Haifa Court Orders Charity Officials to Repay 1.85 Million Shekels
A Haifa court ordered seven charity officials to repay 1.85 million shekels after cancer-treatment donations for children were illegally diverted and misused.
A bequest of nearly 1.9 million shekels from the estate of the late Helen Khatav, intended to aid children and teenagers battling cancer, was improperly diverted to another association, altered without court approval, and partially drained through illicit payments including salary and rent for the CEO. The Haifa District Court ordered seven former officers of the 'Keren LeChaim' and 'Keren LeChaim for Children and Youth' associations to repay approximately 1.85 million shekels to the liquidation fund, plus linkage and interest dating back to April 2019.
In a ruling issued on October 8, Senior Judge Ron Sokol granted the request of the liquidation trustee, Adv. Ron Kahana, concluding that the officeholders breached their fiduciary and care duties. While noting that the officials demonstrated a genuine desire to assist the needy over the years, the judge emphasized that 'they also exploited the donation funds for personal financial benefits.'
The case originated with estate administrator Adv. Sharon Yanko's decision to allocate a portion of Khatav's funds to support cancer-stricken children. In March 2019, the Family Court approved an agreement with 'Keren LeChaim' for educational support, recovering patient assistance, and medical equipment. However, the account details provided by CEO Adv. Galit Pauker Shemesh belonged to a newly formed entity: 'Keren LeChaim for Children and Youth.'
When First International Bank identified the discrepancy, it refused the transfer, prompting the associations to open accounts at Mizrahi Tefahot, where the donation was deposited. The court determined that a forged copy of the court ruling, altering the recipient association number, was submitted to the original bank. Following a deep audit by the Registrar of Associations revealing severe irregularities, the court ordered the liquidation of both entities in June 2024.
Central findings revealed that Pauker Shemesh received approximately 180,000 shekels in salary and 112,000 shekels in rent for a room in her law office, approved by her husband, Adi Pauker, who served as chairman. The court ruled this a severe conflict of interest disguised as a rental agreement. Additionally, 149,000 shekels were transferred to an aluminum company owned by the estate administrator's father-in-law for purported mediation, which the court dismissed as an indirect benefit to the administrator.
Accountability and Final Ruling
Board members argued they served voluntarily, trusted management, and derived no personal benefit. Judge Sokol rejected this defense, stating that relying on trust is no substitute for supervisory duty. The 1.85 million shekel liability was imposed jointly and severally on all seven respondents, with Pauker Shemesh personally ordered to return the salary and rent funds. Registrar of Associations Adv. Shuli Avni Shoham stated that board membership is not a symbolic role and volunteering does not exempt individuals from financial oversight and transparency.
