A state Supreme Court justice has ruled that 17 nonprofit groups will not have to return more than $8 million in contributions made by Garden City attorney Steven Schlesinger without court approval while he managed the Kermit Gitenstein Foundation in a way that had drawn stern criticism from another judge.
Acting Supreme Court Justice Robert A. Onofry of Orange County said that Schlesinger, as a court-appointed fiduciary, wasn’t required to obtain permission from the Nassau County Surrogate’s Court to make the donations.
The judge found that mistakes were made by previous judges, the state attorney general’s office, and Schlesinger, but that they “were not of sufficient magnitude to justify disallowance of the distributions.” Onofry signed the decision last Friday.
The donations Schlesinger gave without court approval were made between August 2009 and December 2011.
In a statement, Schlesinger said he was pleased with Onofry’s decision because it “corrected some of the long-standing misimpressions” of his stewardship, and “any suggestion that I had contravened the Gitenstein family’s intent was incorrect.”
The 17 donations reviewed by the court don’t include the most controversial aspect of Schlesinger’s management of the foundation — his decision to give $250,000 to a charity controlled by political power broker Gary Melius during the same week Schlesinger held his wedding at Oheka Castle, the Gold Coast estate Melius owns. Schlesinger didn’t pay for the wedding until five months after it occurred.
Another distribution Schlesinger made that was not covered by the decision was $50,000 given to a charity controlled for former Sen. Alfonse D’Amato and named after his parents, Armand and Antoinette D’Amato. The donation funded construction of a splash park in Island Park, where D’Amato’s parents lived.
Onofry’s approval of Schlesinger’s donations came with a critique of the foundation’s management over the years. Schlesinger at first operated under “a shared and common belief” that court approval was required before a distribution, but then “deviated” from what was a standard practice without seeking guidance of the court, the decision states.
“If it was Schlesinger’s bona fide belief that prior approval was not required, then he could have and should have sought ‘advice and direction’ from the court clarifying that obligation,” Onofry wrote in the decision. “Instead he unilaterally changed what was clearly an established pattern of conduct without formal notice to the court.”
A spokesman for Schlesinger’s attorney, Daniel L. Kurtz, said that the state attorney general’s office was made aware of Schlesinger’s deviation in annual court filings but never objected.
Attorney General Eric T. Schneiderman’s office declined to comment on Onofry’s decision.
The attorney general’s office, which regulates charities, and Schlesinger’s attorney agreed in court filings that, because Schlesinger’s distributions were made to qualified charities, it would be best not to make the charities return the Gitenstein donations.
The decision doesn’t address Schlesinger’s broader management of the foundation beyond the dispersal of the funds to the 17 nonprofit groups. It did not consider whether he should be restored as receiver of the foundation. A prior court order by Nassau County Surrogate’s Court Judge Margaret C. Reilly removed him.
In May 2016, Reilly found the lack of court approval for the 17 donations was evidence that Schlesinger was acting outside the bounds of his duties.
Onofry found that all $8.1 million in donations were consistent with the Gitenstein foundation’s broad original mission, even if they didn’t conform to the charity’s more recent focus on Jewish charities and health care, and that distributions went to qualified “charitable beneficiaries.”
Groups receiving the Gitenstein money included the Holocaust Memorial in Nassau County, Nassau Health Care Corp., Molloy College Nursing Program, and Hofstra Medical School.
In his statement, Schlesinger said the “misimpressions” of his tenure were created by Reilly’s ruling.
A supervisory state judge last October transferred the case out of Nassau County and into Onofry’s courtroom.
At the time, Lucian Chalfen, a spokesman for the state Office of Court Administration, said the change was made “to avoid an inference or appearance of impropriety in hearing the matter.”
The Gitenstein foundation was created in 1968. In 2007, Shirley Gitenstein died without heirs, and Schlesinger was appointed to manage the foundation.
In August 2015, Newsday published an investigation that showed Schlesinger’s court appointment allowed him to direct the foundation’s money to Melius and other organizations where he had personal ties and raised questions about cronyism and political favoritism that the state court system has been trying to eliminate for more than a decade.
The New York attorney general’s office and the U.S. attorney’s office for the Eastern District both launched separate investigations after Newsday’s report, according to court records.