New lawsuit alleges financial misconduct at ZOA, but it’s not the first

Klein is alleged to have received
off-the-books payments from donors. File photo.

Mort Klein, president of the Zionist Organization of America, is back in court, this time facing a lawsuit brought by the organization’s former executive director, David Drimer.

The suit made headlines when it was filed at the end of July, alleging that as president, Klein has received off-the-books payments from donors, deliberately failed to file proper Internal Revenue Service forms because of his high salary and then deceived other donors about the subsequent loss of the organization’s tax-exempt status from 2011 to 2013.

Drimer, who worked at the organization from 2011 to 2017, also alleges that he “suffered intimidation, harassment, discrimination and other retaliation” when he brought his concerns about Klein’s management of organization money to senior leadership, and that when he ultimately filed a whistleblower complaint with the New York State Attorney General’s office, Drimer was fired. He’s seeking over $3.4 million in damages.

Through his attorney, Klein declined to comment for this story, and Drimer could not be reached.

This is not the first time that the ZOA has been forced to respond to allegations of financial impropriety and retaliation in court. The lawsuit bears resemblance to a suit filed five years ago in California by Orit Arfa, who previously worked as the ZOA’s executive director of the western region.

Except in that suit, Arfa alleges that it was Drimer who fired her over her objections to alleged financial impropriety.

Arfa could not be reached, but Steven Goldberg, a former national vice chairman of the ZOA who was involved with the organization’s West Coast operation at the time of her lawsuit and later went on to challenge Klein for the organization’s presidency, said the ZOA settled with Arfa out of court for more than $300,000. Another former employee who worked with Arfa before she was fired, but asked to remain anonymous due to a non-disclosure agreement he signed upon leaving the organization, confirmed that Arfa and the ZOA settled and that both Drimer’s and Arfa’s allegations were consistent with what he witnessed at the organization.

In her suit, Arfa alleged that she was instructed to deceive donors into believing their donations would still be tax-exempt. But when she expressed discomfort to ZOA management about not being up front, “Klein began calling her on her cell phone at all hours of the day and night to berate her, increasing pressure on her to fund-raise.” And she said she faced increasing pressure “to raise funds in part to compensate for the decline in fundraising from Klein himself and in part to retaliate against her insistence on disclosing the loss of tax exempt status.”

Arfa’s suit alleged that ultimately, Drimer and ZOA lawyer Susan Tuchman flew to Los Angeles to fire her over her protestations. “When Arfa explained that she still had concerns about the legality of concealing the tax issue from donors, Drimer and Tuchman told her that if that was the case, she should have simply left the organization.”

Both Drimer’s new lawsuit and Arfa’s old suit center largely on the ZOA’s loss of tax-exempt status, a penalty imposed by the IRS in 2012 retroactive to 2011. But Drimer’s allegations reach even farther back.

Klein has maintained in interviews with WJW and other outlets that after being elected ZOA’s president in 1994, his first five years in the job were unpaid. According to Drimer’s lawsuit, Klein used this as a justification for, in 2007, retaining Quatt Associates to devise a compensation plan that would provide “Mr. Klein with additional compensation to make up for the years in which he was either not compensated or compensated below market.”

But Drimer’s suit also claims that Klein never actually went uncompensated. Instead he “received numerous periodic and substantial secret cash ‘gifts’ from some members of the board of directors and other donors,” something that Drimer alleges other board members did not know about.

Goldberg said that “off-the-books” payments to Klein continued through his tenure with the organization, which ended in 2015.

Similar to Arfa, Drimer alleges that he was professionally punished for raising objections to financial misconduct before ultimately having his employment terminated.

In summation, Drimer’s suit claims that “Defendant Klein acted as if ZOA existed for his own benefit without regard to his responsibilities as a fiduciary of ZOA and all its members” and that Drimer “had a good faith belief that defendant Klein engaged in conduct that was fraudulent and in violation of ZOA policies and Federal and New York State laws.”

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  1. Magnificent piece. As a blog entry once noted: ” the tyrannical Klein could give management tips on command-and-control techniques to Kim Jong Un.”

    Further background:
    The excellent WJW editorial “Unite the Right Fizzles” (Aug 15) kvelled that “Jews and Jewish organizations were well represented at the August 12 counter demonstration.” But NOT the Zionist Organization of America (ZOA) ! But, then, what can be expected from a group that has honored (November 12, 2017) ethno-nationalist darling and white supremacist ally Steve Bannon? Participating in such a counter-protest would have damaged its street cred among the alt-right elite. Lest we forget: the ZOA said nothing about President’s “very fine people” remark in response to the first “Unite the Right” rally in Charlottesville. (FORWARD, “this Jewish group has failed to condemn Trump’s defense of Nazis, August 17).*


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