Israeli Court Orders Return of $500,000 Misused by Charity Officials

A District Court judge in Haifa has ordered the return of 1.8 million shekels (approximately $500,000) that were improperly spent by the chairwoman, CEO, and committee members of two charitable organizations. The ruling by Judge Ron Sokol concerns the "Keran LeChaim" (Foundation for Life) charity, established in 2003 to aid children in distress, at-risk youth, and children with cancer.

An audit by the Registrar of Associations revealed severe deficiencies between 2016 and 2018, including funds transferred to the personal account of then-chairwoman and later CEO Galit Shemesh-Fauker. Concerns were raised about the charity potentially being used to illegally transfer funds to other entities and about significant illicit profit distributions to Shemesh-Fauker. Despite commitments to rectify these issues, the charity failed to do so, with a 2021 report detailing hundreds of thousands of shekels spent, including rent payments to Shemesh-Fauker. In 2022, the charity allegedly falsified an "approved management" certificate to seek government assistance.

In 2019, the same individuals established a new charity, "Keran LeChaim for Children and Youth," headed by Adi Fauker, Shemesh-Fauker's husband. The court found that the creation of the new entity was likely an attempt to circumvent restrictions placed on the original charity. That same year, the older charity agreed to receive 1.9 million shekels from the estate of Helen Khatav for a program supporting vocational skills and assistance for teenagers with cancer, guiding cancer survivors, developing support networks, and funding equipment and treatments.

Judge Sokol ordered the dissolution of both charities in 2024 and appointed Ron Kahana as their liquidator. He found that funds from Khatav's estate were transferred from the old charity to the new one without court approval, using a forged court document submitted to the bank. The judge stated that the committee members showed a "striking lack of interest" in the proper handling of the donation, demonstrating "complete disregard" for their duties, the agreement, court orders, and the audit process. The new charity also allegedly used the funds for purposes other than those agreed upon, with documentation for its claimed expenditures, such as supporting a center for at-risk girls in Hadera, proving insufficient or inconsistent with the original agreement.

Further findings include a 150,000 shekel payment to a company owned by the father-in-law of the estate manager, which the judge suggested was a kickback. Approximately 600,000 shekels were paid as salaries to Shemesh-Fauker and another employee, Miriam Assiao, despite a lack of proof for their work hours or the necessity of their roles. The court also noted discrepancies in the charity's financial reports, including inflated expenses and hidden salary costs, which were likely intended to conceal the transfer of funds. Shemesh-Fauker also allegedly misrepresented her volunteer status and income to tax authorities. The judge concluded that the transfer of funds and the change in their intended use were designed to evade oversight and allow the respondents to manage the donations without restriction, while also benefiting personally from the funds.