Israeli consulting firm sues Hadassah for $20.9 million
Jun 13, 2018
Legal Newswire POWERED BY LAW.COMby Robin Owens
Jerusalem – A $20.9 million lawsuit has been filed in Israel against Hadassah: the Zionist Women's Organization of America (HWZOA). The New York-based nonprofit founded and underwrites the world famous Hadassah Medical Center in Jerusalem. The medical center has two university hospital facilities in the city.
Free World Ltd, an Israeli consulting firm that in 2014 enabled HWZOA to avoid almost certain government takeover of the nearly bankrupt medical center’s ownership, filed the suit in Jerusalem District Court April 23, 2018. Free World’s owner, David Spector, had served as the organization’s chief strategic adviser and negotiator as HWZOA fought to retain ownership of the Hadassah Medical Center in 2013-2014. The suit says that HWZOA failed to compensate him for the firm’s work.
At the time, the medical center was experiencing a severe and unprecedented economic crisis with stakeholders viewing HWZOA as the main source of blame. The financial crisis came as HWZOA was dealing with funding difficulties due to the 2007 financial crisis in the U.S. and was forced to return to donors some $45 million of so-called clawback funds in the Bernard Madoff Ponzi scandal. It also had spun off its prized Young Judaea youth program and camps, reduced or ended other significant programming, considerably cut back staff and sold its $71.5 million New York headquarters building, as well as its near-by apartment and several additional properties in Israel.
Mr. Spector’s work brought HWZOA from a point where it had already agreed to surrender its ownership, due to its disadvantage in the negotiations with the State of Israel, to a point where full ownership was retained and a large-scale government-funded recovery plan was instead set in place.
This work and result had been described as “a miracle” by Hadassah’s leadership and is widely detailed in the suit.
Among the numerous examples provided by Mr. Spector: On May 18, 2014 Marcie Natan, then the National President of Hadassah WZOA, wrote to him via e-mail, “Dear David, It is we who thank you – for your strength and your vision for achieving a working agreement that would keep HWZOA as the owners and with control of the board. I am still pinching myself trying to realize that we have reached this point.”
The suit alleges that the defendants — HWZOA, Hadassah Medical Relief, Inc., Sabra Flats and Hadassah Offices in Israel — “(unlawfully) made a huge financial gain at the expense of the Plaintiff.”
That financial gain, according to the suit, totals billions of Israeli shekels and exemption from tax payments, as well as an arrangement allowing HWZOA to be the medical center’s sole fundraiser, a position which the suit says has allowed the organization to extract a 14% commission on all monies it raises for the hospitals.
The suit details HWZOA officials’ appreciation to Spector, including another from Ms. Natan, also as HWZOA, telling him that he had achieved “more than we could ever properly compensate you for.”
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