In
United States ex. rel. Kozak v. Chabad-Lubavitch, Inc., (ED CA, Dec. 9. 2014), a California federal district court granted summary judgment in a
False Claims Act qui tam action, finding Chabad of California liable for $844,985 in treble damages and statutory penalties. The court concluded that Chabad of California misappropriated Department of Homeland Security grant funds intended to pay for video surveillance and other security equipment for Chabad and two of its affiliated institutions. (See
prior related posting.) Chabad executed documents assuring the government that it would comply with specific financial management standards in receiving advances of the grant funds to assure that the funds would be used for the purposes for which they were awarded. However Chabad had no written financial management procedures, deposited the grant funds into its general checking account and used $272,495 of the funds for non-grant purposes.
While Chabad argued that there were triable issues of fact as to whether it submitted false claims "knowingly," the court said:
The undisputed facts in this matter show that Chabad knew about the requirements attendant to NSG Program grants in general and to drawdown advance requests in particular, yet had no compunction whatsoever in failing to adhere to those requirements. Under the circumstances, it is clear to the Court that Chabad acted at minimum “knowingly” as defined by the FCA.
The court did not grant summary judgment against two Chabad affiliates that were also defendants, finding that triable issues of fact remain as to their liability.
Jewish Journal reports on the court's decision.
