Acting A.G. Underwood Announces Settlement With Self-Dealing Trustee Of A Private Foundation
News from the New York Attorney General's Office
FOR IMMEDIATE RELEASE
May 21, 2018
Attorney General’s Press Office / 212-416-8060
ACTING A.G. UNDERWOOD ANNOUNCES SETTLEMENT WITH SELF-DEALING TRUSTEE OF A PRIVATE FOUNDATION
David Richenthal Used Nearly $500,000 in Richenthal Foundation Funds for Personal Travel, Entertainment, and Legal Fees
Richenthal Pays Foundation $550,000 in Total Restitution, Is Barred from Access to Foundation Funds and Fiduciary Responsibility for NY Not-for-Profits
Foundation Agrees to Implement Internal Controls, Board Expansion, and Training Program for Trustees to Stop Future Misuse of Funds
NEW YORK – Acting Attorney General Barbara Underwood today announced a settlement resolving an investigation into the Richenthal Foundation, a grant-making organization that focuses on funding not-for-profit theater groups. As a result of the settlement, David Richenthal’s restitution will total $550,000 and he is barred from access to the Foundation’s funds and having any fiduciary role in New York not-for-profits. The Foundation has also agreed to implement internal controls, expand its board to ensure greater oversight, and implement a training program for trustees.
The Attorney General’s investigation found that David Richenthal, the son of founder Arthur Richenthal, improperly obtained close to $500,000 in personal benefits from the Foundation without oversight or intervention from the Foundation’s other trustees. According to the Attorney General’s investigation, Mr. Richenthal was reimbursed by the Foundation for approximately $240,000 in expenses, primarily for personal travel and entertainment costs, as well as other personal expenses. Mr. Richenthal also improperly had the Foundation make a $250,000 grant to settle a personal litigation matter with a former romantic partner. The investigation found that his misuse of the Foundation’s assets was made possible by the fact that the Foundation did not have adequate internal controls and its trustees failed to oversee Mr. Richenthal’s use of the Foundation’s charitable assets.
“When someone uses their trustee position to enrich themselves, it’s not just an abuse of trust – it's an abuse of the law,” said Acting Attorney General Underwood. “We will continue to pursue wrongdoing, protect charitable assets, and – as in this case – work with organizations that respond quickly and seriously to address misconduct.”
As a result of the settlement, in which he admitted to the findings of the investigation, Mr. Richenthal agreed to pay an additional $150,000 in restitution to the Foundation above the approximately $400,000 that he had already paid back to the Foundation during the Attorney General’s investigation. In addition, Mr. Richenthal agreed to a permanent bar on his service as a director, officer, or other fiduciary of any not-for-profit organization operating in New York.
Under the terms of the settlement, Mr. Richenthal is barred from having direct access to the Foundation’s assets. The Foundation has agreed to a number of reforms, including nonprofit training for its trustees, the expansion of its board to five members (at least two of which must be independent trustees), and the adoption of new internal control policies (in addition to other policies that were adopted during the course of the Attorney General’s investigation).
This case was handled by Assistant Attorney General Steven Shiffman under the supervision of Enforcement Section Co-Chief Emily Stern, with the support of accountant Melvin Klein and paralegal Jacqueline Sanchez. James Sheehan is the Charities Bureau Chief. Matthew Colangelo is Executive Deputy Attorney General for Social Justice.
More information about the Attorney General’s Charities Bureau and organizations regulated by the Bureau may be found at www.charitiesnys.com.