Wednesday, January 17, 2018

People need to reconsider their roles as neighbors, relatives, and community members when it comes to protecting children who are not their own offspring—even if the parents appear to be religious.

by Janet Heimlich

We hear it time and time again. People express shock and disgust that parents who appear to be religious have been abusing their children. In the horrific case of the Turpin family, police found the 13 children, ages 2 to 29, shackled to their beds, severely malnourished, living in filth, and injured. 

They were so thin, police drastically miscalculated their ages; they thought a 17-year-old girl was only 10.

The grandparents hadn’t seen the home-schooled children in 4 or 5 years. But in that time, did they bother to learn how the parents were raising their children? Were there no red flags? Or were they satisfied just knowing that the children were being raised with faith?

Neighbors interviewed in the suburban neighborhood of Perris, California, wondered why they rarely saw the children. Some admitted that a few looked malnourished. When one neighbor saw the children putting up a nativity scene, she witnessed bizarre behavior: The children “froze [as] if by doing so they could become invisible.” And yet no one put in a call to police or CPS?

People need to reconsider their roles as neighbors, relatives, and community members when it comes to protecting children who are not their own offspring—even if the parents appear to be religious.

Of course, stepping into someone else’s private space to report them to authorities is not easy. 

(Although keep in mind you don’t have to prove abuse to make such a call.) Coming to the aid of a child who is in distress also is unnerving. I will never forget when I was in line at the post office and I had to beg a woman to pick up her baby who had been screaming for 15 minutes, his face beet red. I was verbally attacked by a stranger who thought what I had done was unconscionable. That was not fun, but at least, for that moment, things were better for the baby because the mother did pick up the baby and the crying ceased.

Yes, I’ve heard all the excuses. “It’s not our place to interfere with another parent’s choice.” “You could cause even more trouble for the child.” “The parent knows what she’s doing.” But let’s be honest. Most people don’t want to assume the role of protector for the simple reason that it’s uncomfortable, embarrassing, and a little scary.

The time has come for us to realize it’s not about us. Maybe if the Turpins’ relatives or neighbors had taken their roles as child protectors more seriously, those children would not have endured what they did.

On January 16, David and Louise Turpin were arrested on nine counts of torture and child endangerment. 

You may wonder how the children were saved. It turns out the 17-year-old girl who police thought was so much younger had escaped through a window and called 911 form a deactivated a cell phone. Her siblings owe their sister their lives. But it shouldn’t have been that way.

We shouldn’t have to rely on children to save themselves. That’s our job.

Janet Heimlich is an award-winning journalist and author of the book, Breaking Their Will: Shedding Light on Religious Child MaltreatmentShe founded and sits on the board of the Child-Friendly Faith Project.

Do you know of a religious organization that isn’t taking child abuse or neglect seriously? Or is your place of worship doing great things for children? Please let us know your questions, concerns, and ideas by emailing us at:info@childfriendlyfaith.org.

Tuesday, January 16, 2018

"The Face of The Generation is Like The Face of a Dog" --- Mishna Sota 9:15 , Sanhedrin 97a Talmud Bavli

The President and the Porn Star

Donald Trump at a campaign rally in October 2016, about the time his lawyer, according to news reports, arranged a $130,000 payout to a porn star.

In 1998, the professional moral scold William Bennett published a book titled “The Death of Outrage: Bill Clinton and the Assault on American Ideals.” In it, Bennett described blasé attitudes toward presidential adultery as corrosive. Clinton’s promiscuity, he argued, implicated his fitness for governing: “Chronic indiscipline, compulsion, exploitation, the easy betrayal of vows, all suggest something wrong at a deep level — something habitual and beyond control,” he wrote.

I was reminded of Bennett’s words by David Friend’s fascinating recent book, “The Naughty Nineties: The Triumph of the American Libido,” about the sexual scandals and cultural upheavals of that decade. In retrospect, the dynamics of the Clinton-era culture wars seem blissfully simple, pitting a sexually libertarian left against an aggressively prudish right. It is a cosmic irony that, 20 years later, it is conservatives who’ve finally killed off the last remaining unspoken rules about presidential sexual ethics.

On Friday, The Wall Street Journal reported that, a month before the 2016 election, Donald Trump’s lawyer Michael Cohen arranged a $130,000 payout to the porn star Stephanie Clifford, known by the stage name Stormy Daniels, to stop her from discussing a 2006 dalliance with Trump. The New York Times added new details. The Daily Beast then reported that another porn actress, Jessica Drake, who had accused Trump of offering her $10,000 for sex, signed a nondisclosure agreement barring her from talking about the president.

In any other administration, evidence that the president paid hush money to the star of “Good Will Humping” during the election would be a scandal. In this one it has, so far, elicited a collective shrug.

Liberals, in general, can’t work up much outrage, because the encounter between Trump and Daniels was by all accounts consensual. And few social conservatives are interested in criticizing the president, since they’ve talked themselves into a posture of hardheaded moral realism in order to justify their support for him. In 2016, for example, Bennett himself condemned “Never Trump” conservatives for their “terrible case of moral superiority.”

If there’s a significant scandal, it will lie in the origins of the $130,000, or in other encounters Trump has covered up. There’s a sentence in Michael Wolff’s book “Fire and Fury” that hasn’t gotten the attention it deserves. It comes toward the end, when Steve Bannon is praising Trump’s lawyer Marc Kasowitz: “Kasowitz on the campaign — what did we have, a hundred women? Kasowitz took care of all of them.”

If it turns out there were payoffs to hide non-consensual behavior, there may be an uproar. But sleeping with a porn star while your wife has a new baby, then paying the porn star to be quiet? That’s what everyone expects of this president.
I don’t think it’s a coincidence that the right’s tacit embrace of a laissez faire approach to sexuality — at least male, heterosexual sexuality — coincides with attempts on the left to erect new ethical guardrails around sex.

In the 1990s, many feminists defended untrammeled eros because they feared a conservative sexual inquisition. Elements of that inquisition remain; attacks on reproductive rights have grown only more intense. Still, Trump has reconciled reactionary politics with male sexual license. In doing so, he’s made such license easier for feminists to criticize.

This weekend, the sex scandal that captivated people I know involved not Trump but the comedian Aziz Ansari. On Saturday, an online publication called Babe published allegations from a young photographer, pseudonymously called Grace, about a date with Ansari gone wrong.

Speaking to the writer Katie Way, Grace describes halfhearted — at least on her part — oral sex and Ansari’s insistent push for intercourse. Grace seemed to be disappointed that Ansari didn’t live up to his nice-guy feminist persona. “You ignored clear non-verbal cues; you kept going with advances,” she texted him.

Among feminists, reaction to the piece broke down roughly generationally. Grace interpreted her experience as sexual assault, but several older writers saw it as a story about caddishness and bad sex, neither of which justified the invasion of Ansari’s privacy. In The Atlantic, Caitlin Flanagan described it as “3,000 words of revenge porn” inspired by romantic disappointment.

I agree with Flanagan that the bad behavior Grace described doesn’t rise to the level of assault or harassment, and I don’t think Babe should have published the story. Still, I can sympathize with the younger feminists who are pushing the limits of the #MeToo movement. They are, it seems to me, trying to impose new norms of consideration on a brutal sexual culture, without appealing to religious sanction or patriarchal chivalry.

“A lot of men will read that post about Aziz Ansari and see an everyday, reasonable sexual interaction,” tweeted the feminist writer Jessica Valenti. “But part of what women are saying right now is that what the culture considers ‘normal’ sexual encounters are not working for us, and oftentimes harmful.”

Maybe feminists feel free to express their fury about the path sexual liberation has taken because they no longer need to defend sexual liberation itself from conservatives. In the 1990s, porn culture seemed subversive and chic. Now it’s become repulsively presidential.


Monday, January 15, 2018

In 2001, Rosenfeld was convicted of two counts of child molestation for abusing a 12-year-old bar mitzvah student while serving as cantor of Temple Am David in Warwick, Rhode Island. He was given a suspended sentence but served 18 months in prison after violating probation.

NY Jewish day school launches investigation of alleged sex abuse in 1970s


Salanter Akiba Riverdale Academy in the Bronx probing accusations that former assistant principal molested at least one student

Illustrative: A school classroom. (Image via Shutterstock)

A liberal Orthodox Jewish day school in New York City has launched an investigation after a former assistant principal was accused of sexually abusing a student in the 1970s.

Salanter Akiba Riverdale Academy in the Bronx, known as SAR, informed its community of the investigation in an email Tuesday night. A former student recently emailed the school alleging abuse committed by Stanley Rosenfeld, the school’s former assistant principal for general studies.
“As painful as this is for our school community, the pain for any of the victims of abuse is far greater,” read the email, signed by Rabbi Binyamin Krauss, principal of the elementary and middle school, and Rabbi Tully Harcsztark, the high school principal. “We are committed to being supportive to any victims of abuse, to understanding the abuse they suffered and the harm it has caused them, and to learning from our past experiences and using them to inform our present practices to protect our community.”

Rosenfeld, now 84, worked at the school in the 1970s. At the time, SAR ended at eighth grade. Its high school was founded in 2003.

In 2001, Rosenfeld was convicted of two counts of child molestation for abusing a 12-year-old bar mitzvah student while serving as cantor of Temple Am David in Warwick, Rhode Island. He was given a suspended sentence but served 18 months in prison after violating probation.

SAR has hired an external firm, T&M Protection Resources, to investigate the claims. The school is encouraging people to come forward with any information they have about abuse committed by Rosenfeld. It expects the investigation to take several months.

“We are committed to a thorough and comprehensive independent investigative process about the abuses perpetrated by Mr. Rosenfeld as well as what may have been known at the time or more recently,” Krauss wrote JTA directly in an email. “At this point, it would be premature to speculate on the findings of this effort.”

The community email noted that in recent years, the school implemented policies to prevent sexual abuse and harassment.


Friday, January 12, 2018

Bankrupt The Bastards! --- But even if it did, we should be less concerned with protecting the bank accounts of institutions that might harbor sexual predators, and more concerned with bringing justice to the victims — whether their abusers are clergy members, teachers or, as in a majority of cases, a family member....

Albany, Pass the Child Victims Act

Democratic State Senator Brad Hoylman speaking in favor of The Child Victims Act at the New York State Capitol, in January. Credit Nathaniel Brooks for The New York Times 
If the #MeToo movement of the last few months has taught us anything, it’s that it is extremely painful and risky for victims of sexual harassment or assault — even those with power, money and connections — to speak out against their abusers. Now consider how much harder it must be for a child.

It should surprise no one that a vast majority of people who were sexually abused as children never report it. For those who do, it takes years, and often decades, to recognize what happened to them, realize it wasn’t their fault and tell someone. The trauma leads to higher rates of alcoholism and drug abuse, depression, suicide and other physical and psychological problems that cost millions or billions to treat — money that should be paid not by taxpayers, but by the offenders and the institutions that cover for them.

For these reasons, many states — including eight last year alone — have done the right thing and extended or eliminated statutes of limitations for the reporting of child sexual abuse. This has encouraged more victims to come forward and seek justice for abuse that was never properly addressed, if it was addressed at all.

New York, which has had no shortage of child sex-abuse scandals, should be on that list. In fact, it should be leading the nation on this issue. Instead it, along with Mississippi, Georgia, Alabama and Michigan, is one of the states with the least victim-friendly reporting laws in the country. New York requires most child sex-abuse victims to sue by the age of 23, 19 years before the average age at which such victims report their abuse.
Lawmakers have had the solution in their hands for more than a decade. The Child Victims Act would extend the statute of limitations to age 50 in civil cases, and to age 28 in criminal cases. It would also establish a one-year window in which anyone would be permitted to bring a lawsuit, even if the statute of limitations had already expired.

The bill enjoys widespread and bipartisan support in Albany — it passed the State Assembly once again in 2017, by a vote of 139 to 7 — and from Gov. Andrew Cuomo. And yet it keeps failing to become law.

Why? The Senate majority leader, John Flanagan, a Republican, has refused to let the bill come to the floor for a vote. The bill’s opponents, which include the Catholic Church, Orthodox Jewish groups and the Boy Scouts of America, are concerned primarily with the one-year window, which they believe would cause a wave of claims that could drive churches, schools and hospitals into bankruptcy. That hasn’t happened in other states, even those that opened the window for longer. In Minnesota, which created a three-year window for a population a little more than a quarter of New York’s, just under 1,000 civil claims have been filed.

But even if it did, we should be less concerned with protecting the bank accounts of institutions that might harbor sexual predators, and more concerned with bringing justice to the victims — whether their abusers are clergy members, teachers or, as in a majority of cases, a family member.

The Child Victims Act should have passed on its merits long ago. Since it hasn’t, Mr. Cuomo needs to step up and demonstrate the leadership he has shown on many other divisive issues in recent years, like same-sex marriage. If Mr. Cuomo includes the bill’s provisions in the 2018-19 state budget, which he is scheduled to present on Tuesday, he will make it extremely tough for Mr. Flanagan and other Republican leaders to say no to protecting New York’s most vulnerable victims.


Thursday, January 11, 2018

I would rather send my children to a school that deals with its children with problems than to a school that pretends it doesn’t have any children with problems....

Response from Rabbi Pruzansky: Changing My Mind on School Expulsions

For some time now, we have heard that many of our youth are in a bad way—drinking, drugs, scandalous behavior—all of which have given rise to problems in schools. There have been conferences and seminars, calls for better education and improved communication. And the schools have generally responded to credible accusations of misconduct with a quick but somewhat selective trigger finger—especially in their use of expulsions. A number of people have reported to me about a party that took place recently in the metropolitan area that attracted a lot of teens and involved mass drinking and revelry, with the parents of the host conveniently out-of-town. (There were probably many other and similar parties of which I am unaware.) And the schools have dutifully responded with the range of disciplines at their disposal, and applied to the great variety of offenders under their dominion in inconsistent ways.

I have always been a law-and-order man; schools should have rules just like life has rules because otherwise there is chaos and anarchy. But I think we have gone too far in these situations to the extent that I have changed my mind. I used to think that it was appropriate for schools to monitor their students’ behavior even off campus and react when there is degenerate behavior, and in an ideal world that would still hold true. But I no longer believe that. Schools should monitor what students do on their premises, and that’s it. And off premises? That is the responsibility of the parents. Remember them?

Parents used to have primary responsibility for parenting, discipline, and instilling values in their children. Sometime in the recent past, parents abdicated that responsibility to the schools, and the results have not been pretty. For example: What parent lets a teenager go to a party of teenagers that has no responsible adult in charge? (I say “responsible” because not all adults are responsible.) You would have to be insane to allow such a thing. My children were trustworthy, but I would never let them as teens go to an unsupervised party. My wife and I would monitor, as best as possible, with whom our children would socialize. That is elementary parenting.

Forget the schools. As far as I am concerned, it’s none of the school’s business what happens off campus. It’s the parents’ business—and parents have to reclaim their role. Indeed, parents have many more disciplinary tools in their arsenal than schools do. They should use them, without fear of losing their children as “buddies.”

That being said, I have reconsidered something else. Schools have to stop these willy-nilly expulsions of students, which have become (1) a marketing tool (“Look at us! We expelled two students for unacceptable behavior. Problem solved. Send your children to us!”), (2) a deterrent that has clearly failed given the widespread misconduct that apparently exists and (3) a tacit admission that schools don’t have the time, interest or energy to deal with every child with a problem. I was slow to come around to this but I have realized that was once unthinkable has become normative, and again, quite selectively applied. A few months ago, I was sent a video a few months ago of Rav Moshe Weinberger (the Rav of Aish Kodesh) pleading with principals to remember their own youth. “What were you like when you were 17?” Why are they pretending that all was so perfect that now we can just dispatch Jewish children into the spiritual wilderness?

My initial reaction was that it is easy for someone not in chinuch to make such a broad statement and encourage such a policy change—banning expulsions—but as I pondered his comments over the course of a few weeks, I realized that he was correct. Teens are teens, and even if the parameters of “acting out” have widened over the decades since I was a teenager, and mostly in very unsalutary ways, I do not doubt that there are today principals and Roshei Yeshiva, teachers and rabbis, who acted as teens in ways that they chalk up to adolescent hijinks. Yet, they—or their boards—do not want to give today’s children the same break or a compassionate hand. I certainly do not lay all the blame at the feet of the principals or administrators who are often confronted with conflicting pressures that cannot all be resolved to the satisfaction of all.

And then I started my research on my “Great Rabbis of the 20th Century” series and to my astonishment, I determined that these giants dealt with the same issues in a much more tolerant, loving and probably effective way. The Alter of Slabodka, for example, never agreed to expel a student. (Keep in mind that Slabodka had its share of students who desecrated Shabbat, who were Socialists trying to overthrow the Czar, who were students in the yeshiva who even rebelled against the Alter and tried to have him dismissed!) Yet, he would tell the Roshei Yeshiva, that we must look and find some good in them. He kept one student around, he told his colleagues, even though he wasn’t much of a student, because he liked to do favors for people. The Jewish people need that also. And when challenged about particular miscreants, he would cite the verse in Kohelet and the Midrash (Vayikra Raba 27:5) thereon: “‘G-d seeks out the pursued;’ even when the righteous pursue the wicked” G-d takes up the cause of the underdog. So find his good quality and help him. Don’t throw him away.

Similarly, Rav Ovadia Yosef said in an interview a year before he died that it is forbidden to expel a child from yeshiva. I quote: “Even if there is a student who behaves inappropriately, it is still forbidden to throw him out of school and instead we must exercise extreme patience… If we are patient with this student, one day he can grow up to be a talmid chochom. And if we send him away from the yeshiva where will he go? To a secular school and then what will become of him?”

And then he added: “What, are you throwing away a rock? These are precious souls! If you throw a child away, do you know what will be? Are you ready to take responsibility for what might happen?”

And in Rav Yissachar Frand’s Dvar Torah last week (the second essay) he made the same point. If all these great rabbis are addressing this issue, it tells me that there is a problem in Baltimore, Israel, the Five Towns, New Jersey – and everywhere else.

And who are we throwing away? The children of the Avot and Imahot of our people. Like Rambam says (Hilchot Sanhedrin 25:2), even the lowliest among us are “the children of Avraham, Yitzchak and Yaakov, the armies of G-d who took us out of Egypt with a great might and a powerful arm.”

I’m not an extremist. If a child is endangering another child, that is different. But short of that, there are other measures. Educate. Discipline. Suspend. Make a child repeat a class or a grade. (The thought alone of paying an extra year’s tuition will get the parents’ attention.) But don’t throw them away. G-d also took these children out of Egypt.

I would rather send my children to a school that deals with its children with problems than to a school that pretends it doesn’t have any children with problems.

And what should parents, now once again responsible for their children’s behavior, impress upon them? During the years of bondage in Egypt, we never lost our identity, our dignity, our sense of self-respect. We always knew, in the statement of the Mishna (Masechet Shabbat 111a), that “all Israel are the children of kings.” We are all princes and princesses. We never let the Egyptians, those debauched pagans, define us. We endured them, survived them and triumphed over them, and then the sense of inner freedom naturally emerged from us. It cannot be suppressed forever – in any of us.

That is the message for us and for our children. They should realize that all the attractions and allures of the world mean nothing compared to the great privilege of being part of a royal people. They need to be taught that when they act like reprobates, they have first and foremost let themselves down.

There is no greater deterrent to mischief than the realization that some conduct is beneath them and unworthy of them, of who they are supposed to be. When that realization sinks in, we will merit only blessings from all of our children.

Rabbi Steven Pruzansky is mara d’atra of Congregation B’nai Yeshurun in Teaneck.

Wednesday, January 10, 2018

Levy was jailed for three years in 2013 for two counts of sexual assault against Yehudis Goldsobel, who waived her right to anonymity to encourage others to speak out against abuse.

Convicted abuser Mendy Levy criticised for trying to “seek public acclaim” by donating a scroll to Chabad in Golders Green


Chief Rabbi Ephraim Mirvis
Chief Rabbi Ephraim Mirvis

Menachem ‘Mendy’ Levy was criticised by Chief Rabbi Ephraim Mirvis for trying to “seek public acclaim” by donating the scroll, which was subsequently rejected. 

Last week there were celebrations in Golders Green after the completion of the Sefer Torah. 

According to a press release published — and then removed — from the crownheights.info website, “well over 1,000 men, women and children” joined in with “joyous dancing and celebration which was heard several streets away.

The new Torah made its way slowly to the local Lubavitch shul, Hechal Menachem, where it was greeted by the other existing Torah scrolls.”

After the ceremony, there was celebration at Levy’s home, where, again according to the press release, “Rabbi Yossi Simon presented Levy with a thank you from Chabad of Golders Green.”

Levy was jailed for three years in 2013 for two counts of sexual assault against Yehudis Goldsobel, who waived her right to anonymity to encourage others to speak out against abuse.

Yehudis Goldsobel

On her Facebook page this week, she wrote: “A Sefer Torah dedication is a lovely thing, but how can a community of people ignore the fact that the person donating it is a convicted sex offender? Does this not somehow tarnish this mitzvah? I would think so.”

She said she had not known about the dedication until she was approached by a reporter, and that she continued to be shunned by members of the Chabad community in which she had grown up.
A spokesman for the Chief Rabbi told Jewish News: “The very idea that a man convicted of sexual abuse should seek public acclaim in this way is extremely disturbing.

“The Chief Rabbi has met Yehudis Goldsobel on a number of occasions. and knows her to be a brave and tireless campaigner against the scourge of abuse. It is impossible for us to appreciate the kind of pain that this episode must have caused her.

“What is essential is that a clear message goes out to all concerned that these kind of antics will never find support within our community. It’s also fair to say that everyone we have spoken to on this matter is in agreement with this position.”

On Sunday, Rabbi Simon issued a statement saying “an individual” — Levy — had “chosen to turn the completion of the sefer Torah into a public event, organising all the details, down to the production of the flyers and post-event publicity”.

Rabbi Simon said Levy had offered Golders Green Chabad the scroll, on loan, when Chabad moved into premises in the area. But in light of the nature of the celebration, it had decided against housing it, he said.

“We have also asked news outlets that publicised the donor’s article to remove it from their sites.
“We can only imagine the further anguish this matter has caused the victim, and our hearts go out to her and her family.”

 Board of Deputies Vice President Marie van der Zyl said Chabad were correct to not accept the scroll, saying: “Sexual offences are extremely serious and, while we should give people the opportunity to express remorse and change their behaviour, care should be taken not to honour people who have committed these sorts of terrible crimes.

 I am therefore reassured to note that Chabad has decided not to accept the scroll. No one in the Jewish community must ever give the impression that sexual abuse perpetrators are to be accepted until it is clear they have genuinely repented.”

A spokesperson for the Jewish Leadership Council said: “We can only imagine the further pain that this event has caused Ms Goldsobel and her family and were encouraged to read of the strong action Rabbi Simon has taken. We continue to encourage our member organisations to have robust policies in place regarding safeguarding and work to ensure that victims of abuse are protected and respected.”


Tuesday, January 09, 2018

According to the lawsuit, the story, which began three years ago, reveals incidents of serious physical, emotional and sexual abuse against a 16-year-old minor, including violence and humiliation....

Bnei Brak lawsuit: Yeshiva student harassed others over 3 years

Conspiracy of silence? Allegations of sexual abuse and pedophilia at flagship haredi yeshiva.

Haredi man (illustrative)

A lawsuit filed last week against the famed Ponevezh Yeshiva in Bnei Brak, the leading Israeli haredi yeshiva, alleges that serious crimes by a student have been committed there for several years.

According to the statement of claim, a yeshiva student sexually assaulted students in a violent manner and photographed them in the nude in a secret location within the yeshiva.

The victims appealed to a new organization called Din Vecheshbon that was formed recently by members of the haredi community in order to fight silencing of sexual harassment within the community.

The events were investigated by the organization and a civil suit was subsequently filed against the yeshiva, two of its rabbis and the alleged offender. The lawsuit states recorded evidence as proof of admission by the defendant of his actions against the plaintiff. In addition, a complaint was also filed with the police.

According to the lawsuit, the story, which began three years ago, reveals incidents of serious physical, emotional and sexual abuse against a 16-year-old minor, including violence and humiliation. In addition, it alleges that the offender exploited the minor by fostering a situation of deep emotional dependency and using this to violate him sexually contrary to his will and consent, as well as beat, threaten and humiliate the minor before allowing him to leave the room.

The prosecution likewise claims an additional offense of creating and collecting pedophilic material.
"In many of the events detailed [in the statement of claim], the defendant would sit on top of the plaintiff and photograph himself. The defendant would store the nude photographs of the plaintiff in his personal computer, along with nude pictures of other youngsters, which in effect holds the defendant responsible for a computer collection of child abuse images."

In addition to the offender in question, two of the yeshiva’s rabbis are being charged with criminal violations for failing to report the incidents. According to the complaint, when the minor turned to the first rabbi, "Defendant 3 listened to the plaintiff's words, calmed him down and left without following up on the matter."

When the plaintiff asked to meet with the second rabbi, the rabbi told him that "He believed that the purpose of the meeting was to discuss what the defendant had done to him after hearing about the severity of the defendant’s actions committed on the plaintiff. During this conversation, Defendant 2 told the plaintiff that it had been known for some time that the defendant was a danger to the students, but that they did not know how severe his actions were."

The statement of claim says that, "Although Defendants 2 and 3 recently admitted to the plaintiff that they are aware of the danger posed by the defendant, the defendant continues to live in the yeshiva, and it is reasonable to assume that even now he continues to harm there. "
"It should now be noted that all the defendants recently confirmed to the plaintiff that the events described above did indeed occur, and that the plaintiff has the recordings which confirm this admission, and therefore the defendants' confessions must be regarded as a confession."

Nachman Rosenberg, who represents private haredi donors behind Din Vecheshbon, states that, "It is time to recognize that the 'silencers' of sexual abuse are far more dangerous than the predators themselves."

"These institutional cover-ups directly endanger hundreds and thousands of innocent children simultaneously. Din Vecheshbon represents a paradigm shift in the haredi community by targeting the root of this... by punishing institutions or individuals who neglect the safety of their students and turn a blind eye on sexual abuse."


Monday, January 08, 2018

The New Black!

Rubashkin faced a real possibility of being one of the unlucky prisoners who die in prison. But Rubashkin did not despair. The plight facing someone who is in prison is not something that anyone can understand until he has experienced it, but to survive it and live every day is nothing short of heroic.

Rubashkin Surviving Prison Is A Heroic Act In Itself 

Though the Forward published many articles after the release of Sholom Rubashkin, some opinion writers have taken the position that the celebrations that followed Rubashkin’s release were at best inappropriate and at worst a desecration of God’s name.

Most of us have thankfully not been through the criminal justice system. However, until one has been through it, one cannot truly understand it nor appreciate why these celebrations were befitting someone who epitomizes the justice system at its worst.

Though I have never met Rubashkin, I myself have been through the criminal justice system and spent about a year in the Federal Prison Camp in Miami, Florida.

Long prison sentences demoralize a person. I have met people who have been in prison for 20 years and the effects are not pretty. When they are released they are not equipped to socially integrate into society. They have been sitting in prison while life passed them by. Whether or not they deserved these sentences does not change the fact that when someone enters prison for a lengthy prison sentence, he has effectively kissed his life goodbye. In short, his life is over.

Rubashkin faced that real possibility when he entered prison. Even though he was a white collar convict, he was not permitted to go to a prison camp since his sentence was so long. He was housed in a medium security facility. From my own experiences, knowing that I was going to prison for even a 30 month sentence was especially daunting. I have no idea how I would have handled the prospect of being away from my friends and family for such an enormous amount of time, especially if i felt I had been wrongly convicted and unfairly punished. In my view, suicide is a better option than that prospect. Certainly, upon entering prison, I see no scenario where, even as an Orthodox Jew, I would have been able to keep my faith in God. I would have wallowed in a state of depression and despair. God would have been completely out of the picture.

Rubashkin faced not only that possibility but lived the reality. He faced a real possibility of being one of the unlucky prisoners who die in prison. But Rubashkin did not despair. The plight facing someone who is in prison is not something that anyone can understand until he has experienced it, but to survive it and live every day is nothing short of heroic.

You eat when they tell you to eat and sleep when they tell you to sleep. Visitations with family are limited and monitored. Prisoners are limited to 300 minutes of phone privileges per month, which is less than most of us use in two days. The spouse is left to handle everything on his or her own while the husband or wife is helpless to assist in any way. In many ways prison is harder on the spouse then it is on the actual person who has been incarcerated. Meanwhile, the inmate is watching his family suffer, hearing about everything going out in the outside world and he misses everything. Rubashkin was looking to have to do that for 20 years.

In the end, common sense prevailed and President Trump commuted his sentence. As a Jew and more so as a former inmate, I experienced a joy not felt since my own release as I watched the videos of the celebrations. How can one not admire a man who did not despair and who came out stronger on the other side? How can we not feel a sense of happiness for a wife who after eight years of waiting finally has her husband back at home? How can we not jump for joy for the children who finally have their father back at home and can study with them? How can we not be happy for the grandchildren who finally get to meet their Zaidy? And how can we not feel a sense of joy and admiration for a person who took everything the prosecutors threw at him and came out not only the same but stronger on the other side? Heroic does not begin to appropriately describe his actions.

As word of his release spread, celebrations erupted from all corners of the world and among many different stripes of Orthodox Jews. Not only were they warranted, but there should have been more of them. When I came out of prison, my family was ecstatic. My wife, my three children and my entire family suffered tremendously while I was in prison. Life while I was away was extremely stressful for many reasons. However, on the day I was released, all the worries of the past year melted away and joy permeated the home. My parents were beyond elated and a received calls of mazal tov from friends who had visited me as well as those who did not. That Shabbat I got called to read from the torah and was welcomed warmly back into the shul. But that was me: I was a relative nobody who went away for a relatively short amount of time. When it came to Rubashkin, everyone of those people dancing in the streets felt as though it was also his father, his brother and his son who got released. Not only did Rubashkin get released, but the release came unexpectedly via a sentence commutation by none other than the president! Is it any wonder that there were so many celebrations?

Perhaps the real problem lies with those who did not celebrate. We Jews are supposed to be achim, brothers. We have a commandment to V’ahafta L’re’acha Kamocha, to love your brother as yourself.

When a brother is released from prison after eight years, how do we not go out and celebrate!

Of course, the obvious response is that it is a “bad example” to turn convicts into heroes. That is the comment of at best an ignoramus and at worst a fool. One cannot fully appreciate the criminal justice system until he has lived it. Well, I lived it, and let me tell you a little secret: it is not a fair system.

I ask all of Rubashkin’s accusers why you feel the need to rain on his parade. No one is forcing any of you to participate in the celebrations. Why the need to publicly criticize and defame Rubashkin? 

Are you all so insecure in your own religious beliefs that the only way to legitimize your own flaws is by trying to find fault in others? Are you all so perfect that you have the right to criticize others? Are you so insensitive to the plight of a mother and children that had to endure pain that no one should ever experience you begrudge their celebration? As a Modern Orthodox Jew, I am embarrassed by some of the hatred coming from my own community.

Finally, Jews embrace the concept of t’shuva, repentance. We believe that while people do sin, there is an opportunity and obligation to repent. King Solomon stated in Ecclesiastes that there is no man who does all good and does not sin. We all have something for which we can repent. While I cannot give an opinion on what went on is Postville, Iowa all those years ago, I do know that as Jews, we accept the person who does repent. So even if one were to honestly believe that wrongs were committed, can there be any doubt that there was repentance as well? We have an obligation not only to accept the person who has repented but we are forbidden from bringing up his past indiscretions.

Saying the celebrations are unwarranted and using the “sins” as a basis flies in the face of everything that we Jews embrace. Perhaps it is the naysayers who need to take a hard look at themselves and embrace repentance. Of course, first you all need to ask forgiveness from Sholom Rubashkin.

To Sholom Rubashkin I say the following: May God bestow upon you and your family all of His blessings. May you continue to be an inspiration to Jews all over the world and may you only use this horrible experience to help others. But most of all, Mazal Tov!

Read more: https://forward.com/scribe/391350/rubashkin-surviving-prison-is-a-heroic-act-in-itself/

Friday, January 05, 2018

The district attorney of that area told us that he had never been under as much pressure by every facet of the Jewish community to not press charges against the accused. A well-known New York City lawyer was brought to Monticello to defend the accused, who went on to be arrested again at a later time and was seen being taken in handcuffs from a well-known yeshiva that did not find his charges from the past relevant. Into the police car he went. Shame on the menahel and board of that school to have allowed him to be hired in the first place. For years there was a cover-up due to his well-known family.


There are situations in life that are more complicated than others. Some of us only become aware of them many years after the fact, and often decisions have been made to sweep things under the carpet or hide them in the recesses of our minds.

Few of us are unaware of the cases of harassment, assault and abuse that have taken over the news media. Truthfully, as astounding and vulgar as these accusations may be in the “Hollywood” community, we are able to regard them as not being a relevant part of our lives.

However, when these accusations enter “our” world, the Jewish world, they seem to catapult into our consciousness and sometimes lead us to deny that this could ever happen to us, one of our children or someone we know. Both in terms of perpetrator and victim.

In the very back of Nina’s mind, rarely thought of, is the tutor her parents hired to help her with algebra. This well-recommended math teacher came each week for several months to help ensure that Nina would pass her New York State algebra Regents. Each week he sat with her at her desk and went over various problems, and each time as the session progressed he would rub her back. There was not a chance in the world that Nina would ever tell her parents. She was so sure that she must be imagining this horrible act that made her so uncomfortable. Her thought at the time was primarily that if she told her parents they would probably excuse his actions as those of a kind and caring individual. He definitely was not that.

We worried for many years about the vulnerability of our daughter Naama. People would pass her and some would say, “Oh, she’s so cute.” Believe us that after she passed the first maybe eight years of her life, Naama was no longer “cute.” Silently we worried and were concerned. Her ability to defend herself was obviously “not at all.”

Often people talk about the “good old days” as if they were the absolute best. In some ways, perhaps the attention being given to the situations in which people have been abused is a benefit to all of us. It helps us be more aware of the dangers that really do exist out there in both the secular and Jewish world. It may give us the opportunity to be more open within our community and our workplace, with our children and our families. Abuse takes many forms.

As a family, we experienced the terror of one of our grandsons being subpoenaed as a witness in a case of possible abuse, in which a rebbe who slept in the same bunk as the boys was accused of molesting a child in the bunk. Although there was a trial, the “rebbe” was acquitted by the judge in the Monticello, New York, courthouse. The district attorney of that area told us that he had never been under as much pressure by every facet of the Jewish community to not press charges against the accused. A well-known New York City lawyer was brought to Monticello to defend the accused, who went on to be arrested again at a later time and was seen being taken in handcuffs from a well-known yeshiva that did not find his charges from the past relevant. Into the police car he went. Shame on the menahel and board of that school to have allowed him to be hired in the first place. For years there was a cover-up due to his well-known family.

Another form of abuse that we significantly cringe at is verbal in nature: the lack of respect that is often shown between men and women, husbands and wives, in front of others and, most sadly, in front of their children. There is no excuse for a father to speak to one of his children derogatorily about their mother and vice versa. Couples spending time with other couples seem not to hesitate to criticize their spouses. This form of abuse, yelling, criticizing, making fun of in public causes a form of poison in a relationship and must not continue.

It is obvious that despite the number of times we, on egg shells, speak with our children about these topics, it is almost impossible to protect them from totally unexpected incidents. Most notable is the fact that most instances of abuse are by someone who is known to the person and in whom they place their faith and trust. We all must be brave enough to come forward at any time if we feel someone has acted inappropriately to anyone in our family. There are also appropriate ways to report such incidents. Going directly to the person in question is absolutely the last way to deal with a concern. Have enough confidence in knowing that what you are doing is protecting yourself and many others, and do not hesitate.

Recent reports of inappropriate behavior among respected youth leaders in our communities has encouraged us to come forth and share with everyone the necessity of not keeping quiet. It is extraordinarily important to report these cases discreetly, without ever taking the chance of decimating the character of someone before all evidence has been proven. No, the world is not the same; however, as we have seen, many of these horrors took place way before anyone considered that such things could occur. With proper education and responsibility we need to continue to relish the beauty of the world we live in and the good fortune we have to be a part of it, ensuring that any improprieties are immediately dealt with.

 Rabbi Mordechai and Nina Glick are living in Bergenfield after many years of service to the Montreal Jewish community. Rabbi Glick was the rav of Congregation Ahavat Yisroel as well as a practicing clinical psychologist in private practice. He also taught at Champlain Regional College. The Glicks were frequent speakers at the OU marriage retreats. Nina coordinated all Yachad activities in Montreal and was a co/founder of Maison Shalom, a group home for young adults with special needs. They can be reached at nina@jewishlinknj.com.

Thursday, January 04, 2018

We’ve seen this “Let him off, he’s one of us” approach all too often in some of the recent responses to the exposure of harassment or abuse by prominent political or cultural figures. We’ve seen it in cases of suspected child molesters....

'He's one of us' doesn't excuse sexual abuse

There are no extenuating circumstances for abuse. 
  by Dr. Rafael Medoff
Shulamit Magnus, and Thane Rosenbaum co-authored this article

The longstanding dispute over accusations that Shlomo Carlebach molested or harassed numerous women has gained new currency as American politicians, journalists, and entertainers have been exposed for engaging in similar conduct. 

The Carlebach discussion has provoked strong sentiments. Sadly, some of Rabbi Carlebach’s defenders have gone way beyond the bounds of civility by trivializing and rationalizing the abuse.
In his December 31 essay for Arutz 7, Dr. Chaim Charles Cohen protests that some in the Jewish community have—in his words— “stopped singing the music of Rav Shlomo because two of the women complained that it is not liberally correct to sing the music of man who may have had questionable social behavior at one point in his life.”

No, they didn’t complain that it was “not liberally correct.” They complained that it was improper to honor the music of someone against whom there is credible evidence of numerous instances of sexual harassment and assault. 

Each of us has to make an individual decision as to whether she or he is comfortable enjoying the music, art, or writing of someone accused of despicable acts. In addition to that personal decision, everyone has a right and even a duty to question whether it is wise communal policy to act is if Carlebach’s behavior never happened or doesn’t matter.

The acts attributed to Rabbi Carlebach were not acts of “questionable social behavior.” Nor were they  “solitary mistakes of social behavior” and “incidents of inappropriate social behavior,” as Cohen characterizes them. Laughing loudly during a shiva visit is inappropriate social behavior. 

Fondling a teenage girl is criminal assault. Girls and women don’t exist to serve the pleasure of men. The world is not a harem. 

Dr. Cohen does not express any sympathy for Rabbi Carlebach’s victims. Instead, he dismisses the eyewitness testimonies of molestation as “certain possible footnotes in Rav Sholomo’s life.” [The girls and women who were molested were not footnotes. They were people, religious seekers no less than the men who came to Carlebach, who were allegedly harmed.

Dr. Cohen in effect rationalizes molestation when he asserts: “If there were, at some point in his life, incidents of inappropriate social behavior on the road, they are very clearly a result of this unending loneliness.” Loneliness is not an excuse for abuse. Nothing is. 

Cohen argues that the evidence of molestation by Rabbi Carlebach should be overlooked because of “the greatness of [Carlebach’s] contribution to the resurrection of Jewish life after the Holocaust” and his commitment to “an unending mission of spreading Torah.”  

We’ve seen this “Let him off, he’s one of us” approach all too often in some of the recent responses to the exposure of harassment or abuse by prominent political or cultural figures. We’ve seen it in cases of get-refusers and suspected child molesters. We see it when board members of Jewish or Zionist organizations fail to act against corrupt leaders because they approve of their leader’s political positions. This argument is unacceptable in any context. In this one, we would also note that Rabbi Carlebach’s behavior towards women violated the very Torah he was spreading. 

No one is saying that those who committed acts of sexual assault at some point in their lives must be exiled from the Jewish community, or that their achievements must be forgotten and expunged from our collective memory.  All human failure is a matter of degree. Not all of these allegations and acts are the same; proportion always informs culpability.  So, too, does acknowledgment and meaningful gestures of repair. But in this case, Dr. Cohen is saying, in effect, that nobody was culpable, nothing needs to be acknowledged, and that there is no obligation (in this instance, by the community) to acknowledge a grievous wrong.

Perpetrators of sexual crimes are not being defamed; they are being exposed, which is critical to preventing abuse and giving justice to victims of abuse. The Jewish community must face how it responds to sexual assault. Chaim Cohen’s essay is a tutorial on what the Jewish community shouldn't say in response to these moral and ethical failures.

Dr. Cohen concludes by complaining that “p.c. liberalism wants to resolve all the complexities of man-woman relationships with a single equation: all intimate physical relationships between men and women are moral if both parties truly consent of their own free will.” This, indeed, is the clear and legal definition for permitted sexual contact: true consent by those legally able to give it. No such consent, no relations. Period.

The need for such consent in physical contact is not “p.c. liberalism.” It is basic decency; it is the law in civilized societies; and it is an integral part of the teachings of the same Torah that Cohen praises Rabbi Carlebach for spreading.

The authors are members of the steering committee of the Committee on Ethics in Jewish Leadership (www.jewishleadershipethics.org)


Wednesday, January 03, 2018

A SHAMED rabbi forced to step down from a string of ­posts after vilifying and intimidating victims of child sex abuse is now suing their spokesman for defamation....

Controversial Rabbi Meir Shlomo Kluwgant is seeking damages for alleged defamation.

Controversial Rabbi Meir Shlomo Kluwgant is seeking damages for alleged defamation. The Truth Defense Obviously Does Not Apply In Australia

Rabbi Meir Shlomo Kluwgant sues over ‘scum of the earth’ slur ...Although that's too nice of a name for him!


A SHAMED rabbi forced to step down from a string of ­posts after vilifying and intimidating victims of child sex abuse is now suing their spokesman for defamation.

Meir Shlomo Kluwgant had to resign as Australia’s top rabbi in the wake of the child abuse royal commission’s probe into Yeshivah College in East St Kilda.

He now claims Phillip Weinberg, who acted as spokesman for the victims, ­defamed him in telephone calls to Adass Israel School secretary Avraham Weiszberger in June and July last year.


Adass Israel School in Elsternwick
In a writ filed in the ­Supreme Court, Rabbi Kluwgant claims the first call took place just days before he took up the post of CEO and principal of the Elsternwick school.

Rabbi Kluwgant alleges that during the call, Mr Weinberg told Mr Weiszberger that he (Kluwgant) was “the scum of the earth” and “one of the worst people” he had heard about.

He claims Mr Weinberg suggested he was unsuitable for the job and that the school was making a big mistake employing him and encouraged Weiszberger to contact other members of the Rabbinic Council of Australia and New Zealand to obtain further details of his poor character. The Rabbi alleges further defamatory comments were made in a second call where Mr Weinberg allegedly stated the school was “on the right track” by distancing itself from him.

Rabbi Meir Shlomo Kluwgant labelled the father of a child sex abuse victim a “lunatic” who neglected his children.
Rabbi Kluwgant claims Mr Weinberg suggested that he was of such “unsavoury, unscrupulous and distasteful” character that he should be sacked, being unfit to hold any office at a school.

He claims the alleged statements injured his reputation and breached court orders made in December 2015 restraining Mr Weinberg from making derogatory comments about him.

He is seeking aggravated damages and damages for lost income and for the ­alleged contempt of court.

He claims the alleged statements injured his reputation and occupation and breached court orders made in December, 2015 restraining Mr Weinberg from publishing or sharing certain documents, or making derogatory comments about him to anyone.

Rabbi Kluwgant alleges Mr Weinberg has refused to correct, retract of apologise despite being asked to do so and is seeking aggravated damages and damages for lost income and for Mr Weinberg’s alleged contempt of court for breaching the earlier orders.

Mr Weinberg could not be contacted and is yet to file a defence.

Rabbi Kluwgant resigned as principal of Adass Israel in August last year. His appointment prompted the most powerful rabbi in the ultra-­Orthodox community to make an extraordinary call for further consultation, after abuse victims asked the school to reconsider.

Former Adass Israel School principal Malka Leifer, who is now in hiding in Israel.
Victims had expressed alarm in 2015 that Rabbi Kluwgant was teaching religious studies at Beth Rivkah Ladies College, operated by the Yeshivah Centre, saying it was evidence the centre was not serious about tackling abuse.

Earlier in 2015 Rabbi Kluwgant resigned as president of the Organisation of Rabbis of Australasia, lost his position on Victoria Police’s multi-faith advisory committee and ­resigned as general manager of cultural and spiritual services at Jewish Care.

The royal commission heard that he had ­labelled the father of Yeshivah College abuse victim Manny Waks a “lunatic” who neglected his children, and told another victim who called on Jewish leaders to confront the child sexual abuse crisis to “remain silent”.

Adass Israel School was previously mired in controversy when former principal Malka Leifer fled to Israel in the middle of the night when she was accused of molesting her students in 2008.

Israel’s Prime Minister Benjamin Netanyahu last month promised to take a fresh look at extraditing Ms Leifer to Australia, where she is wanted on 74 charges of child sexual abuse.


Tuesday, January 02, 2018

Economic policymakers seem to have lulled themselves into a false sense of security by trusting the stricter bank regulations put in place after the collapse of Lehman Brothers in 2008.

The Global Economy Is Partying Like It’s 2008

In late 2008, at a meeting with academics at the London School of Economics, Queen Elizabeth II asked why no one seemed to have anticipated the world’s worst financial crisis in the postwar period. The so-called Great Recession, which had begun in late 2008 and would run until mid-2009, was set off by the sudden collapse of sky-high prices for housing and other assets — something that is obvious in retrospect but that, nevertheless, no one seemed to see coming. 

*(For the record, I did see it coming in the summer of 2006,  and told everyone in my inner circle and in my organization. The pattern of consumer spending started to decline rapidly as the banks dramatically cut back on home equity loans - PM)*

Are we about to make the same mistake? All too likely, yes. Certainly, the American economy is doing well, and emerging economies are picking up steam. But global asset prices are once again rising rapidly above their underlying value — in other words, they are in a bubble. Considering the virtual silence among economists about the danger they pose, one has to wonder whether in a year or two, when those bubbles eventually burst, the queen will not be asking the same sort of question.

This silence is all the more surprising considering how much more pervasive bubbles are today than they were 10 years ago. While in 2008 bubbles were largely confined to the American housing and credit markets, they are now to be found in almost every corner of the world economy.

As the former Federal Reserve chairman Alan Greenspan recently warned, years of highly unorthodox monetary policy by the world’s major central banks has created a global government bond bubble, with long-term interest rates plumbing historically low levels.

He might have added that this bubble has hardly been confined to the sovereign bond market. Indeed, stock values are at lofty heights that have been reached only three times in the last century. At the same time, housing bubbles are all too evident in countries like Australia, Britain, Canada and China, while interest rates have been driven down to unusually low levels for high-yield debt and emerging-market corporate debt.

One reason for fearing that these bubbles might soon start bursting is that the years of low interest rates and avid central bank government bond buying that spawned the bubbles now appear to be drawing to an end.

The Federal Reserve has already started to raise interest rates — on Wednesday it hiked the benchmark rate by a quarter of a percentage point — and has announced a schedule for reducing the mammoth amount of government securities it holds. At the same time, with the European and Japanese economic recoveries picking up pace, both the European Central Bank and the Bank of Japan are hinting that they are likely to soon follow the Fed’s lead in tightening monetary policy by raising rates.

Other reasons for fearing that the bubbles might soon start bursting are the fault lines in a number of major economies. Italy has both a serious public debt problem and a shaky banking system. Brazil is experiencing political turmoil while its public finances are on a clearly unsustainable path. China has a housing and credit-market bubble that dwarfs the one in the United States at the start of this century. And both Brazil and Italy will be holding contested parliamentary elections next year.

This is not to mention the economic dislocation that could result from a termination of the North American Free Trade Agreement, or from the accentuation of other protectionist tendencies, whether by the United States or by another big country. Nor is it to mention the risk that events in the Korean Peninsula could spin out of control.

Economic policymakers seem to have lulled themselves into a false sense of security by trusting the stricter bank regulations put in place after the collapse of Lehman Brothers in 2008. They seem to be turning a blind eye to the dominant role that so-called shadow banks (hedge funds, private equity funds, large money market funds and pension funds) play in the American financial system now. Unlike the banks that were covered by the Dodd-Frank regulations, these institutions are lightly regulated — but, as we painfully learned in 1998 when the hedge fund Long-Term Capital Management had to be bailed out, are subject to deposit runs just like banks.

It is too late for policymakers to do much to prevent bubbles from forming. However, it’s not too early for them to start thinking about how to respond in a manner that might free us from the boom-bust cycles that we seem to be experiencing every 10 years. They could, for example, create a program that in a severe downturn would give every citizen a cash grant to be spent at their discretion, what Milton Friedman called “helicopter money.”

It’s unclear, however, whether the world’s largest economy can take the lead this time. The Trump administration’s budget-busting tax cuts risk overheating markets even further and limiting the government’s ability to respond when the bubbles pop. This heightens the risk that when the bubbles burst, we’ll be forced to rely yet again on artificially low interest rates, which will set us up yet again for another boom-bust cycle.


 Subprime delinquency rate for non-bank lenders back near recession levels

A Perella Weinberg Partners fund has been sitting on an IPO of Flagship Credit Acceptance for two years as bad loan write-offs push it into the red. Blackstone Group LP has struggled to make Exeter Finance profitable, despite sinking almost a half-billion dollars into the lender since 2011 and shaking up the C-suite multiple times.

And Wall Street bankers in private say others would love to cash out too, but there’s currently no market for such exits.

In the years after the financial crisis, buyout firms poured billions into auto finance, angling for the big profits that come with offering high-interest loans to buyers with the weakest credit. At rates of 11 percent or more, there was plenty to be made as sales boomed. But now, with new car demand waning, they’ve found the intense competition -- and the lax underwriting standards it fostered -- are taking a toll on profits.

Delinquencies on subprime loans made by non-bank lenders are soaring toward crisis levels. Fresh investment has dried up and some of the big banks, long seen as potential suitors, have pulled back from the auto lending business. To top it off, state regulators are circling the industry, asking whether it preyed on borrowers and put them in cars they couldn’t afford.

“The PE guys sailed into this thing with stars in their eyes. Some of the businesses have done fine and some haven’t,” said Chris Gillock, managing director at Colonnade Advisors, a boutique investment bank. But right now, “it’s about as out-of-favor a sector as I can think of.”

The apparent turnabout represents a sobering shift in what has been a booming market. Since the turn of the decade, buyout firms, hedge funds and other private investors have staked at least $3 billion on non-bank auto lenders, according to Colonnade. Among PE firms, everyone from Blackstone and KKR & Co. to Lee Equity Partners, Altamont Capital and CIVC Partners waded in.

Many targeted smaller finance companies that often catered to the least creditworthy borrowers with nowhere else to turn. Overall, subprime car loans -- those extended to people with credit scores of 620 or lower -- have increased 72 percent since 2011. Last year, about 20 percent of all new car loans went to subprime borrowers.

It usually works like this. Subprime finance companies first borrow money from the big banks and then compete for loans from car dealers. They make their margin from the spread between their funding costs and the interest they can charge, minus operating expenses and whatever losses occur when borrowers can’t pay. What they don’t keep on their books usually gets bundled into bonds and sold as asset-backed securities. Some will also sell loans to banks or brokers to raise cash.
For many PE-backed subprime lenders, which invested heavily to expand, margins have shrunk as delinquencies spiked and auto sales peaked.

In some ways, buyout firms can only blame themselves. Because of the limited time to show a return on their investments, usually four to six years, there was immense pressure to grow. That led many finance companies to loosen their standards -- like lengthening repayment periods and lending to borrowers with lower credit scores -- to gain an edge as car sales roared back from the depths of the recession and competitors jumped in. Many pushed into “deep subprime,” the riskiest part of the business that’s grown in recent years.

Not Pretty


The results haven’t always been pretty.

Take Exeter. The company, which is licensed in all 50 states and works with roughly 10,000 dealerships, was unprofitable from 2011 -- when Blackstone took a majority stake -- through 2015, according to S&P Global Ratings. That’s even as the PE firm invested $472 million to help Exeter expand and cycled through three CEOs at the lender.

On a pretax basis, S&P said Exeter turned a profit last year, and Matthew Anderson, a spokesman at Blackstone, says the company will do so again in 2017. He added the New York-based firm hasn’t tried to sell the lender.

Blackstone may look to unload Exeter later next year, said a person familiar with the matter, who asked not to be identified because it’s private.

Bad loans remain an issue. This year, a rash of delinquencies in two bonds stuffed with loans that Exeter made in 2015 caused the securities to dip into their extra collateral to keep investors whole.
Another example is Flagship, which Perella Weinberg bought in 2010. (Innovatus Capital Partners, which manages the lender on behalf of Perella Weinberg, was formed by former Perella Weinberg managers last year after they split from the firm.)

‘Satisfactory Return’


As its loan portfolio surged to almost $3 billion from just $89 million in 2011, bad loan write-offs mounted and left the company with losses last year. Since then, it’s been forced to cut back origination and tighten underwriting standards. Kroll Bond Rating Agency said in November it expects Flagship to post another loss this year before returning to profitability in 2018.

“We’re concerned about the company’s ability to earn a satisfactory return,” S&P said in August.

That might not bode well for Flagship’s initial public offering, which could potentially provide an exit for its owners. The IPO has languished and its prospectus hasn’t been updated since July 2015.
Representatives for Perella Weinberg, Flagship and Innovatus declined to comment.
In hindsight, the planned sale may have come a year too late.

Santander Consumer USA Holdings Inc., whose investors included KKR and Warburg Pincus, went public in January 2014, turning then-CEO Thomas G. Dundon into a billionaire. (He didn’t respond to a request for comment.) The shares have lost about a quarter of their value since then as the lender restated earnings going back to 2013 and agreed to pay almost $25 million to two states to settle a probe into predatory lending. Santander says it has improved its governance, risk management and capital buffers.

Perfectly Timed


“Tom Dundon at SC timed it perfectly,” said Dan Parry, co-founder of Exeter who now runs TruDecision, a fintech firm that serves car dealers and lenders. “Others haven’t been that fortunate.”

Indeed, while subprime delinquencies of 90 days or more have stabilized at banks, the rate at non-banks is close to the highest since 2009, according to the Federal Reserve Bank of New York, which noted the industry’s hasty underwriting standards.

Many of the large banks that provide funding to subprime auto lenders have taken notice and become far more conservative in doling out credit lines, says David Knightly, a vice-president at Innovate Auto Finance, which buys loans from dealerships and auto finance companies to help them raise cash.

“From a standpoint of subprime auto right now, if you’re small, people aren’t lining up,” he said. “Everybody’s trying to guess when the next 2008 is.”

Bigger subprime auto lenders can still turn to the capital markets. Sales of subprime auto ABS have reached $25 billion, topping last year’s total and almost triple the amount in 2010. They’ve also shored up finances by lending to borrowers with stronger credit, said Amy Martin, an analyst at S&P. That in turn has buoyed shares of some of the biggest ones in recent months.

Martin expects a lot of mergers as car sales slow. In the meantime, PE firms have largely lowered their expectations for a big exit and are trying to make their companies leaner to extract a dividend or sell the loan portfolios.

“Nobody wants to pay much more than book value” for these companies, said Colonnade’s Gillock. “It’s not a disaster, but it’s a failure.”


Bitcoin Starts New Year by Declining, First Time Since 2015

 Updated on
Bitcoin is already having a bad year.

For the first time since 2015, the cryptocurrency began a new year by declining, extending its slide from a record $19,511 reached on Dec. 18.

The virtual coin traded at $13,624.56 as of 5 p.m. in New York on Monday, down 4.8 percent from Friday, according to data compiled by Bloomberg. That’s also a fall from the $14,156 it hit Sunday, according to coinmarketcap.com, which tracks daily prices. The cryptocurrency fluctuated in early Asian trading on Tuesday.

Wrong Foot

Bitcoin is having an unusually bad first day of the year
Source: Coinmarketcap.com

Percentage changes reflect bitcoin's rise or fall on Jan. 1 compared with the previous day. The figure for 2018 reflects the cryptocurrency's price as of 3:45 p.m. in New York.
Bitcoin got off to a much stronger start last year, and then kept that momentum going, helping to create a global frenzy for cryptocurrencies. It rose 3.6 percent on the first day of 2017 to $998, data from coinmarketcap.com show. It ended the year up more than 1,300 percent.

That rally drew a growing number of competitors and last month brought bitcoin to Wall Street in the form of futures contracts. It reached the Dec. 18 peak hours after CME Group Inc. debuted its derivatives agreements, which some traders said would encourage short position-taking.