A federal judge ruled last week that Chabad of California intentionally misused $272,495 in Department of Homeland Security (DHS) grants it received in 2009 and must pay $844,985 in penalties, a portion of which will go to whistleblowers who brought the suit against Chabad.
Chabad of California’s head, Rabbi Boruch Shlomo Cunin, applied for the funds in 2008 as part of a national program to boost surveillance systems at religious institutions. He convinced two other local Chabad institutions — Chabad of Marina Del Rey and the Yeshiva Ohr Elchonon high school — to also apply for the grants and allow Chabad of California to carry out the logistics of managing the funds and contracting with a security firm.
But according to a ruling by Judge Morrison England, Cunin never established procedures for the money, and he also did not create a separate bank account to segregate and track the federal funds. The judge also ruled that Chabad did not use the funds for their intended purposes, and instead used the money for “regular operating expenses, including employee payroll, building repairs, mortgages, and utility expenses.”