A.G Schneiderman And Comptroller Dinapoli Announce Guilty Pleas By Former Met Council Directors For Stealing $9M In Kickback Scheme
William Rapfogel And David Cohen Admit To Decades Of Theft From NYC Charity.
New York, NY - April 23, 2014 - New York State Attorney General Eric T. Schneiderman and New York State Comptroller Thomas P. DiNapoli today announced the guilty pleas of William Rapfogel, former executive director and chief executive officer of the Metropolitan Council on Jewish Poverty (Met Council), and David Cohen, also a former executive director of the council. Rapfogel and Cohen both face prison time after pleading guilty to multiple felony charges for stealing, together with other co-conspirators, approximately $9 million from the taxpayer-funded nonprofit organization in a 20-year grand larceny and kickback scheme.
Cohen admitted illegally receiving approximately $650,000 in cash kickbacks and payments for personal expenses. Rapfogel admitted that between January 1993 and August 2013, while working with Cohen, Joseph Ross of the insurance company Century Coverage Corporation and others, he stole in excess of $1 million from Met Council.
“These defendants abused positions of trust to steal millions of dollars from a taxpayer-funded charitable organization -- one that is dedicated to serving New York City’s poor,” Attorney General Schneiderman said. “Those who rip off taxpayers and charitable organizations will be prosecuted. While New York has the greatest nonprofit sector in the country, this case reminds us that we must vigilantly protect it. I want to thank Comptroller DiNapoli for his continued partnership in our mission to root out public corruption and ensure that taxpayer money is protected. I also thank the Met Council board of directors for bringing this activity to light and cooperating with our investigation.”
State Comptroller DiNapoli said, “This was a troubling and sad case of personal gain at the expense of important community services. I commend Attorney General Schneiderman and his staff for their diligence in prosecuting this matter and recovering millions of dollars in stolen funds. We will continue to work with the Attorney General through our Joint Task Force to root out public corruption.”
Rapfogel, 59, pleaded guilty today before the Honorable Larry Stephen in New York County Supreme Court to Grand Larceny in the First Degree (a class B felony), Money Laundering in the Second Degree (a class C felony), Criminal Tax Fraud in the Third Degree (a class D felony) and Offering a False Instrument for Filing in the First Degree (a class E felony).
In exchange for his guilty plea, Rapfogel will be sentenced to 3 1/3 to 10 years in prison and will pay $3 million in restitution. If he fails to pay the restitution by his sentencing date, July 16, he will be sentenced to 4 to 12 years in prison.
Cohen, 70, pleaded guilty today before the Honorable Michael Obus in New York County Supreme Court to Grand Larceny in the First Degree, Grand Larceny in the Third Degree and Conspiracy in the Fourth Degree. In exchange for his guilty plea, Cohen will be sentenced up to 1 1/2 to 4 1/2 years in prison and agreed to pay $650,000 in restitution by his sentencing date, set for July 9.
According to the Attorney General’s felony complaints and admissions made by the defendants as part of their guilty pleas, from 1993 to 2013, Rapfogel served as head of Met Council, a New York State not-for-profit organization that provides the poor and elderly in the metropolitan New York City area with social, economic, housing, food and emergency financial assistance as well as anti-family violence programs. Met Council receives funding through New York State and New York City grants, legislative member items and contracts. Prior to Rapfogel, Cohen was Met Council’s executive director and, after Rapfogel took over in 1993, he served as a consultant to the nonprofit.
Rapfogel and Cohen admitted engaging in an elaborate kickback scheme to steal money from Met Council. The scheme began in 1992 when Cohen devised a scheme with Joseph Ross of Century Coverage Corporation in which the company would submit inflated invoices for insurance coverage to the nonprofit. Met Council paid the inflated premiums, and then Ross paid cash kickbacks to Cohen and Herb Friedman, Met Council's chief financial officer. Ross previously pleaded guilty to Grand Larceny in the First Degree and other charges for his role in the conspiracy and is awaiting sentence.
About six months after Rapfogel took over as executive director in 1993, he joined the conspiracy and received kickbacks, either in envelopes of cash or through payments of personal expenses by Ross. Initially, Ross paid Rapfogel and Cohen each $20,000 to $30,000 per year, but the inflated amount on the insurance policies increased over time, with Rafogel ultimately receiving approximately $30,000 per month. Cohen admitted to receiving approximately $650,000 in cash kickbacks and payments for personal expenses.
Rapfogel obtained the largest share of the kickbacks. As part of his plea, he admitted that from approximately January 1993 to August 2013, while working with Cohen, Friedman, and Ross, he stole over $1 million from Met Council as part of the kickback scheme. In August 2013, investigators from the Attorney General’s Office recovered more than $400,000 in cash that was hidden in Rapfogel’s homes. As restitution for his crimes, Rapfogel agreed to repay over $3 million to Met Council.
As part of the scheme, Rapfogel and Cohen also directed Ross to make political donations to various candidates for elected office from Century or from straw donors, using money obtained from the inflated payments for the insurance policies. These campaign contributions were made to politicians whom Rapfogel and Cohen believed could help Met Council.
These convictions are a result of an ongoing investigation by the Attorney General’s Office in conjunction with New York State Comptroller DiNapoli, as part of the Joint Task Force on Public Integrity.
The joint investigation by the Attorney General’s and Comptroller’s offices continues.
Attorney General Schneiderman and Comptroller DiNapoli would like to thank the New York City Department of Investigation, the New York State Department of Financial Services and the New York State Department of Taxation and Finance for their assistance with the investigation.
Gerard Matheson is the lead investigator assigned to the case. Supervising Investigator Michael Ward of the Investigations Bureau is also working on the case. The Investigations Bureau is led by Chief Investigator Dominick Zarella. Also assisting in the investigation are Supervising Auditor Edward J. Keegan, Associate Auditor Matthew Croghan, Auditor Matthew Krogan, Assistant Attorney General Milton Yu and Investigative Analyst II Paul Strocko of the Criminal Enforcement and Financial Crimes Bureau, Legal Support Analyst KerryAnn Rodriguez and Supervising Analyst Brian Selfon of the Public Integrity Bureau, and Policy Analyst Liam Arbetman of the Charities Bureau.
This case is being prosecuted by Gary T. Fishman, Chief of the Criminal Enforcement and Financial Crimes Bureau, with Assistant Attorney General Jihee Suh of the Public Integrity Bureau. The Attorney General's Criminal Justice Division is led by Executive Deputy Attorney General Kelly Donovan.