Mishandled Funds Alleged at Terror Charity

MINEOLA, N.Y. (CN) - A father-son duo treated the American Center for Civil Justice "as their own personal piggy bank," and siphoned off $20 million, a former board member claims in court.

In the complaint he filed on Dec. 29 in Nassau County Supreme Court, Michael Engelberg says that Rabbi Eliezer Perr controls the management and board of the American Center for Civil Justice Inc., or ACCJ, with his son Jedidiah.

Engelberg says he founded the ACCJ with the rabbi in 1996 to represent "the victims of some of the deadliest state sponsored terrorist attacks by Hamas and Hezbollah in recent history."

Claimants that the ACCJ represents agree to pay the nonprofit 20 percent of the share in any recovery, according to the complaint, which notes that collection is underway in several multimillion-dollar judgments or settlements in such cases.

"By the late 2000s, as the ACCJ's share of settlement proceeds from the cases against Libya was received and recoveries from the collection efforts in the litigations against Iran were imminent, the Perrs sought to divert funds to themselves through entities set up by Jed Perr, who was leading collection efforts by this time as the plaintiff has been diagnosed with multiple myeloma and was undergoing treatment," the complaint states.

Engelberg says the Perrs have been using their positions to "siphon off" such money, diverting "over $20 million of charitable funds to other shell for-profit and not-for-profit entities, owned and controlled by them."

He complains that the Perrs have also donated "over $800,000 to various Jewish religious and educational organizations entirely unrelated to ... and beyond the scope of the center's charitable mission."

Attempts by Engelberg to get an accounting in light of such "flagrant violation" of fiduciary duty have proved fruitless, according to the complaint.

"The Perrs have stonewalled him at every turn and been overtly hostile; fabricated documents post hoc; including board minutes, in an attempt to justify the transfer of funds to Jed Perr's [entity] as a 'lawful' assignment, providing false and misleading information to the Internal Revenue Service; and effectively ousted plaintiff from the organization, falsely claiming that he was no longer a representative board member or executive director of the center," the complaint states.

Engelberg says the Perrs are also trying to revoke his powers of attorney with them.

"Such a blatant abuse of control and authority by the Perrs as de facto officers and directors of a not-for-profit organization for private gain of more than $20 million must be accounted for, as it comes at the considerable expense of the ACCJ's reputation as a charitable organization entrusted by the claimants to advocate on their behalf and represent their interests as victims of terrorist attacks," the complaint states.

Engelberg, a former pediatrician based in South Woodmere, says the Perrs live in Lakewood, N.J. The ACCJ's former president, Milton Pollack, is also named as a defendant to the 71-page action.

Skadden Arps, Slate, Meagher & Flom attorney Daniel Kurtz, of Manhattan, represents Engelberg.

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