Two law enforcement enforcement agencies have launched criminal investigations into the sudden collapse of a historic nonprofit, sources told the Daily News.
The Manhattan district attorney and state attorney general are looking into the finances of the Federation for Employment & Guidance Services, according to a source.
The group initially blamed its woes in part on a loss of grant money. But the debt continues to balloon, with one source estimating it is many millions higher.
The nonprofit is shutting down in the coming months and looking for other social service agencies to take over its many publicly funded contracts to run job centers and help people with disabilities find work.
“We are very concerned about what will happen to the clients of FEGS,” said City Councilman David Greenfield (D-Brooklyn). “These services are more needed than ever before.”
The organization, one of the seven largest Jewish charities in the U.S., has about 2,000 employees and an annual budget of $250 million largely funded by city and state grants.
Its collapse follows the recent news that the Metropolitan Council on Jewish Poverty, whose CEO William Rapfogel pleaded guilty to larceny last year, is struggling to survive.
Despite its money woes, FEGS paid 81 administrators and execs $100,000 or more last year.
Longtime CEO Gail Magaliff hauled in $482,436 plus added compensation of $156,444 in 2013, according to records.
Her handpicked successor, Ira Machowsky, who was to take over last month but was pushed aside in favor of former state Mental Health Commissioner Kristin Woodluck, earned $343,000 in 2013 and 2014.
Meanwhile, many of the group’s vendors have gone months without being paid.
“I got screwed from day one by a nonprofit organization,” said the president of Third Ave. Furniture in East Harlem, who declined to give his name.
FEGS owes his company $61,0000, he said.
“I’m wondering if I’ll ever get any of the money back,” he said.
The charity was first started in 1934 primarily to help Jews overcome discrimination in the workplace.
Reps for Manhattan District Attorney Cyrus Vance Jr. and state Attorney General Eric Schneiderman declined to comment.
With Kenneth Lovett
