Welcome, Guest! - or
Easy to remember!  »  VinNews.com

New York - Brooklyn-Based Children's Charity Accused Of $10 Million Fraud By State AG's Office

Published on: July 21, 2015 09:10 AM
Change text size Text Size  

Brooklyn, NY -  Attorney General Eric T. Schneiderman today announced that his office has filed a court action to shutter the National Children’s Leukemia Foundation (NCLF), and to hold accountable its founder, its president, its vice president, who is the founder’s son, and its auditor.

The lawsuit comes after an investigation by the Attorney General’s Charities Bureau allegedly revealed that the NCLF, which touted itself as a leading organization in the fight against leukemia, did not conduct most of the programs advertised on its website and in its solicitations – including claims it operated a bone marrow registry and fulfilled the last wishes of dying children – flouted critical filing obligations required of it under New York law.

The court papers charge that, despite claims it had a board of directors and other significant financial and scientific controls, the two-decade-old organization was largely a one-man operation, run by founder Zvi Shor, 64, out of the basement of his Brooklyn home.

Advertisement:

NCLF’s president and vice president are alleged to have breached their duties to the organization and to have aided and abetted Shor in running the organization; the auditor is accused of making false filings.

“Nothing is more shameful than pocketing millions of dollars donated by good-hearted people who just wanted to help children afflicted with a terminal illness,” said Attorney General Eric Schneiderman. “My office will continue to identify, investigate, and shutter so-called charities that use legitimate-sounding names to exploit the generosity of New Yorkers and betray the public’s trust. Those charitable organizations that do help our most vulnerable citizens, and put donors’ money to its intended use, are an essential part of the fabric of our state. I urge New Yorkers to continue giving to the neediest among us, but to give wisely.”

The lawsuit alleges that between 2009 and 2013, the NCLF raised $9.7 million from donors across America by:

• Repeatedly lying about having a bone marrow registry, an umbilical cord blood banking program, and its own cancer research center; and telling donors it had filed a patent application for a new lifesaving treatment for leukemia when it had not;
• Lying when it told potential donors that funds raised would be used to “fulfill wishes of terminally sick children,” including sending these children to Disney World, when NCLF had not done so in years;
• Making false official filings, including annual financial filings submitted to the Attorney General’s Office, by reporting individuals as directors of the organization without their knowledge, and falsely reporting a large portion of fundraising expenses as public education about cancer;
• Filing false audit reports, when no audits were in fact conducted.

As the petition charges, between April 2009 and March 2013, NCLF collected approximately $9.7 million in revenue from thousands of donors across the country. Of that, $8.9 million was solicited by professional fundraisers hired by Shor, who were in turn paid approximately $7.5 million – or 83% – of the money raised. Of the remaining funds, according to the organization’s filings, the organization spent less than 1% percent – $57,541 – of its income on direct cash assistance to leukemia patients and transferred another 5% – $655,000 – to a shell organization in Israel run by Shor’s sister, allegedly for research purposes. Over the same time period, Shor was paid a salary of nearly $600,000, and awarded himself another $600,000 in deferred compensation.

The Attorney General’s investigation found that NCLF’s president, Yehuda Gutwein, 58, who lives in Brooklyn, was president in name only. Gutwein, a certified public accountant, took over the title in May 2010, when reports surfaced that Shor, who had been president since the organizations 1991 founding, was convicted of felony bank fraud in the Eastern District of New York in 1999. Shor’s son, Shlomo Shor, 43, also of Brooklyn, stepped in as a director and vice president, but did nothing other than sign checks and forms, as he was ordered to do by his father.

New York law requires that the board of directors of a charitable organization be true overseers of the organization, and that directors perform their fiduciary duties, including reviewing documents and overseeing management. It also requires that forms submitted to the Attorney General’s office be accurate and that charities comply with accounting rules in reporting their program expenses.

Investigators also found that an accountant hired by NCLF, Shlomo Donn, 35, of Lakewood, New Jersey, signed audit reports that were filed with the Attorney General’s Charities Bureau, but did not in fact conduct any audits.

From 2009 to 2013 the respondents submitted audit reports and other official documents to the Attorney General’s Office and the New York State Department of Health containing material falsehoods that concealed NCLF’s numerous violations of New York’s charities laws. These false reports – signed variously by Shor, Gutwein, Shlomo Shor and Donn – misrepresented NCLF as an organization overseen by a 13- to 16-member board of directors and a separate medical advisory board, with a large and diverse array of programs that directly assist cancer-stricken children. NCLF’s financial statements also misreported millions of dollars in fundraising expenses as “education” or “awareness raising.” This false reporting made NCLF appear to spend more on programs than it did in fact.

The charges against the auditor signal an increased focus on accountants and auditors of not-for-profits by Attorney General Schneiderman’s Charities Bureau.
The petition filed in Kings County Supreme Court today seeks to recover the full amount of all funds raised through fraudulent representations.

The investigation into NCLF was initiated as a result of the Bureau’s “Pennies for Charities” report, which showed that a tiny fraction of donations raised by many professional fundraisers actually went to the charitable causes donors intended to support. The Bureau revoked NCLF’s registration in January 2014 as the investigation developed.

Mr. Shor’s attorney, Douglas Gross, said the AG’s petition was without “substance” and that his client ran the charity with the “best of intentions.”


More of today's headlines

Pyongyang - North Korea said Tuesday that it's not interested in an Iran-type nuclear disarmament deal, saying it won't abandon its atomic weapons as long as the United... United Nations - The United Nations approved U.N. accreditation Monday for the London-based Palestinian Return Center in a defeat for Israel which claims the...

 

Total27

Read Comments (27)  —  Post Yours »

1

 Jul 21, 2015 at 09:39 AM Normal Says:

Another reason people are not giving money to charity. Anyone wanting my money can get it off Hazan Yeshaya.

2

 Jul 21, 2015 at 09:41 AM ItsMyOpinion Says:

Another Hillul Hashem and during the nine days no less.
Gashmius above all!
Hashem yirachaym!

3

 Jul 21, 2015 at 09:48 AM lazerx Says:

Are they Israelis or 'frum' people? What ever they are, they are certainly michalel shem shamayim b'rabim!

4

 Jul 21, 2015 at 09:51 AM TexasJew Says:

Do these people realize that many people who read these types of stories end up going OTD. This is disgusting. These people should sit in jail for the rest of their lives in found guilty. Stealing from such an organization where kids are dieing because these animals want to live big. Throw away the keys.

5

 Jul 21, 2015 at 10:29 AM ShmutzVesh Says:

My heart is hurting.

6

 Jul 21, 2015 at 10:32 AM RuNuts Says:

It's totally disgusting. That false accusations are being thrown around, and good people's names are being dragged through the mud. If it's on the internet, then it must be true, right? NOT! I have a relative involved, and half the "facts" in this story are not true.

7

 Jul 21, 2015 at 10:34 AM registered charity Says:

Reply to #4  
TexasJew Says:

Do these people realize that many people who read these types of stories end up going OTD. This is disgusting. These people should sit in jail for the rest of their lives in found guilty. Stealing from such an organization where kids are dieing because these animals want to live big. Throw away the keys.

I have to agree with you, especially on sitting in jail. How many devastated people who donated generously are there who, instead of funding research or support, ended up paying for some crook's personal lifestyle? Ignorance of the law is no excuse. File your papers & be accountable!

8

 Jul 21, 2015 at 10:50 AM Mikey Says:

Reply to #4  
TexasJew Says:

Do these people realize that many people who read these types of stories end up going OTD. This is disgusting. These people should sit in jail for the rest of their lives in found guilty. Stealing from such an organization where kids are dieing because these animals want to live big. Throw away the keys.

TexasJew you are correct in your assessment that these people should be punished. You are way off base in saying that this is the reason go off the derech. You are out of touch man.

9

 Jul 21, 2015 at 11:15 AM BuckyinWisconsin Says:

Another scam from Brooklyn. Does it ever stop?

10

 Jul 21, 2015 at 11:23 AM BigBoich Says:

its amazing how anytime a frum yid is accused we all have our opinion and we all come out against him without knowing any facts only allegations. and believe it or not the torah also says judge a Jew favorably. the e vast majority of people writing comments have not heard of this person or his story prior to this news article and are solely basing it on info that are allegations. let the facts unroll before judging. you have heard one side only. that's very poor judgment if you ask anyone with brains!!

11

 Jul 21, 2015 at 12:00 PM commonsense99 Says:

Reply to #6  
RuNuts Says:

It's totally disgusting. That false accusations are being thrown around, and good people's names are being dragged through the mud. If it's on the internet, then it must be true, right? NOT! I have a relative involved, and half the "facts" in this story are not true.

even if "half the facts are not true" that means half are, and that is sickening! i feel bad that he lost a son, I lost a niece to cancer but to try and milk this into a scam is sickening

12

 Jul 21, 2015 at 12:04 PM hashomer Says:

Reply to #8  
Mikey Says:

TexasJew you are correct in your assessment that these people should be punished. You are way off base in saying that this is the reason go off the derech. You are out of touch man.

People may not go OTD as a result of such repeated scandals and disgusting scams and bad frum behavior (BFB), but people who are OTD stay OTD, when they see that all the exterior trappings and learning mean so little to those involved. The good frum people are being crushed by all these scams, just as secular America is being crushed by all the violence and racism that plague the country.

13

 Jul 21, 2015 at 01:02 PM chachom Says:

In the past 2 years, I know of 3 people who have been arrested and have had the charges dismissed.

14

 Jul 21, 2015 at 01:35 PM Anonymous Says:

My child had cancer and was treated at Sloan Kettering 4 years ago. He now has collected over $100k by having his friends ride on "Cycle for Survival." 100% of the money raised goes directly to rare cancer research. Why take a chance contributing to some guy in Brooklyn? Wise up people, there are crooks among us.

15

 Jul 21, 2015 at 01:40 PM abilenetx Says:

I believe, if you want to give charity, give it to the institution that you are in favor of. If you believe in a cause give it directly to the cause, such as a good hospital, or a Yeshiva, or a children's camp, etc. Never give money to a fund unless you find out how much goes to the real recipient and how much the fund holds back. Some times the fund holds more money back then it gives to the recipient that it is trying to help. It is your money be wise about it.

16

 Jul 21, 2015 at 02:02 PM yaakov doe Says:

Not the first time members of our community have been caught running phoney charities. My advice is that unless you know the charity, don't contribute. Recently a man was convicted of creating charities with names similar to the names of organizations that we know and trust. I would think that they will face severe punishment from the Heavenly Court.

17

 Jul 21, 2015 at 02:04 PM The Professor Says:

Reply to #6  
RuNuts Says:

It's totally disgusting. That false accusations are being thrown around, and good people's names are being dragged through the mud. If it's on the internet, then it must be true, right? NOT! I have a relative involved, and half the "facts" in this story are not true.

So you're prepared to stipulate that the other 50% of the facts are true?

18

 Jul 21, 2015 at 02:42 PM allmark Says:

Reply to #6  
RuNuts Says:

It's totally disgusting. That false accusations are being thrown around, and good people's names are being dragged through the mud. If it's on the internet, then it must be true, right? NOT! I have a relative involved, and half the "facts" in this story are not true.

Which half?

19

 Jul 21, 2015 at 03:15 PM yaakov doe Says:

Reply to #3  
lazerx Says:

Are they Israelis or 'frum' people? What ever they are, they are certainly michalel shem shamayim b'rabim!

Which one would make this less of a chillul Hashem?

20

 Jul 21, 2015 at 03:37 PM Bezalel Says:

Reply to #13  
chachom Says:

In the past 2 years, I know of 3 people who have been arrested and have had the charges dismissed.

Do you believe that O.J. Simpson was innocent?

21

 Jul 21, 2015 at 03:39 PM OyGevald Says:

Oy! Gutwein a really fine person. I can see him being suckered in. Such a quiet, unassuming and ehrlich-appearing individual. I hope and pray he comes out unscathed. May Hashem protect the innocent!

22

 Jul 21, 2015 at 04:07 PM Anonymous Says:

Reply to #10  
BigBoich Says:

its amazing how anytime a frum yid is accused we all have our opinion and we all come out against him without knowing any facts only allegations. and believe it or not the torah also says judge a Jew favorably. the e vast majority of people writing comments have not heard of this person or his story prior to this news article and are solely basing it on info that are allegations. let the facts unroll before judging. you have heard one side only. that's very poor judgment if you ask anyone with brains!!

Exactly right! Yasher koiach! All the supposedly from people here are so quick to be mekabel lashon hard from the secular press! Unreal, I can guarantee these people think they're knowledgable and learned in the Chofet Chaim's teachings. They're apikorsim. And by the way in this country its innocent until proven guilty, but I guess not here by our own ffrum oilam.

23

 Jul 21, 2015 at 04:22 PM OberBoberGrober Says:

Reply to #4  
TexasJew Says:

Do these people realize that many people who read these types of stories end up going OTD. This is disgusting. These people should sit in jail for the rest of their lives in found guilty. Stealing from such an organization where kids are dieing because these animals want to live big. Throw away the keys.

If when you read stories like this one becomes OTD, what happens when you read these stories on a non Jew, you become Jewish? Go back to your hole....

24

 Jul 21, 2015 at 05:45 PM CNN Says:

Reply to #20  
Bezalel Says:

Do you believe that O.J. Simpson was innocent?

James Sheehan, chief of the charities bureau at the attorney general's office, told CNN that the telemarketers hired by NCLF to make calls to donors received 80% of the funds.

25

 Jul 21, 2015 at 07:16 PM chachom Says:

Reply to #20  
Bezalel Says:

Do you believe that O.J. Simpson was innocent?

No. But if 3 people were indicted and never brought to trial and did not cop a plea, that means the charges were dismissed. That means that being arrested and indicted is not an indication of guilt. It has been said, by a Jewish judge no less, that you can indict a ham sandwich if you want.

26

Sign-in to post a comment

Scroll Up
Advertisements:

Sell your scrap gold and broken jewelry and earn hard cash sell gold today!