A Supreme Court justice has approved a settlement that requires prominent Democratic attorney Steven Schlesinger to pay $150,000 back to a nonprofit foundation the state attorney general’s office accused him of mismanaging.
The settlement also requires that should Schlesinger obtain a court appointment as a fiduciary on Long Island in the next five years, he must report the appointment to the state attorney general’s office.
Schlesinger won’t be able to receive commissions or any other compensation from his overseeing of the $11 million Kermit Gitenstein foundation, according to the settlement.
Schlesinger is also prevented from serving on the board of directors of a nonprofit or charitable corporation for five years, according to the order signed by Justice Robert A. Onofry, acting Supreme Court justice, on Wednesday. He was allowed to remain at two nonprofit boards on which he currently serves.
The ruling came two weeks after Onofry determined that 17 donations from the charity totaling more than $8 million will not have to be returned. Onofry found that the grants were made to eligible charities and returning the money would be disruptive.
“This settlement sends a strong message that any misconduct by charitable receivers will not be tolerated, and those who attempt to circumvent the laws on the books will face real consequences,” said Doug Cohen, a spokesman for New York State Attorney General Eric T. Schneiderman. “In particular, we’re pleased, that as a result of this settlement, Mr. Schlesinger will not receive any form of payment or compensation for his eight years of work related to the Gitenstein Foundation and estate.”
A Nassau County judge had removed Schlesinger as receiver of the charity last year, citing his failure to get court approval for donations and potential conflicts of interest when making grants. Schlesinger had overseen the foundation since 2007.
In a statement from his Garden City law firm, Schlesinger said he never intended to take any fees for his work as receiver of the foundation. Schlesinger petitioned the court in 2011 to receive $131,329 in commissions for work as estate administrator for Shirley Gitenstein, who died without heirs, leaving the court to choose Schlesinger as receiver. He received that amount for the estate work.
The foundation’s mission was to make donations to Jewish organizations and health care.
Schlesinger, who used to serve as the Nassau County Democratic Party’s attorney and helped pick judicial candidates for endorsement, said that he made “no admission of wrongdoing” in the settlement, and that the $150,000 payment was for “reimbursement of certain administration expenses.”
But experts interviewed Friday said the settlement was a victory for court transparency in a case that had raised questions about cronyism and patronage.
“It seems to be that’s an appropriate resolution,” said Pablo Eisenberg, a senior fellow at the Center for Public & Nonprofit Leadership at Georgetown University in Washington, D.C.
A Newsday investigation published in August 2015 revealed that Schlesinger’s court appointment allowed him to direct the foundation’s money to his friends and organizations where he had personal ties.
Recipients included Gary Melius, owner of Oheka Castle. One grant, for $250,000, went to a charity Melius controlled during the same week that Schlesinger held his wedding at Oheka, which includes a Gold Coast catering facility. Schlesinger didn’t pay for the wedding until five months after it occurred.
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.