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Charity paid $25,000 sex harassment claim against director

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One week after his resignation, Michael Bernstein fatally shot himself at a Super 8 motel in Valdosta, Ga.

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By MARK  DOUGLAS | News Channel 8

Published: November 3, 2009

Ray Gadd, the new interim director of Gulf Coast Jewish Community Services, says it's time for the $32 million-dollar-a-year charity to move beyond the forced resignation and suicide of its former director.

But first, Gadd said, he has to expose some dirty secrets from the past.

They include a sexual harassment payoff involving the former director, Michael Bernstein; home repairs performed on Bernstein's home at the charity's expense; and a $108,000 overpayment to Bernstein that went unnoticed for months.

Gadd, a former assistant superintendent for the Pasco County School District, has only been on the job since Monday but by Tuesday afternoon he had already drafted a two page summary outlining past improprieties.

The letter will be sent to charity staff, board members and funding sources.

"I don't think anything we've found will endanger our tax-exempt status," Gadd said. "I think what it has affected to some extent is our creditability with funders."

Michael Bernstein resigned suddenly Oct. 14 from the charity he started 31 years ago and developed into a social services agency that gets 93 percent of its money from government sources.

One week after his resignation, an action board members would not discuss at the time, Bernstein fatally shot himself at a Super 8 motel in Valdosta, Ga.

Before his resignation, Jewish Family Services was forced to repay the State of Florida $130,000 for mismanagement of one of its programs in Miami.

The day after Bernstein's resignation, the charity's chairman, David Abelson, refused to elaborate on the circumstances, saying everyone involved had signed a confidentiality agreement.

Abelson told a reporter he'd have to wait two years to find out how much the charity paid Bernstein in severance. That's when the charity would file financial disclosure forms with the Internal Revenue Service.

But Tuesday, Gadd, the interim director, revealed the reasons behind Bernstein's resignation and released documents that explain in Bernstein's own words what happened.

Gadd said Abelson and the charity board hired a former FBI investigator last summer to look into anonymous allegations of fraud, embezzlement and the unauthorized repairs on Bernstein's home.

Gadd said the investigator did not find evidence of fraud or corruption but he added that an outside investigation by auditors remains open.

"We don't currently have any evidence of fraud and embezzlement but I will not rule that out," Gadd said. "We are proceeding with the audit and if we determine that there has been fraud or there has been embezzlement, we will expose it and make it public."

Gadd said last year the charity did pay a secretary with Jewish Family Services $25,000 to settle her allegation of sexual harassment by Bernstein even though he never admitted wrongdoing.

"The board fell there was sufficient evidence to close the case," Gadd said.

Gadd said he now plans to take a fresh look at two similar complaints made by two other secretaries against Bernstein. No financial settlements resulted from these complaints.

Gadd is convinced the home repairs were made at the charity's expense.

"Clearly that has happened," he said. "There's a preponderance of evidence that employees from this facility have done work for Mr. Bernstein at his home."

Under IRS regulations, such personal benefits must be reported annually but there is no indication on financial records filed with the IRS that Bernstein disclosed the work.

In a rambling "Confidential Note" that Bernstein emailed to board members Oct. 11, three days before his resignation, Bernstein called his leadership of the charity "an incredible journey."

Bernstein said, "I voluntarily took a lie detector test on major allegations and passed. I am happy to take one on every allegation."

After elaborating on a number of internal disputes and mistakes involving charity personnel, Bernstein wrote, "Please keep this letter and all issues surrounding me confidential."

But a few lines later he closes his letter with another sentiment: "I do believe if something is truthful it can be said before one or 100 with no need for secrecy."

Gadd said his job is to heal the agency, restore confidence through full disclosure and move on with the successful social service programs started by Bernstein.

"We have a cloud hanging over that work now because of findings that are starting to surface."

Gadd said there will be no more secrets at Gulf Coast Jewish Family Services.

When auditors complete their review if financial records, Gadd will make the findings public. he said.

"I think the board is 100 percent behind full disclosure of anything that we find."

Mark Douglas can be reached at 727 451-2333

Reporter Mark Douglas can be reached at (727) 451-2333

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