William Rapfogel pleads guilty in insurance kickback scheme

William Rapfogel, who led the Metropolitan Council on

William Rapfogel, who led the Metropolitan Council on Jewish Poverty before resigning in August, leaves court in Manhattan on Wednesday, April 23, 2014, after pleading guilty to first-degree grand larceny in a plea deal that calls for him to receive a 3- to 10-year prison sentence and repay a charity $3 million. (Credit: Bryan Smith)

An influential one-time New York City charity leader linked to Assembly Speaker Sheldon Silver pleaded guilty to grand larceny Wednesday and faces up to 10 years in prison for taking millions in kickbacks on insurance contracts.

William Rapfogel, 59, who headed the Metropolitan Council on Jewish Poverty until resigning last year when the kickback scandal surfaced, agreed in state court in Manhattan to repay $3 million and accept a 31/3- to 10-year sentence.

"Yes, I plead guilty," Rapfogel repeated four times as a prosecutor read out the charges: larceny, money laundering, tax fraud, and making false campaign finance filings to hide the funneling of some of the kickbacks into city races.


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Rapfogel has known Silver (D-Manhattan) for over 40 years, and his wife, Judith Rapfogel, is Silver's longtime chief of staff. Both she and Silver have denied knowledge of the criminal scheme, and neither was in court for the pleas.

"I am deeply saddened by this entire episode," Silver said in a statement afterward.

Attorney General Eric T. Schneiderman's office charged in the case that Rapfogel conspired with insurance executive Joseph Ross of Valley Stream and his agency, Century Coverage Corp., to inflate the Metropolitan Council's premiums and skim off the profits.

Ross pleaded guilty in December, and in a separate proceeding Wednesday Rabbi David Cohen, Rapfogel's predecessor as head of the charity, admitted as part of a guilty plea to three felonies that he initiated the scheme in 1992 and netted $650,000 from it.

Cohen said Rapfogel went along when he became the council's director. At their peak, the kickbacks were generating more than $30,000 a month, he said, and some of the money was given through straw donors to city politicians who supported the council.

As part of his plea, Cohen -- who implicated the council's former chief financial officer in the scheme -- agreed to repay $650,000 to the charity and cooperate with the attorney general's investigation. If he follows through, he will be sentenced to 1 year in prison.

"These defendants abused positions of trust to steal millions of dollars from a taxpayer-funded charitable organization -- one that is dedicated to serving New York City's poor," Schneiderman said after the pleas.

The Metropolitan Council is a nonprofit dedicated to providing the poor and elderly with housing aid, emergency financial assistance and other social supports. It relies heavily on taxpayer-funded city and state grants and contracts to do its charitable work.

Last August, investigators found $400,000 in cash hidden in Rapfogel's homes. Prosecutors said the kickbacks were sometimes paid with envelopes stuffed with cash, and other times with checks to cover personal expenses.

Rapfogel and Cohen didn't apologize in court for their conduct, and neither had a comment leaving court. Rapfogel was ordered to return for sentencing on July 16, and Cohen for a status conference on July 9.

Charges against former Metropolitan Council chief financial officer Herbert Friedman are pending, and the Ross plea agreement is still sealed. Schneiderman's office says a total of $9 million was stolen and the investigation is ongoing.

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