Can Greenfield even join the Met Council?

William Alatriste for the New York City Council

New York City Councilman David Greenfield’s July 17 announcement that he will not run for re-election and instead head the Metropolitan Council on Jewish Poverty has put the challenged nonprofit back in the spotlight and revived concerns about its political entanglements. Questions about accountability have trailed the sprawling nonprofit since a $9 million grand larceny and kickback scheme was exposed in 2013.

Since that scandal, the Met Council has been subject to a complicated, multiagency oversight agreement. The agreement may, in fact, preclude Greenfield from taking the job as his hiring has yet to be approved, or even considered by some of those agencies.

The Met Council, established in 1972, became a large and influential charity running food banks, offering domestic violence services, operating affordable housing and providing other services for low-income New Yorkers. But through 2013, Met Council Executive Director David Cohen and CEO William Rapfogel, along with other co-conspirators, stole about $9 million from the nonprofit as part of a “20-year grand larceny and kickback scheme,” according to the state attorney general’s office. Rapfogel pleaded guilty and was sentenced in 2015 to three to 10 years in prison, but was quietly granted a “merit release” in May, according to the Daily News.

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Following the scandal, the charities bureau of the state attorney general’s office drafted an agreement for the New York City Department of Investigation, the Mayor’s Office of Contract Services and the state Division of Budget to oversee the Met Council, and mandated that the Met Council’s remaining board of directors – several were dismissed as a result of the Rapfogel scandal – agree to a set of stringent governance and oversight rules to qualify for city and state funding. The 14-page contract stipulates that the nonprofit adopt several reform measures, including hiring an outside auditor; creating subcommittees on the board of directors to review compensation, governance and other issues; developing a plan to fix any financial deficiencies; and appointing two independent directors to the board subject to approval by the state comptroller and city agencies tasked with monitoring the organization.

It’s not clear how many of these actions the organization has fulfilled, and representatives of the Met Council did not respond to repeated requests for comment. The organization does have anethics code and has a general counsel and compliance officer listed on its website, both listed in the oversight agreement.

Among the agencies overseeing the Met Council, the Mayor’s Office of Contract Services did not respond to a request for comment. The city Department of Investigation declined to answer specific questions about whether the nonprofit followed the oversight agreement as it pertains to hiring Greenfield, only confirming that the monitorship agreement requires it to review the hiring of executives. “That process is ongoing,” a spokesperson said.

Greenfield would replace Alan Schoor, a veteran of the Jewish Board of Family and Children’s Services, who took over the nonprofit in 2015 from David Frankel. Combined, the two were paid $750,000 to run the organization even as revenues dropped by more than 30 percent in one year, according to the Forward.

The state Division of Budget, however, made it clear that Greenfield’s hiring was not yet official, and that the agencies overseeing the Met Council were not consulted or involved in the process of selecting Greenfield as the chief executive.

“The monitoring agreement established in 2013 provides that the city and state have final approval on the executive director of the Met Council,” Morris Peters, a spokesman for the state Division of Budget, wrote in an email. “To date, the Division of Budget has not been consulted or involved with this proposed appointment and, accordingly, has not approved it. Along with the city, we will be discussing the candidate with the Met Council shortly and we expect all monitors will meet with the board in the coming weeks to obtain a status update on operations.”

Several observers have raised the issue of state Attorney General Eric Schneiderman’s involvement in the oversight arrangement. A 2015 City & State story raised the issue of Schneiderman’s office striking a plea deal with Rapfogel in which millions of dollars in restitution was repaid to some of the same directors on the Met Council board who turned a blind eye to Rapfogel’s illegal activities.

Despite drafting the oversight agreement, Schneiderman’s office is only tangentially involved in scrutinizing the Met Council’s activities. Direct oversight is provided by the three aforementioned agencies. However, if the Met Council was found to be in violation of the oversight agreement, Schneiderman’s office could take action against the nonprofit. The attorney general’s office did not respond when asked if it had received any referrals from the agencies overseeing the Met Council.

“If you’re the leadership of Met Council, you want everyone ... to have nothing but warm and fuzzy feelings about you. ... That means there’s no room for being involved in politics.” – City Councilman Rory Lancman

The Met Council is the umbrella organization for 19 local Jewish Community Councils across New York City, with the heaviest concentrations in the North Bronx and Central and South Brooklyn.

As the Forward recently reported, the Met Council is still struggling financially, with Schoor cutting contributions to employees’ retirement plans in June, saying, “The financial situation of the agency remains a challenge.”

Greenfield’s appointment marks another chapter in the Met Council’s uphill climb. In early 2015, the organization had planned to merge with UJA-Federation of New York – a considerably larger faith-based social services organization – only to instead appoint Schoor to lead the Met Council.

Even as it recovered, the organization continued to provide services to low-income New Yorkers of all faiths. “It wasn’t scandal-ridden,” said City Councilman Rory Lancman, who, like many of his colleagues, helps fund several Met Council programs through discretionary funding. “A couple of guys figured out how to steal some money, and like a lot of nonprofits, even large ones – and a lot of for-profit corporations – you had a board that was asleep at the switch.”

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In response to the announcement about Greenfield’s move to the Met Council, Lancman tweeted that he was “really shaking my head at this one” as the nonprofit “got burned for being too close to politics just a few years ago.” He told City & State that he expected the Met Council to veer away from those politics and to conduct itself in a nonpartisan, apolitical fashion as well as tamp down on executive pay that exceeded $400,000 for Rapfogel.

Indeed, sources familiar with the inner workings of the Met Council said that there were several members of the organization’s leadership that were highly uncomfortable with the timing of Greenfield’s announcement that he would not run for re-election. Because Greenfield made the decision after the ballot petitioning deadline, a committee on vacancies that he controls named a replacement for his council seat – Kalman Yeger – a former Greenfield aide and Met Council employee.

“If you’re the leadership of Met Council, you want everyone in the Jewish community and you want everyone in city and state government to have nothing but warm and fuzzy feelings about you and your organization,” Lancman said. “That means there’s no room for being involved in politics – in partisan politics or political machinations.”

But that may be exactly why the organization planned to hire Greenfield. Speaking to New York Jewish Week, Met Council board President Abraham Biderman credited his “excellent relationships in government” and “knowledge of how government works, which is a major funder of Met Council, and his knowledge of his constituents, who are served by the Met Council.”

John MacIntosh, partner and board member of SeaChange Capital Partners, which has worked with troubled or compromised organizations, wrote in an email that he’s experienced nonprofits in similar situations are put at a disadvantage when fundraising. “Most nonprofits are largely fungible to private funders – lots of other groups are clamoring for donations – and also to government which can usually find others to take the contracts,” he said.

SeaChange recently helped guide the Healing Arts Initiative through a merger after its executive director discovered an embezzlement scheme. He noted that often the rank-and-file employees are those who suffer when a nonprofit stumbles.

“So the most common strategy is to make pleas from desperation in the hopes of limping along until memories fade,” MacIntosh said. “This is really tough on staff, very few of whom had any culpability for the problems.”