Jewish group pays PR firm co-owned by its president

J Street ‘self-dealing’ seen as ‘very messy’

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The Middle East lobby J Street — a tax-exempt 501(c)4 organization — paid tens of thousands of dollars to a consulting firm co-owned by its founder and president, Jeremy Ben-Ami, according to internal documents obtained by The Washington Times.

The documents, including invoices sent to J Street, show that Ben-Or Consulting — the Tel Aviv-based public-relations firm Mr. Ben-Ami co-founded in 1998 while living in Israel — charged J Street at least $56,000 over a roughly six-month period.

Though Mr. Ben-Ami ceased a day-to-day managerial role with Ben-Or a decade ago, he remains a 15 percent shareholder in the company, according to the May 2010 Dun and Bradstreet listings, as well as current filings with the Israeli Ministry of Justice.

According to nonprofit analysts, Mr. Ben-Ami’s stake creates a conflict of interest that runs afoul of ethical — if not legal — restrictions on acts of “self-dealing,” in which an officer in a tax-exempt organization receives undue benefit from that organization’s transactions.

“Even if it’s technically legal, it gets very messy when you have these sorts of deals going on because, if you’re going to benefit on the other end of it, be it 100 percent or 5 percent, it raises questions about objectivity and the arms’ length in the transaction,” said Ken Berger, president of Charity Navigator.

“If you want your organization to use a particular company, ideally there would be a clean break one way or the other. So you would either sell off your interest in that company or step down from the board during the period of time when this is going so that there would be no question as to what’s going on in the boardroom.”

Mr. Ben-Ami declined repeated interview requests, but provided a statement through a spokesman:

“I founded Ben-Or together with Oriella Ben-Zvi in 1998. When I left in 2000, I relinquished all rights to ongoing compensation from Ben-Or in any form. I have received no payments from the company in the past 11 years and have had no role in the management or operation of the firm.

“At the time of my departure, as a token of my role as a co-founder, we left 15 percent of the shares of the firm in my name — an agreement that has no financial implications for me personally, for J Street or for the firm.”

Organizations that file with the IRS as 501(c)3’s and 501(c)4’s must be run as not-for-profit groups. Groups that are 501(c)4 groups, however, are permitted to use more of their time for lobbying and political activities and are not required to disclose their donors the way that 501(c)3 organizations do.

J Street, which bills itself as the progressive alternative to the American Israel Public Affairs Committee (AIPAC) and other pro-Israel groups, has been under fire recently, after The Times reported in September that, contrary to Mr. Ben-Ami’s long-standing denials, the group had received $750,000 from billionaire George Soros and $811,697 from Hong Kong donor Consolacion Esdicul.

The full extent of J Street’s business relationship with Ben-Or is unclear, but a sample of Ben-Or invoices establish that it involved several transactions.

One marked May 1, 2010, requests payment of $32,581.77 for service fees and expenses associated with the April 2010 visit of a J Street delegation to Israel and the West Bank.

A Feb. 8 letter from Mr. Ben-Ami to Israeli Deputy Foreign Minister Danny Ayalon requesting a Feb. 16 meeting for a congressional delegation sponsored by the J Street Education Fund — J Street’s 501(c)3 arm — indicates that Ben-Or was hired for that trip as well. “Your office can contact [senior Ben-Or staffer] Shiri Ourian … at any time to discuss the details of the sponsored trip and our organization,” it says.

On Nov. 1, 2009, J Street was charged $4,194 for an unspecified “project.”

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About the Author

Ben Birnbaum

Ben Birnbaum is a reporter covering foreign affairs for The Washington Times. Prior to joining The Times, Birnbaum worked as a reporter-researcher at the New Republic. A Boston-area native, he graduated magna cum laude from Cornell University with a degree in government and psychology. He won multiple collegiate journalism awards for his articles and columns in the Cornell Daily Sun.

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