All but two employees at San Francisco’s Jewish Educational Center were laid off late last week, but volunteers are keeping the besieged charity alive for now.
“I ran out of money. It was the only option I had,” court-appointed bankruptcy trustee Stuart M. Kaplan said Tuesday.
Kaplan, who is in charge of JEC’s operations, called the layoffs “hopefully temporary.” But he couldn’t make any promises.
Despite the seeming deathblow to the debt-ridden and legally entangled charity, the organization’s supporters scrambled this week to run its summer camp, day care and other services with donations and volunteers. The latter include many of the approximately 20 workers laid off Aug. 1.
An official letter from JEC controller Mamie Tang had arrived last Friday afternoon calling for the programs to shut down immediately. But Frank Malifrando and others decided to ignore the letter and keep the programs going for as long as possible.
“I said, `I just can’t accept this,'” noted Malifrando, who is now JEC’s unpaid program director.
On Saturday, JEC still handed out bags of groceries to Russian emigres. On Sunday, it still offered Wheel of Fortune for emigres. On Monday, it still opened the third session of summer camp for about 100 youths and day care for about 30 children.
But it’s unclear how long volunteers can keep up those efforts. And the new development makes the future of the JEC-run Schneerson Hebrew Day School at 34th Avenue and Balboa Street harder to predict than ever.
The school, which enrolled 140 last year, is set to open Sept. 15.
Meanwhile, JEC supporters were trying to create a new nonprofit organization of parents and community members to sidestep the charity’s debt and start anew.
Tang’s letter, written with Kaplan’s approval, stated that “interim budget constraints have made it impossible to maintain any of the JEC programs.”
According to the letter, which was addressed to parents and employees, only Tang and Mark Paladini would remain on staff. Parents who already paid for summer camp’s third session and for August day care would be reimbursed.
“We hope that our current difficulties can be resolved and that this suspension of programs will be only temporary,” wrote Tang, who is facing her own problems. She was indicted three weeks ago by a federal grand jury in a $20 million pyramid scheme unrelated to JEC. She pleaded not guilty.
JEC’s board chair, Carol Ruth Silver, could not be reached for comment. But Malifrando said he and others are trying to take the latest blow in stride.
“We’re so used to all this battling. We’re not fazed by it as much. We seem to rely on each other,” he said.
The camp has $17,000 to $18,000 in deposited and undeposited checks, Malifrando said. If the camp runs the entire three weeks, parents would not be reimbursed as Tang’s letter promised.
Malifrando said on Tuesday afternoon he hopes the layoffs will last only for two or three weeks. But the now-volunteer workers need reassurance they will get paid in the future, he said.
“We just want the confidence that we will at least get the school going,” he said. “I can’t deal with terminating everyone and then trying to bring everyone back three days before school opens.”
Kaplan, who was appointed in U.S. Bankruptcy Court last month to oversee the financially troubled JEC, has been trying to decide whether to reorganize or liquidate the charity.
A state-appointed receiver had decided in early July that the charity wasn’t fiscally viable. But Kaplan, who replaced the receiver, decided to give the situation a second look.
The JEC, which brought in millions of dollars from auctions of donated used-cars over the past four years, has witnessed a complete turnaround in its fortunes this summer. It now faces debts estimated between $600,000 and $1 million, state charges of financial wrongdoing, and an Internal Revenue Service investigation.
Iain Macdonald, who is Kaplan’s attorney, said the layoffs “might be helpful or therapeutic” because they will give JEC a chance to reorganize financially without the burden of a payroll.
The layoffs will last until used-car auctions can resume, Kaplan said, “with no promises they will ever resume but with efforts being made in that direction.”
In the meantime, the bankruptcy trustee is planning to sell hundreds of used cars and JEC equipment still sitting in a Los Angeles area lot — one of two JEC lots outside San Francisco. By selling the merchandise to a parts dealer, Kaplan expects to bring in about $120,000. That money must go to pay off creditors.
If JEC supporters can form a new, debt-free charity, Macdonald said, they could restart used-car auctions and use that money for the elementary school.
He acknowledged, however, that parents and teachers will have a tough time deciding whether they should take a chance on a school in such financial disarray.
Regardless, it’s not clear yet whether creating a new nonprofit would be approved by the state. Belinda Johns, the deputy attorney general in charge of the state’s case against the JEC, wasn’t available for comment this week. In the past, however, she had expressed reservations about such a move.
The layoffs are only the latest in a long string of problems for the JEC.
In June, the California attorney general and San Francisco district attorney charged the charity’s leaders with fraud, diversion of funds, tax evasion, false advertising and unfair business practices. The city also sought $1 million from a November fire in a public port, where JEC is accused of performing illegal car repairs.
Meanwhile, the IRS confiscated the charity’s records while searching for evidence of mail fraud, wire fraud, money laundering and currency transactions designed to evade federal reporting laws.
The charity’s founders, Rabbi Bentzion and Mattie Pil resigned after their paychecks were cut off. They have denied any wrongdoing.
Soon after a state Superior Court judge ordered the charity’s liquidation. But JEC creditors filed for involuntary Chapter 11 bankruptcy in July and pre-empted that sell-off.
Currently, the landlord of the 34th and Balboa building is trying to evict JEC.