D.A.s deal with Pils sets stringent limits

The Jewish Educational Center's founders, whose used-car solicitations once plastered the radio waves, now face severe restrictions on future advertisements.

The prohibitions against Rabbi Bentzion and Mattie Pil were part of a settlement reached this week with the San Francisco District Attorney's Office over allegations of false advertising and unfair business practices.

Despite an injunction that contains 3-1/2 pages of detailed limitations on ads, the Pils view the settlement as their first official vindication. For nearly a year, they've had to swallow accusations against their character and their now-bankrupt, defunct charity.

"They're relieved," said David Schwartz, one of the couple's attorneys.

The city's civil lawsuit was set to go to trial in May in San Francisco Superior Court. The settlement was filed Monday.

The deal has no effect on the state attorney general's allegations against the Pils and other JEC leaders of fraud and diversion of funds.

Likewise, the settlement doesn't affect the U.S. Attorney's investigation into alleged mail fraud, wire fraud and money laundering at JEC.

The state's lawsuit is set for trial in November.

Unlike the state's case, the city's action focused specifically on the JEC's ads, which for several years swamped the airwaves in the San Francisco, Los Angeles and New York City areas.

The city specifically targeted about 40 ads, including ones for the JEC's Kids Overcoming Katastrophe program. Those commercials highlighted 12 boys from the former Soviet Union who allegedly suffered problems due to the 1986 Chernobyl nuclear accident. The JEC brought the boys to San Francisco in 1995.

Despite numerous radio ads proclaiming that the boys were getting "needed medical care" at U.C. San Francisco Medical Center, the D.A.'s suit noted that "not one of the 12 children brought to San Francisco by the JEC suffered from any kind of serious illness" or "radiation sickness."

The suit also alleged that in the "one and only case in which the UCSF Medical Center advised the JEC that medical treatment was needed — for a boy diagnosed to be suffering from tuberculosis — defendants failed and refused to obtain any medical treatment for the boy."

Other radio ads targeted by the D.A. included one promising: "A lot of causes want your car, but only the Jewish Educational Center will use 100 percent of your donation to fund local programs like schooling and camp and job placement for adults."

In fact, records showed that only $1.4 million went to charitable causes in 1996 out of $8.5 million in income.

According to the settlement's injunction, future ads cannot state any of the following:

*One-hundred percent of the donations go to charitable programs — if it isn't true.

*A substantial portion of the donations go to charitable programs — unless that figure is greater than 50 percent or the percentage of administrative expenses is clearly stated.

*Donations go toward children with serious health problems — unless the D.A. can review the medical records.

*Money aids children in foreign countries — unless the money is actually sent to such nations.

*Cars will be given free to needy families — unless the ads say what percentage of the donated cars actually go to the poor.

*Donors can claim a tax deduction for more than a car is worth.

The injunction, which covers all of California, is in effect for 30 months. If the Pils violate any of the prohibitions, the injunction can be extended.

Schwartz was pleased with the settlement.

"I think it's an indication that the allegations of false advertising basically, if they existed at all, were technical in nature…In my view, if the D.A. felt they were a menace to society, they would not have let them off this way."

Schwartz didn't consider the stipulations onerous for the Pils.

"What they're giving up is the right to do things they have no intention of doing," he said.

Although the document has a clause saying the Pils admit no wrongdoing, a letter the rabbi recently wrote to the D.A.'s office noted that he had gained "a new appreciation and understanding of how to carry out charitable fund-raising."

June Cravett, the assistant district attorney who handled the case, saw the letter as "somewhat of a concession that he wasn't doing right."

But Schwartz said the letter wasn't an admission of guilt.

"It's an admission that he wasn't as sophisticated as he should be," Schwartz said.

In the D.A.'s eyes, the settlement was simply a practical way to avoid wasting taxpayer dollars on a trial.

When the district attorney's office filed the civil lawsuit last June, prosecutors believed the JEC was awash in millions of dollars.

"In a civil case, you go for money and for an injunction," Cravett said.

Creditors, who are owed up to $1 million, forced the JEC into a bankruptcy reorganization last July. When the bankruptcy was converted to a liquidation in early January, any hopes of getting money out of the JEC evaporated.

"Even the creditors won't get paid," Cravett said. "What we have is a situation where the false advertising stopped. The company is dead."

The city's suit also sought money for the November 1996 fire that caused more than $1 million in damage to a city-owned pier. The JEC had been renting Pier 48's buildings to store its cars before auction.

The settlement notes for the record that the fire was not set intentionally — although the city's suit focused specifically on illegal car repairs, not arson.

Instead, insurance companies are still haggling over who will pay for the damage.

The city was already self-insured for $100,000, Cravett said, but the city didn't want to use that resource if the charity could pay.

"We thought we had a multimillion-dollar organization," she said.

To reach the settlement, the Pils had to file a financial statement showing they have no ability to pay anything out of their own pockets.

Right now, Schwartz said, the Pils and their eight children are "living off the charity of friends and relatives."

Cravett noted that if her office ever finds out their finances were misrepresented, her deal will be null and void.

"If anyone ever finds money they squirreled away, it will be a different story," she said.

Meanwhile, the Pils are still under a state injunction that prevents them from managing any public-benefit nonprofit.

The Pils are now involved with a JEC successor called the Jewish Foundation for Learning and its tiny Torah Day School. The foundation is a religious nonprofit, which is not covered by the state's injunction.

Schwartz hopes an agreement also can be worked out with the state Attorney General's Office.

But Belinda Johns, the deputy attorney general handling the case, said this week she would not settle unless any money allegedly diverted from the charity for the Pils' personal use was returned first.

Her suit alleges that the Pils used at least $100,000 of the charity's money to buy their home, and about $40,000 to pay for their son's bar mitzvah.

And if it was proven the Pils couldn't repay the money, Johns said she would still want to prevent the Pils from running a public-benefit nonprofit.

Johns said she believes that justice will be served even if the Pils don't repay the money.

"They aren't getting off, because they've lost control of JEC," Johns said. "They did lose their charity. I don't know about their reputation…but they did lose their source of income."