The Jewish National Fund of America has been ordered by a New York state court to respond to a class-action suit that accuses it of misleading American Jews into believing JNF allocates funds to Jews living in areas Israel captured during the Six-Day War of 1967.
Affidavits from the four plaintiffs in the lawsuit, who swore they have made donations to the JNF, charge that since 1967, they have been misled by JNF “circulars, brochures and literature disseminated to the general public (that) falsely and fraudulently and/or at the very least misled” contributors into believing that it allocates funds beyond Israel’s 1948 boundaries.
State Supreme Court Judge Shirley Finger-hood signed a show-cause order Sept. 19 requiring JNF to appear in court Oct. 5. That date has been moved to Oct. 12 because of the Jewish holidays. In the New York state court system, the Supreme Court is the trial court of general jurisdiction, rather than the highest appellate court.
Fingerhood’s order calls on the JNF to refrain in the interim from expending “any and all contributions given to JNF by the named plaintiffs.”
The judge originally had barred JNF from “making, publishing, distributing and disseminating” fund-raising materials in the interim. But she struck this provision to protect JNF’s First Amendment right to free speech, sources said.
The four plantiffs — Jay Marcus, William Goldman, Morris Stillman and Martin Gallin — have made “substantial contributions” to the JNF, totaling about $50,000, according to Howard Rubin, a senior partner in the New York law firm of Rubin and Juhase, who is the chief attorney for the plaintiffs in the case.
Sources who would not speak for attribution said that three of the plaintiffs have made only small contributions to the organization, which provides funds for the afforestation, reclamation and development of land in Israel.
UJA AND UIA ALSO TARGETED
The United Jewish Appeal and the United Israel Appeal, the main distributor of UJA funds, also do not fund projects in annexed East Jerusalem, the Golan Heights, the West Bank and the Gaza Strip, in part because of fear of jeopardizing their U.S. tax-exempt status.
Rubin said that he has drafted complaints against the others but that he is holding off until after he meets Oct. 7 with the UJA and UIA to see if their differences can be resolved without litigation. He asserted that his case against JNF was “the strongest” of the three.
Rubin said that his clients want to see the three groups allocate 10 percent to 15 percent of their money to Israel beyond the so-called 1948 armistice “Green Line.”
In addition, they are seeking a “lump-sum settlement” to compensate the 185,000 Jews they claim are living beyond the “Green Line,” for JNF’s past exclusionary practices.
The plaintiffs are also calling on JNF to pull all advertisements that effectively assert that its allocations “cover the map of Israel.”
The UIA distributed $328 million in Israel during the year ending March 31, 1988, while JNF dispensed $21.5 million there in 1987.
Rubin said that UJA and UIA, unlike the JNF, responded to the three summonses issued earlier this year by the rabbinical court of the Union of Orthodox Rabbis of the United States and Canada.
‘WITHOUT BASIS OR MERIT’
A group calling itself the Ad Hoc Committee for UJA and JNF Funding for Jews of Jerusalem, Judea, Samaria, Gaza and the Golan Heights had asked the rabbinical court to rule on the validity of the philanthropic organizations’ reasons for not funding Jewish causes in East Jerusalem and the administered territories.
According to rabbinic law, if a defendant refuses to appear on three occasions, then it can allow the plaintiffs to seek remedy in a civil court. None of the three organizations actually appeared before the rabbinic court, but UJA and UIA provided written responses to the summonses, according to Rubin.
The ad hoc group has since changed its name to the Ad Hoc Committee for Jewish Survival in Jerusalem, Judea, Samaria, Gaza and the Golan Heights. It is co-chaired by Michael Teplow, national director of Tehiya USA, the U.S. branch of the ultranationalist Israeli political party.
Stuart Paskow, JNF director of communications and information, said Friday that the civil lawsuit is “totally without basis or merit, and I am very, very satisfied to let it be decided in the courts.”
Andrew Bronzman, a partner in the New York law firm of Anderson, Russell, Kill and Olick, which is defending JNF, said the case “does not appear to have any substance to it.”
Previous lawsuits against the groups were dismissed because those bringing them were not granted legal standing, Irving Kessler, former UIA executive vice chairman, said in a comprehensive interview with the JTA earlier this year. Current UIA officials would say little about the case Friday.
Paskow said that it appears safe for tax-exempt groups to pass funds beyond Israel’s 1948 borders, but that his group’s tax counsel “is not totally convinced” it will always remain legal.
TAX-EXEMPT STATUS AT ISSUE
Stephen Weidman, who until a week ago was an attorney in the charitable contributions section of the Internal Revenue Service, told JTA in an interview earlier this year that the IRS has never revoked an organization’s tax-exempt status because it sponsored humanitarian projects abroad.
Weidman said that while tax-exempt groups cannot send weapons abroad, such as to the Contra rebels in Nicaragua, other types of aid, such as for food and shelter, are permitted, as long as U.S. citizens, and not foreigners or foreign governments, retain control over the money.
The UIA, but not JNF, argues that its letter of incorporation filed with the IRS limits its mandate to Israel’s 1948 borders.
Kessler said that UIA lawyers advised him against changing the letter of incorporation, because it might be challenged in court.
Attorney Rubin said that the plaintiffs donate funds to, and are on the boards of, Jewish groups that receive funds across the Green Line.
Rubin said he and his clients are not looking to “kill” JNF, because “they do a lot of good work.”
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