Davis Lawyers Win Case For Whistleblowers in Non-Profit Misappropriation Case
Chabad of California was found guilty of misappropriating federal grant money in a federal court in Sacramento on December 9 after investigators had been alerted to the crime back in 2010.
U.S. District Court Judge Morrison C. England Jr. ruled that Chabad of California, a subsidiary of the Chabad-Lubavitch Hasidic/Orthodox Jewish movement, misused almost $272,500 it had been granted by the United States Department of Homeland Security. The grants were designed to pay for security upgrades at facilities managed and occupied by nonprofits. Chabad of California took the federal money and deposited it into its bank accounts and then used it to pay for payroll and building repairs.
The whistleblowers are Aria and Donna Kozak. Their company, Elite Interactive Solutions based out of Los Angeles, had been hired by Chabad to install state-of-the-art video surveillance equipment at several of the nonprofit’s properties. The Kozaks were never paid even though they repeatedly requested the agreed-upon compensation for the work their company completed.
Judge England ordered Chabad of California to pay fines amounting to $844,985. That amounts to triple what the nonprofit misused.
The Kozaks’ lawyer Michael Hirst, of the Davis-based Hirst Law Group, had filed the lawsuit against the nonprofit in April, 2010. Hirst also worked with the federal government after it joined the litigation.
Rabbi Boruch Shlomo Cunin (Chabad.org)
Judge England stated that deposition testimony by Rabbi Boruch Shlomo Cunin, the president of Chabad of California was “damning…Rabbi Cunin treated the grants as if they were gifts to Chabad.” In other words, Chabad did not follow proper financial management procedures in its use of the federal money, spending it as it saw fit.
Lauren Keene of The Davis Enterprise reported that she attempted to contact the Chabad of California branch located in a residential home at 732 Anderson Road in Davis for comment but received no reply.
According to the federal False Claims Act, enacted in 1863 under President Abraham Lincoln, whistleblowers who provide information about fraud are entitled to 15 to 25 percent of the amount the federal government successfully recovers in such cases. Hirst said the amount to be paid to the Kozaks is going to be worked out later.
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Davis Enterprise: Chabad of California fined for grant misuse
