Israeli Court Orders Charity Leaders to Repay $500,000 in Misused Funds
Translated & summarized from Makor Rishon by baba
An Israeli court has ordered former leaders of two charities to personally repay nearly $500,000 in misused donation funds intended for children with cancer. The funds were diverted to a different charity without court approval, and the court found that the leaders bypassed oversight and used the money improperly. The ruling emphasizes that volunteer status does not exempt charity officials from personal responsibility for managing public funds.
The story in 5 lines · by baba
- Israeli charities' leaders ordered to repay $500,000 in misused funds for sick children.
- Donation meant for cancer patients was diverted to a different charity without court approval.
- Court ruled volunteer board members are personally responsible for charity fund oversight.
- Charity leaders used forged documents and submitted false reports to authorities.
- The new charity was allegedly created to evade regulatory oversight and restrictions.
A district court in Haifa has ordered the board members and CEO of two Israeli charities, "Keran LeChaim" and "Keran LeChaim for Children and Youth," to personally repay approximately 1.85 million shekels (about $500,000) in donated funds. The money was originally intended as a specific donation for children with cancer from the estate of the late Helen Hatav.
In 2019, a family court approved the donation of nearly 1.9 million shekels to "Keran LeChaim" to aid young cancer patients. However, the funds were instead transferred to a different organization, "Keran LeChaim for Children and Youth," without court approval for the change in recipient or the purpose of the funds. This diversion occurred despite a thorough review by the Corporations Authority in the Ministry of Justice, which uncovered serious deficiencies in the operations of both charities.
When these deficiencies were not rectified, the Registrar of Associations initiated proceedings to dissolve the organizations. During the liquidation process, the court discovered that the designated donation had been unlawfully transferred, bypassing oversight mechanisms, altering its purpose, and using the funds inappropriately. Judge Ron Sokol emphasized that even volunteer board members bear personal responsibility for overseeing charity funds, stating that their duties of care and loyalty are not contingent on receiving payment.
The court ruled that the transfer of funds and the change in their designation were intended to allow the officials to evade oversight and restrictions imposed on the original charity. False reports were submitted to the Registrar of Associations, and forged documents were used. Some of the donation money was spent on improper payments, including brokerage fees, salaries, and rent, while evidence for alleged renovation expenses was insufficient.
The court accepted the liquidator's and the Registrar's claims that the new charity was established to circumvent scrutiny. The court stressed the significant trust and care obligations of board members, ruling that volunteer status does not exempt them from responsibility and that blind reliance on dominant figures is not a substitute for proper oversight. The ruling also highlighted the need for increased deterrence and strict adherence to donor intent when managing public funds and donations.
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