Rabbi’s use of discretionary funds spurs new policies
In response to the Haiti earthquake in January 2010 and the Carmel forest fires in Israel in December 2010, members of Congregation Ner Tamid of South Bay, like so many others, wanted to donate money to help the victims. So, many of them directed donations through Rabbi Isaac Jeret’s discretionary fund.
But their money never made it to organizations working on the ground in Haiti and Haifa.
Jeret, who led the 500-member Conservative congregation in Rancho Palos Verdes for seven years, allegedly not only did not send the money where he was supposed to, but instead he is believed to have taken money from his discretionary fund to make political donations to congressional campaigns across the country, according to Timothy Weiner, the synagogue’s treasurer from September 2009 through June 2012, who participated in an internal investigation of the matter.
Discretionary funds, common in most synagogues and churches, typically empower clergy to discreetly assist the needy and to support other charitable endeavors. Jeret’s case, while an aberration, could prompt other synagogues to asses their own balance between, on the one hand, trusting their rabbi and keeping the confidentiality of recipients, and, on the other, providing greater oversight and accountability for how the funds are dispersed.
The board of Ner Tamid accepted Jeret’s resignation on May 24, following an investigation initiated by the board last February that uncovered evidence indicating that Jeret had used somewhere around $10,000 from his discretionary fund to support political candidates going back several years, according to attorneys leading the investigation. The investigation is not yet complete, so a final number is not available.
Use of synagogue funds for political purposes could have potentially threatened the synagogue’s tax-exempt status, an outcome Congregation Ner Tamid has worked to head off. The IRS has not contacted the synagogue, and attorneys do not expect the federal agency to get involved.
“Given the congregation’s swift and decisive action in investigating Rabbi Jeret’s conduct, accepting his resignation once that investigation was completed, and implementing more robust corporate governance and oversight procedures to prevent any similar issues from arising in the future, the congregation has best positioned itself to address any future IRS concerns,” said attorney Nathan Hochman, a partner with Bingham McCutchen in Santa Monica, who is assisting the synagogue pro bono. Hochman headed the tax division of the U.S. Department of Justice in 2008-2009.
Jeret declined to comment.
Jeret’s attorney, Nancy Kardon, said the rabbi left the synagogue on a medical leave of absence in February 2012.
“After that time, on behalf of Rabbi Jeret, we worked diligently to assist CNT in its effort to reconcile any purported misuse of the Rabbi’s Discretionary Fund. Rabbi Jeret has since paid back to CNT all monies for which it sought reimbursement, and, as of May 2012, formally resigned from CNT, due to his medical condition. The Rabbi offers his thanks and prayers to those who have stood by him in this trying time,” his attorney, Kardon, wrote in an e-mail to The Journal. Kardon declined to elaborate on Jeret’s medical condition, and attorneys for the synagogue also declined to elaborate.
Rabbi Joel Rembaum, rabbi emeritus of Temple Beth Am on the Westside, has agreed to lead the congregation on an interim basis; a search for a new rabbi will commence in the fall. Cantor Sam Radwine delayed his retirement and canceled a two-month sabbatical in Israel this summer to stay with the congregation.
Debra Schneiderman, president of the 51-year-old congregation, says Ner Tamid is well positioned to move forward.
“At Congregation Ner Tamid, we share in each other’s joys and comfort one another in our sorrows. Our community, always strong and vibrant, has rallied together in the last few months and is looking forward to building upon that strength in the coming year, when we will have the honor and privilege to be led by Rabbi Joel Rembaum and Cantor Sam Radwine.”
While Jeret was on medical leave in February 2012, board members received statements from his discretionary account, and that is what tipped them off that something was awry, Weiner said. Ner Tamid then placed Jeret on administrative leave and hired an accounting firm to begin an investigation. Board member and attorney Laura Abrahamson and Hochman headed the investigation, both offering their time pro-bono.
The investigation took a comprehensive look at all spending Jeret was involved in. The political contributions from the discretionary fund were the most significant instances of wrongdoing, according to Abrahamson.
Weiner, who was involved in the investigation, said Jeret made the political donations privately and then used the discretionary fund to reimburse himself.
Public records indicate that Jeret made campaign contributions totaling $6,500 in 2008 and 2010. Another $6,000 came from a Rabbi Leslie Jeret; Jeret’s full name is Leslie Isaac Jeret. It is not clear which, if any, of these donations were reimbursed from the discretionary fund.
Jeret has supported both Republican and Democratic congressional candidates from a broad geographic range.
Hochman said the synagogue has already taken all the actions the IRS would require if it were to investigate. In addition to accepting Jeret’s resignation, the synagogue has revamped how it oversees the discretionary fund. Lay leaders have contacted donors who made directed gifts that were not fulfilled and offered to reimburse them or donate the funds to the intended recipients, Weiner said.
While many rabbis can tell stories of discretionary fund misuse — colleagues paying for their own child’s bar mitzvah, leasing a car or simply writing checks to oneself — it is believed that cases like Jeret’s are few and far between, said Rabbi Alan Henkin, director of rabbinic placement of the Reform movement’s Central Conference of American Rabbis (CCAR).
“When you consider how much money goes through discretionary funds on an aggregate basis for several thousand synagogues, remarkably little of it is misused. The money is used for positive and productive purposes,” Henkin said.
The size of funds varies widely from synagogue to synagogue, ranging anywhere from a few hundred dollars to hundreds of thousands of dollars.
Donations to honor the rabbi, pushkes (collection boxes) and honorariums for lifecycle events typically fill the funds.
More often than outright abuse, the funds are the subject of misunderstanding, rabbis say.
“There is a lot of confusion on the part of rabbis and congregations about discretionary funds — what is appropriate use for them and what is not appropriate. We have tried over the years to provide some clarification for congregations and rabbis,” Henkin said.
A few years ago, the CCAR updated its discretionary fund guidelines. Ellen Aprill, a professor of tax law at Loyola Law School and a past president of Temple Israel of Hollywood, helped craft the guidelines.
Aprill cautions that if rabbis use the fund for personal benefit — even mixed personal-professional benefit, such as attending a conference — the IRS could consider the entire fund personal taxable income for the rabbi. (The Conservative movement’s Rabbinical Assembly guidelines allow for conference fees).
In addition, for congregants to take a tax deduction on their donation, the money must go to charitable purposes.
Congregants also can’t earmark a donation for a specific family, because that would essentially be laundering a person-to-person gift through a tax-exempt body. A congregant can, however, suggest a recipient to the rabbi, as long as the gift is not conditional, Aprill said.
And, of course, the disbursement must comply with the synagogue’s nonprofit status.
Aprill said while the IRS could theoretically go after Ner Tamid for influencing a political campaign, it typically doesn’t pursue cases if the nonprofit is addressing the situation.
Before this incident at Ner Tamid, the rabbi’s and cantor’s contracts stipulated that they must administer their respective discretionary funds according to Rabbinic Assembly (RA) guidelines, but no one checked regularly to make sure that was happening, said Weiner, a deputy attorney general for the state of California.
The new policy requires the board’s financial secretary to review the ledgers quarterly, and the financial secretary will also be a signatory on the account with full access to records. In alternating years, an outside accountant will review the rabbi’s and cantor’s funds, and the clergy will present to the membership an annual general breakdown of the fund. Direct reimbursement from the fund to personal accounts will not be permitted, according to Weiner.