Manhattan district attorney Cyrus Vance, Jr. and New York State Attorney General Eric Schneiderman have reportedly launched criminal investigations into the sudden collapse of FEGS, a large Jewish social service agency in New York, which announced recently that it would close after discovering a $19.4 million shortfall.
Citing an unnamed source, the New York Daily News reported Monday that the two law enforcement agencies are investigating the agency’s debt believed to be millions of dollars larger than initially reported.
Founded in 1934 by the UJA, the Federation Employment and Guidance Service employed 2,000 but provided health and disability services, home care and job training to so many more. With an annual operating budget of over $250 million, it helped over 135,000 clients with an estimated 20,000 of them being Jews.
Richard Altman, CEO of New York’s Jewish Child Care Association, told JTA, “FEGS had always been seen as the premier, cutting-edge, entrepreneurial, really smart organization in the Jewish world. It certainly had built a huge array of quality services over many years of diversifying their portfolio. It was seen by many of us as a model Jewish organization.”
When asked about the reason for their financial collapse Julie Farber, the senior vice president for planning, strategy and innovation at FEGS, told JTA the agency’s $19.4 million loss “was a result of multiple factors, including poor financial performance on certain contracts, contracts that did not cover their full costs, investments in unsuccessful mission-related ventures, write-offs of accrued program revenue, and costs resulting from excess real estate.” She added that a “forensic assessment has not uncovered any fraud or malfeasance to date.”
“We are very concerned about what will happen to the clients of FEGS,” The Daily News quoted Councilman David Greenfield (D-Brooklyn). “These services are more needed than ever before.”