclassical cream painted, parcel gilt-carved swan benches should bring between $20,000 and $30,000 at the auction.

by JIM SCHLOSSER Staff Writer
Greensboro News & Record
25 October 1999

Here's the nearly $64 million question: What is the second largest charitable foundation in Greensboro?

The Community Foundation of Greater Greensboro? Wrong. The Cemala Fund founded by members of the Cone Family? Nope. The Tannenbaum- Sternberger Foundation? Sorry.

The answer is the Sabbah Family Fund, a virtually unknown foundation whose co-founder, Maurice Sabbah of Greensboro, lives so simply and privately that most people have never heard of him. Even some who know him don't realize that the unassuming Sabbah is wealthy through international investments and the insurance business.

Among leaders of some other area foundations that give money for worthy causes, the name Maurice Sabbah and the Sabbah Family Fund draw blanks.

"First I've heard of them," says Jim Melvin, president of the Joseph Bryan Foundation, by far Greensboro's largest foundation with assets of about $120 million.

The Sabbah Family Fund's assets totaled $63.3 million as of 1998, according to an Internal Revenue Service 990PF form on file with the Foundation Center, a New York organization that tracks the assets and grants of foundations.

The assets put the Sabbah Fund among the 1,000 wealthiest foundations in the county, out of a total of 48,000 such organizations, which have estimated combined assets of $329.9 billion and give $20 billion in grants annually.

The Sabbah Fund stands 15th among North Carolina's foundations, according to the Southeast Council on Foundations. It is behind such giants as the nearly $2 billion Duke Endowment, the various Reynolds family foundations, the Kenan Charitable Trust and the John Motley Morehead Foundation, which provides Morehead Scholarships at UNC- Chapel Hill.

In Greensboro, the Sabbah Fund is tied for second with the Kathleen Price Bryan Family Foundation, funded with money left by Joseph Bryan's wife, who was an heir to a fortune in Jefferson-Pilot Life Insurance Co. stock. The Bryan Family Fund, however, is temporarily inactive.

The Sabbah Fund's assets are slightly higher than those of the Community Foundation of Greater Greensboro. The Community Foundation has $60 million, according to its president, Walker Sanders. Like Melvin, Sanders said he had never heard of the Sabbah Family Fund.

The fund's existence surfaced recently as the result of the establishment of the American Hebrew Academy. The academy will be the nation's first Jewish boarding school when it opens its $40-million first phase in the fall of 2001, on a 100-acre campus at Jefferson and Hobbs Road in Greensboro.

Maurice Sabbah is one of the school's seven trustees. His nephew, Glenn Drew, an attorney who works for a company that Sabbah helped start, serves as chairman of the board of trustees. Freddy Robinson, a Greensboro certified public accountant and former president of the Greensboro Jaycees, also is a trustee. Robinson's CPA firm, Bernard Robinson & Co., at 109 Muirs Chapel Road, is listed as the office of the Sabbah Family Fund.

Sabbah did not return calls to his home and office. Drew refuses to comment on his uncle's philanthropy, saying that public attention would violate Sabbah's religious principles. A Jewish tenet strongly emphasizes the philosophy of anonymous giving.

Rabbi Fred Guttman of Temple Emanuel said it saddens him as a rabbi that a person who wishes to remain anonymous and do good things no longer is able to do so.

Guttman cites Maimonides, the great Jewish philosopher who lived from 1135 to 1204 and who ranked charity in eight degrees. Number one is when a person helps another to become self supporting. The second is when the giver and receiver don't know each other. The third is when the giver knows the receiver, but the receiver doesn't know the giver.

He says the third degree is what Sabbah has done in Greensboro.

"This man is a righteous per.jn," he says. "Judaism has a mythic belief that the world depends on 36 righteous people, or there wouldn't be a world. From what I've seen of this man, he might be one of them."

Sara Engelhardt, a spokeswoman for the Foundation Directory, a New York group that collects tax records of foundations, says private foundations need public exposure because "it's the law."

"They are receiving tax benefits," she said, "and need to be scrutinized by the IRS and the public so they can see if they are working in the public interest."

She says if philanthropists feel strongly about giving money anonymously, "they should not set up a foundation." A foundation is not necessary for donating large sums of money, she says.

Because of organizations such as the Foundation Directory, it's becoming increasingly difficult for foundations to guard their privacy. The directory and others obtain Form 990 for public foundations and Form 990PF for private foundations from the IRS, and make them available for public viewing.

The Foundation Directory collects the tax records of private foundations and makes them public through cooperating institutions in each state. In North Carolina, the records are available at the Durham County Public Library, the State Library in Raleigh, the Forsyth County Public Library and the Duke Endowment in Charlotte.

Those who know Maurice Sabbah say he is so unassuming that people are astonished when they learn he is wealthy. He and his wife, Zmira, who is listed as a founder of the family fund,live in a 1950s-era ranch-style home on a busy Greensboro thoroughfare.

They attend Beth David, the city's conservative synagogue. Sabbah is chairman of Fortress RE, a Burlington company that re-insures insurance companies. Sabbah also is said to have far-flung business interests. In addition to the owner's desire for privacy, another reason his foundation - which was started in 1987 - may have escaped media attention is because most of the approximate $3.5 million it gives away annually goes to causes outside Greensboro. For example, the foundation has given about $1 million each year to Hadassah, an international Jewish women's service group. What donations the Sabbah Family Fund has made locally were mostly in the $1,000 to $1,500 range. Recipients include art groups and organizations that work with the mentally retarded. Two other local grants - of $5,000 in 1997 and $25,000 in 1998 - went to the American Hebrew Academy, according to 990PF forms for those years.

Glenn Drew says the idea for the school arose from the desire of various Jewish people in Greensboro that Jewish youngsters continue to be aware of their heritage after they leave the eighth grade. The only Jewish school in the city, B'Nai Shalom Synagogue Day School, at Beth David, goes through grade eight.

Greensboro News & Record
January 24, 2002

An obscure Burlington company finds itself embroiled in a multibillion dollar controversy with three Japanese insurance companies over claims from the Sept. 11 terrorist attacks.

The three insurers are members of a risk-sharing insurance group, known as a "pool," organized and managed by Fortress Re, which operates from a small office on the edge of downtown Burlington.

The pool may face claims of $4 billion from Sept. 11 and the crash of an American Airlines jet in Queens, N.Y., on Nov. 12, according to estimates by the Morgan Stanley investment company in New York.

Fortress Re is owned by Greensboro resident Maurice Sabbah and his family and by Kenneth Kornfeld, also of Greensboro. The company apparently faces no insurance liabilities, because it only handled the policies for the Japanese companies.

One of the three Japanese insurers, Nissan Fire & Marine, has threatened to sue Fortress Re, claiming it withheld information to the companies about the risk they faced, according to AFX News Limited, a global financial news service.

Nissan also said it has stopped doing business with Fortress Re, according to Bloomberg Business News.

Glenn Drew, counsel for Fortress Re, said his company "fully, accurately and repeatedly informed" Nissan about risks and other details.

Fortress Re and Nissan "continue to work together in hopes that a possible settlement to any disputes between the respective companies may be reached," Drew said.

Another Japanese firm, Taisei Fire & Marine Insurance Co., filed for bankruptcy in November. It faced claims greater than the company's worth.

The third Japanese insurer, Aioi Insurance Co., has announced it will stop doing business with Fortress Re in June, according to Bloomberg.

Fortress Re earns commissions and fees by recruiting insurance companies into pools, managing their insurance policies and settling claims.

Insurance pools are common. They consist of insurers that come together to share risks on policies with potential for large losses. That way a company doesn't get wiped out by a catastrophic event. In general, this practice is known as reinsurance.

Asahi Shimbun, one of Japan's largest newspapers, and various financial news services have reported the Fortress Re pool has been hit with huge claims from the loss of five jetliners: the four that terrorists hijacked and crashed into the World Trade Center, the Pentagon and a field in rural Pennsylvania; and the plane that crashed, apparently by accident, in Queens, N.Y., in November.

Drew said the Japanese pool had coverage on the planes, along with "the liabilities associated with the loss."

He called Morgan Stanley's $4 billion estimates "grossly inaccurate," but he declined to reveal what he believes is the true figure. Drew said Fortress Re is "a privately held company and its corporate policy does not permit it to disclose business information concerning its member companies."

But Fortress Re may be forced to open its files to public view. The Dow Jones news service reported that the U.S. Bankruptcy Court in New York could order the company to turn over internal documents regarding how it organizes reinsurance pools.

Fortress Re was founded in 1972 by Maurice Sabbah, who remains as chairman and whose family owns 66 percent of the stock. The company describes itself as an "international reinsurance underwriting manager" working with companies to provide aviation, marine, fire and other types of nonlife insurance.

Sabbah is an intensely private man who has emerged in recent years as a major philanthropist whose projects include American Hebrew Academy, which opened last fall on a 100-acre campus in western Greensboro. He referred questions about the company to Drew, his nephew.

Drew required the News & Record to submit written questions.

During its 29 years of business, Fortress Re has had relationships with 17 different insurance companies, Drew said. Since 1985, all of those companies have been Japanese.

Asahi Shimbun, the Japanese newspaper, reported that documents obtained from Taisei, the bankrupt company, indicated that other companies that Fortress Re brought into the pool were responsible for making initial payouts to settle claims, but that Taisei, Nissan and Aioi were responsible for reimbursing them.

"In effect," Asahi Shimbun said, "the three Japanese insurers were left with the full burden of the value of any reinsurance claims."

Glenn Drew denied that the three insurance firms were saddled with all losses, but he didn't elaborate.

Informa Publishing, another financial news reporting service, wrote that if the three Japanese companies were unaware of their risk exposure, it was because they didn't ask or didn't read the fine print of the Fortress Re contract. The article said their relationship with Fortress Re, dating back to the 1970s and 1980s, had been profitable.

"None of the companies had reviewed the risk of reinsurance over the last 30 years because revenues from underwriting reinsurance contracts were never lower than the total insurance payouts and commission paid to Fortress," Informa said.

When asked if Fortress Re faces insurance claims itself from the September and November tragedies, Drew did not answer directly. Instead he explained the nature of the company.

"Fortress Re is not a risk-bearing company and does not itself provide insurance or reinsurance coverage," he said.

A ruling in a 1995 U.S. Tax Court case - about whether Japanese members must pay taxes earned from Fortress Re pools from 1986-88 - hints at the company's financial success. The court revealed that Fortress Re's profits for 1986 were $1.8 million, jumping to $5 million in 1987 and soaring to $20.7 million in 1989.

The court said in the ruling Fortress Re has a good reputation for working with pool members and promptly settling claims, and it plays an important role in the international reinsurance market.

Most years, insurance premiums to Fortress Re pools offset claims because air crashes, ship accidents and natural disasters are few and far between.

But as David Threadgold, a business analyst in Japan, told the Chikako Mogi Reuters News Agency, "Fortress Re caught a very bad cold with five airliners ... going down in the space of two months."

Contact Jim Schlosser at 373-7081 or jschlosser@news-record.com

Contact Margaret Moffett Banks at 373-7031 or mbanks@news- record.com

September Trial Date Set in Fortress Re Case
Best's Insurance News
December 21, 2004

GREENSBORO, N.C. (BestWire) - Discovery has resumed in lawsuits brought by two of Japan's largest insurers and the liquidators of the defunct Carolina Re against Deloitte & Touche LLP, claiming the auditor assisted Fortress Re Inc. in obscuring the balance sheet liabilities that led to its ultimate collapse.

The suits, brought in North Carolina Business Court by Japanese insurers Sompo Japan Insurance Inc. and Aioi Insurance Co. Ltd. and liquidator McKenna and Hughes, center on Deloitte's bookkeeping for the North Carolina aviation risk reinsurer, which collapsed shortly after the Sept. 11, 2001, terror attacks. Fortress, the companies claim in their court filings, told the Japanese insurers it had gotten insurance to cover their losses, when it actually was relying on financial reinsurance, a technique sometimes used as a loss-mitigation tool to reduce volatility on balance sheets and that has recently been the subject of heightened scrutiny by the U.S. Securities and Exchange Commission and New York Attorney General Eliot Spitzer, among others.

In mid-November, a mediation order handed down by Special Master for Discovery Richard J. Wertheimer was extended several weeks, and all discovery related to the case was postponed until Dec. 6. But with no apparent resolution in sight, the court moved to set a trial date of Sept. 6, 2005, while also urging the parties "to continue their mediation and settlement efforts with utmost diligence." Wertheimer set a July 1 deadline for all fact discovery related to the actions, and gave Deloitte until Feb. 4 to file its motion to consolidate the three cases.

The judge also granted Deloitte opportunity to depose up to seven witnesses affiliated with Carolina Reinsurance Ltd. and up to 35 witnesses associated with Aioi and Sompo. The plaintiffs were granted opportunity to depose up to an additional four witnesses affiliated with Deloitte & Touche Bermuda. Additionally, any of the parties may depose up to six witnesses affiliated with Fortress Re Inc.

A Deloitte spokesman said the company had no comment on the progress of mediation talks, or the trial date set in North Carolina. At the time of the suit's filing, the company issued a statement saying that "the entire premise of this lawsuit — that two of Japan's largest and most sophisticated insurance companies did not understand their own high-risk business strategy — is demonstrably false and incredible on its face." Deloitte said it told Fortress Re, its client, about its liabilities, and that it was Fortress' job to communicate anything further to the Japanese insurers. The Japanese companies' claims in that case are properly lodged "against their own agent, Fortress, not Deloitte."

In the case of Fortress, the North Carolina firm handled the reinsurance business for Nissan, Aioi and another Japanese insurer, Taisei Fire & Marine Insurance Co. Ltd., for nearly 30 years. In the three suits, all being heard by Judge Ben F. Tennille, the state's Special Superior Court Judge for complex business cases, Nissan, Aioi, and McKenna allege that Deloitte hid Fortress Re's financial reinsurance arrangements from them.

Sompo earlier won a ruling against Fortress Re in which it claimed it had been defrauded. An arbitration panel in December 2003 awarded Sompo a $1.12 billion judgment against the reinsurer (BestWire, Dec. 23, 2003), finding that Fortress Re officers Maurice Sabbah and Kenneth Kornfeld engaged in actual and constructive fraud, violated the management agreement and breached their fiduciary duties.

Fortress Re's aviation risk pool, now in run-off, collapsed after facing claims from Sept. 11 and the Nov. 12, 2001, crash of an American Airlines jet. The Fortress pool members were Nissan, Aioi and Taisei Fire & Marine, the last of which went bankrupt in November 2001. Aioi filed a separate suit against Fortress in December 2002.

(By R.J. Lehmann, associate editor: raymond.lehmann@ambest.com)

At 8:18 AM, Blogger jewishwhistleblower said...

Greensboro News & Record
October 1, 2002

A Japanese insurer can see some personal financial records and charitable donations of Fortress Re's owners - including American Hebrew Academy donor Maurice Sabbah - as part of its civil fraud case, a U.S. magistrate ruled Monday.

At a pretrial conference, an attorney for the Japanese company, Sompo Japan Insurance, discussed Sabbah's philanthropy publicly for the first time, saying Sompo "has an obligation to stop the flow of our assets to other people."

The attorney held up a recent national magazine article, in which Sabbah is quoted as saying he plans to leave his estate to the academy, which he hopes eventually will have an endowment of $500 million. He told Forbes he already has given the academy $100 million.

Sompo filed suit against Fortress Re in U.S. Middle District Court in Greensboro in January. The Tokyo-based company accuses Sabbah and co-owner Kenneth Kornfeld of converting hundreds of millions of its money and using it for their own purposes. Fortress Re's owners deny the charge.

On Monday, U.S. Magistrate Trevor Sharp gave Sompo access to Sabbah and Kornfeld's personal documents dating to Dec. 31, 1995. Those documents include tax records, financial statements and charitable donations, along with a record of any expense of $10,000 or more.

Sompo's attorneys said they need access to those records to prove that Sabbah and Kornfeld had diverted money from Sompo through deception. Lawyers for Sompo say they don't know the exact amount, but speculated it could be as high as $1 billion.

"We don't know what a billion dollars was funding," said Elizabeth Sandza, a Washington attorney representing Sompo. "It's a lot of money. There had to be a reason for it."

Fortress Re, located in Burlington, made money through commissions and fees for managing an aviation-reinsurance "pool" - a risk-sharing insurance group - for Sompo and two other Japanese companies. Fortress Re was the reinsurance manager for the four airplanes hijacked on Sept. 11.

Fortress Re's lawyers, including Jim Phillips of Greensboro, couldn't persuade Sharp that gathering Sabbah and Kornfeld's personal documents was a ploy to "annoy, harass and embarrass" them.

Sandza said those records were central to Sompo's case. She reinforced her argument by twice holding up a copy of the September issue Forbes magazine - which contained an interview with Sabbah, conducted by freelance business writer Ed Cone of Greensboro.

Sandza quoted Sabbah in the article saying, "I came into this world with nothing, and I will leave with nothing."

Given this claim, Sandza said, "we have an obligation to stop the flow of our assets to other people."

When asked later if she was referring specifically to the American Hebrew Academy, Sandza said she meant "everybody" to whom Sabbah gave money. And when asked if Sompo would try to retrieve assets donated to charities such as the academy, Sandza shrugged.

"We just don't know what's out there," she said.

Sabbah gave a rare interview to Cone, who writes a weekly column for the News & Record. In the Forbes article, Cone reveals that the American Hebrew Academy's "secret benefactor" is Sabbah, who has "poured $100 million of (his fortune) into the school."

"I was faced with all this wealth, and I just wasn't geared for it," he told Cone. "I wasn't about to change my lifestyle.

Tax records show the academy, which opened in September 2001, holds $104 million in assets - just short of what High Point University has amassed in its 78-year-history.

Sabbah told Cone that the academy has "at least $50 million" in the bank, which would cover the school's operating costs for 10 more years. Sabbah also said his estate will go to the academy.

"If other donors can be persuaded to finish the $250 million construction plan," Cone writes, "he can focus on creating an endowment of up to $500 million."

Glenn Drew, Fortress Re's general counsel and Sabbah's nephew, declined to comment Monday on the article. Drew serves as spokesman for Sabbah and Kornfeld, both of whom have declined numerous requests from the News & Record for interviews.

The Forbes article reveals more details about Sabbah, who despite his wealth remains a mystery to most people in Greensboro. Sabbah, known as "Chico" to his friends, was raised in Brooklyn and Great Neck, N.Y. He attended the University of California at Davis, where he studied agriculture - "I wanted to be a farmer in Israel," Sabbah told Cone.

Sabbah also served in the U.S. and Israeli armies and worked on an alfalfa farm in Israel, Cone writes. Sabbah got a job with Public Service Mutual Insurance in New York and, later, Penn General Agencies in Burlington, for whom Sabbah created a reinsurance business called Fortress Re.

In 1979, Penn General sold Fortress Re to Sabbah and Kornfeld for $700,000, according to the Forbes article.

Contact Margaret Moffett Banks at 373-7031 or mbanks@news- record.com


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