Chabad to Pay $850,000 for Misappropriating Homeland Security Funds

The Hassidic organization found guilty of misappropriating government money meant to upgrade their security.

Adam Ben Cohen / Chabad.org

Chabad misappropriated U.S. federal funds and must pay nearly $850,000 in damages, an American federal court ruled, the LA Times reported Saturday.

The case was brought to light in 2010 when a husband and wife whistleblowers exposed that Chabad misappropriated government funds from the Department of Homeland Security which were meant to be used to upgrade security but were instead used to cover payroll, utility bills and other expenses, the report in the Times read.

According to the report, Chabad misappropriated $272,495, but the judge award treble damages and penalties.

Michael Hirst, attorney for the whistleblowers Aria and Donna Kozak told the LA Times: "What the court is saying here is what the whistleblowers have always maintained: that the facts and law are not in dispute, and that Chabad knowingly defrauded the United States."

The Kozaks will receive an undetermined amount of the award, the report said.

Chabad's attorney, Mark Hathaway, said his clients are disappointed with the ruling and are weighing their options.