On November 16, 1992, almost two years to the day after Rabbi Meir Kahane was assassinated in midtown Manhattan, four Jewish teenagers threw a hand grenade into the shop of an Arab shoemaker in East Jerusalem’s Old City, killing him and wounding ten others. The boys, who called themselves the Revenge Commandos, told Israeli police investigators they had thrown the grenade for no other reason than to kill Arabs. Police later learned that the young terrorists were members of a small Jewish extremist group called Kahane Chai (Kahane Lives), which is based in the West Bank settlement of Kfar Tapuach, a collection of shabby prefabricated dwellings situated about fifteen miles south of Nablus on the West Bank. “It’s unfortunate that more people aren’t attacking Arabs,” David Cohen, a leader of Kahane Chai, told me during a recent visit to Tapuach. “As long as the Arabs are fighting us, there has to be a response. The Arabs have no right to be here. Revenge is ours.”

Not long after that grenade attack, Kahane Chai set up a front group in the US called the Committee for the Freedom of the Youths. It solicited contributions for the suspected terrorists’ legal defense in ads placed in the Brooklyn-based, Orthodox weekly newspaper, the Jewish Press. At the time, there was little, if any, controversy about these ads. Kahane, whose US support went far beyond the radical right-wing fringe of New York’s Jewish community, had raised millions of dollars in America. Though the Kach movement broke up into small competing factions after his death in 1990, Kahane Chai, the largest Kahane-linked group, continued to raise hundreds of thousands of dollars, largely from its offices in Brooklyn. The money, according to government officials I talked to in Israel, as well as Kahane Chai members, was used to run the Tapuach settlement, to set up a paramilitary training camp in the Catskill Mountains, and to buy weapons on Israel’s black market. Although the Kahane groups vehemently opposed the Oslo accords, and their members were involved in numerous attacks against Palestinians, including shootings from cars driving near Arab villages, the Rabin government viewed them as little more than a nuisance.

This indifference changed to alarm after the massacre on February 25 of at least twenty-nine worshipers in Hebron’s Ibrahim Mosque by Dr. Baruch Goldstein, a Brooklyn-born disciple of Kahane. Goldstein lived in the nearby settlement of Kiryat Arba, a center of extreme right-wing Jewish fundamentalism, where settlers’ vigilante groups had been attacking Arabs with virtual impunity during the intifada. Goldstein was elected to Kiryat Arba’s town council in 1985 as a representative of the Kach Party, which Kahane set up in Israel in 1974, and in 1988 he ran Kahane’s campaign for the Knesset. That year Goldstein told an Australian journalist why it was necessary to expel the Arabs: “I’m not looking to punish the Arabs,” he said. “I’m looking to rid ourselves of this danger in any way that’s possible…. The Arabs are the Nazis of today. The same thing Hitler wanted to do in Germany they want to do here in Israel…. There is no chance of co-existence.” Goldstein was still closely affiliated with Kach at the time of his death. “Don’t let anyone say he was a psychopath,” Goldstein’s widow has said. “He planned to do this in order to stop the peace talks. He did this for the sake of the people of Israel.”

Soon after the Hebron massacre, the Israeli cabinet voted unanimously to outlaw Kahane Chai and its related Kach Party, designating them as terrorist organizations. The government hoped to calm Palestinian fears of more attacks and protect its investment in the peace process. It is now a crime in Israel not only to give money to the groups but even to wear a T-shirt emblazoned with Kach’s emblem, a clenched first thrust through a Jewish star.

In Washington, Clinton administration officials anxious to coax the Palestine Liberation Organization back to the peace table, promised Nabil Sha’ath, the PLO’s chief negotiator, that the government would try to suppress the fund-raising activities of the Kahane groups in the US. The administration assembled an interagency working group consisting of officials from Justice, the IRS, the State Department, and Treasury to examine how to stop the flow of US money to Jewish terrorist groups in Israel. No law prohibits Americans from funding terrorist organizations, but the government is investigating whether the Kahane groups are raising money fraudulently or violating local or federal tax laws.

Israeli government officials say that a far greater threat to peace comes from charitable, tax-exempt foundations in the US that funnel money to organizations representing Israel’s 144 settlements, many of them built near heavily populated Arab parts of the Gaza Strip and West Bank. Rabin has slowed down the growth of Israel’s settlements. He told Israel Radio on April 13 that “for peace,” he was “prepared to take down settlements,” and that “we will not establish anew the apartheid that disappeared from South Africa.”


About 15 percent of the 136,000 settlers are originally from North America, and many are now prominent in their communities. Few American Jews have moved to the territories for economic reasons; they say they seek to fulfill the Biblical admonition to settle the land, and they are proud to participate in a messianic movement that has changed the political and geographical landscape of Israel. The Americans who have joined the settlement movement represent a cross section of Orthodox Jews, among them doctors and lawyers, teachers and mechanics. The Americans drawn to the Kahane-affiliated movements are predominantly working-class, Brooklyn Jews; many of them seem to have transferred their fears of blacks, and their contempt for them, to Palestinian Arabs.

American Jews who support Greater Israel are donating as much as $10 million a year to purchase real estate from Arabs in the occupied lands, including East Jerusalem, as well as to meet the day-to-day needs of the settlers. Donations to settlement organizations and development funds have come from famous American Jewish businessmen including Michael and Lowell Milken, through the Milken Family Foundation, the Reichmann family, Canadian owners of Olympia and York Developments Ltd., one of the largest privately held real estate companies in the world, and from tens of thousands of people of more modest means whose commitment to the Biblical Land of Israel is no less intense.

Even more troublesome, from the Labor Party’s point of view, are the American foundations that have been created to oppose the Oslo accords and Palestinian self-rule. YESHA (Salvation), the Gush Emunim–dominated settlement council on the West Bank and the Gaza Strip, has helped to establish at least two charitable, tax-exempt foundations in New York that have financed demonstrations in Israel and the US, at which protestors have called for the abrogation of the Oslo accords and Rabin’s ouster. Many Israeli organizations raise money in the United States for religious, cultural, and educational purposes, taking advantage of tax-exempt status that allows donors to claim deductions for their contributions. But the federal tax code prohibits such charitable tax-exempt foundations from using contributions to campaign for or against elected political leaders, or to intervene in—or violate—public policy. It is also illegal to use tax-exempt funds to purchase or improve real estate in order to promote a manifestly political program.

Robert Kobel, an IRS official in Brooklyn, says tax-exempt organizations such as the ones set up by YESHA are expressly prohibited from using their money to finance partisan political activity “of any kind at all. It is absolutely illegal.” They may use it to inform the public but not to finance political movements or parties or try to precipitate early elections and influence the outcome. Taking out ads condemning the peace negotiations and calling for Jews to rise up in opposition to the Rabin government, Kobel says, could be considered a political activity and “would raise a lot of eyebrows” at the IRS.

But Israeli extremist groups and groups supporting the settlements have long used America as a source of money. Nearly a decade before Baruch Goldstein went on his murderous rampage, federal authorities had strong evidence that Kahane was raising tax-exempt funds in the US to promote a political program of racism and terror. In 1985, five years before Kahane was assassinated, a federal grand jury in Brooklyn began to look into the rabbi’s alleged terrorist activities in America. As part of their investigation, federal investigators examined whether tax-exempt funds raised by Kahane’s organizations were being sent to Israel to be used for political activities in violation of federal tax law. The federal grand jury was convened after seven JDL terror bombings in 1985 killed two persons, including Alex Odeh, the West Coast regional director of the American Arab Anti-Discrimination Committee, who was blown in half by a pipe bomb in Santa Ana, California. According to the FBI, the bombers were young American Jews who had moved to Israel, then returned to the US on Israeli passports in order to kill Arab supporters of the PLO and alleged Nazi war criminals.

Kahane had been personally connected with at least four tax-exempt foundations in the US. He never concealed that they were being used to raise money and build support for his Kach Party in Israel, which had won a single Knesset seat in 1984. At a fall 1987 fund-raising dinner for Kahane at the Lincoln Square Synagogue in Manhattan, supporters were told that their tax-exempt donations to the Jewish Idea, a Kach front group, would help him win ten Knesset seats in the 1988 elections. (I was told this by Mal Leibowitz, a Kach activist who was on the dinner’s steering committee.) Kahane raised $40,000 at the dinner, according to Richard Propis, the treasurer of Kach International, another group created by Kahane.


Kach was barred from running for the Knesset in 1988 on the grounds that the party was racist and fascist;1 but that did not slow down Kahane’s fund raising. By the late 1980s, he was bringing into Israel at least $500,000 a year—enough to run two offices in Jerusalem and buy a sound truck, telecommunications equipment, and a printing press.

Throughout the 1970s and 1980s, Kahane’s organization, according to Ehud Sprinzak, author of the The Ascendance of Israel’s Radical Right, underwrote literally hundreds of attacks on Arabs, which were, for the most part, carried out at very little cost. An army-surplus rifle, a few rounds of ammunition, and a rented car were often all that was needed to go into an Arab village and attack Arabs or their homes or cars. The heavy cost to Kach came in bail and legal fees after Kahane’s followers were arrested.

In a signed confession to the Shin Bet, Israel’s FBI, Kach activist Craig Leitner described a typical Kach anti-Arab attack organized by himself and Mike Guzofsky, now the much interviewed head of the Kahane Chai organization in Brooklyn:

One day towards the end of July 1984, I agreed with Mike Guzofsky and Yehuda Richter to operate against the Arabs. We left Kiryat Arba in a hired car, headed towards Jerusalem. About midnight we saw an Arab in his early twenties walking along the Hebron Road. I left the car and gave the Arab a blow with my fist. I also kicked him. He escaped into the night. We continued to Hebron and it was decided—I don’t remember by whom—to burn Arab cars. We had in our car two plastic bottles containing four-and-a-half liters of gasoline. In Hebron, Yehuda stopped the car. Mike took out the gasoline and poured it under several cars, maybe three. After Yehuda set the cars afire, we moved, not waiting to see what would happen. There were dogs around and I was afraid that they would wake up the neighbors, or perhaps bite us and we would get rabies.

That same year, Leitner and his friends fired a machine gun at an Arab bus on the West Bank, wounding nine passengers. After the young Kach followers were arrested, Kahane told reporters that they were “good Jewish boys” and that their attack on the bus was “sanctified by God.” Kahane then set up a legal defense fund for them in the US.

On November 2, 1990, in his weekly column in the Jewish Press, Kahane compared the Palestinians to the Canaanites, whose extermination, he wrote, is mandated in the Bible. Three days later, he was murdered, allegedly by an Arab gunman. The Kach Party soon splintered. Some of its members broke away and formed Kahane Chai, which is based in Tapuach, and is led by Kahane’s youngest son, Rabbi Binyamin Kahane. Both Kach and Kahane Chai tried to run candidates for the Knesset two years ago before they were banned from running by Israel’s Supreme Court on the grounds that they were violent racist hate groups. A third group, which calls itself the Temple Mount Religious Seminary, is devoted to rebuilding the Jewish Temple on the site of East Jerusalem’s Dome of the Rock, the third holiest shrine in Islam. Kahane’s widow, Libby, a librarian at Hebrew University, helped form this group, whose leader, fifty-eight-year-old Rabbi Avraham Toledano, was arrested at Tel Aviv Airport last November while trying to smuggle bomb-making materials, weapons components, and arms manuals into Israel from America, as well as $40,000 in cash. Police subsequently arrested five of Toledano’s followers, including several Americans, on suspicion of planning attacks against Arabs.

Two of the extremists, Bronx-born Andy Green, who is also called Baruch Ben Yosef, and Israel Fuchs, have been named by the FBI as members of the hit squad that murdered Alex Odeh in California in 1985. Five years earlier, Green was imprisoned for six months in Israel with Meir Kahane for plotting to blow up the Dome of the Rock.

Kahane Chai raises substantial sums in America. Binyamin Kahane collected more than $250,000 during a fund-raising trip to the US last November. Later that month, he was arrested as he entered Tel Aviv Airport on charges of trying to smuggle $30,000 into the country. Israel Radio quoted a Kahane associate as saying Kahane had raised the money in the United States for settler protests.

Tsadok Yecheskeli, the New York-based correspondent for the Israeli newspaper Yedioth Ahronoth, has reported that Kahane Chai is planning to use US funds to buy military equipment, including armored cars. Israeli officials say they fear the weapons will be used for indiscriminate attacks against West Bank Arabs and possibly even against the Israeli army. According to the statements of Kahane Chai members in Tapuach, they are stock-piling weapons on their hilltop settlement—including automatic rifles, grenades, and even mortars—in preparation for the coming Armageddon. “We hate the idea of civil war, but we have our limits,” Tapuach’s mayor, David Axelrod, has said. “We will take whatever actions are necessary to bring down this government so that faithful Jews will continue to live here. It will be a war to the end. We will never accept giving our land to gentiles.”

Last summer, Yecheskeli visited Camp Meir, a Kahane Chai paramilitary training camp in the Catskill Mountains, where he observed Israeli reserve officers and staff sergeants from the elite Golani Brigade training some one hundred Jewish youths in martial arts, automatic weapons, and the tactics of guerrilla warfare. Yecheskeli says that some of the young men and women subsequently traveled to Tapuach. Others may have practiced what they learned in New York. Last January, two unexploded bombs were found in the Manhattan offices of Peace Now and the New Israel Fund, and the FBI has said Kahane Chai is the prime suspect. While Guzofsky approved of the attempted bombings, he denied responsibility for them. But Kahane Chai’s press releases praising the attempted bombings were similar in language to the notes found on the bombs, police officials say.

When Guzofsky was asked by the Israeli daily Ma’ariv how he finances the New York camp, he replied: “Donations. We have a lot of donors who want to see a Jewish force. The majority of them are Holocaust survivors who see what is happening and are worried about a second Holocaust.” Guzofsky said that a company that markets kosher dairy products in Brooklyn provided the camp’s milk products, and that he got “a special deal” on Chinese-made Kalashnikovs.


Kahane Chai was incorporated in Brooklyn on April 15, 1991, as a not-for-profit organization, “to further, advance and promote the tenets of Judaism,” according to its statement of purpose. It has since set up numerous front groups including Operation Adopt a Settlement, American Friends of Yeshiva Harav Meir, and the American Friends of the United Yishuv Movement. The three groups list the same phone number and address on Coney Island Avenue in Brooklyn in ads in the Jewish Press. One recent ad said: “Give Arafat and Rabin a real bone to choke on. Adopt a settlement.” The ad also said donations are “fully tax-deductible,” and would go to Tapuach.

When I phoned the number listed in the ad, the man who answered said I had reached Kahane Chai, and that donors could either send money directly to Kahane Chai, or write for information on how to receive a tax write-off. The IRS, however, says that Kahane Chai’s claim of tax-exempt status for its affiliated groups is fraudulent. None of them is registered with the IRS as a charitable, tax-exempt foundation, according to Robert Kobel, the IRS official I spoke to. Donors who claim a tax write-off may be subject to an audit, Kobel told me. This could discourage some of Kahane Chai’s supporters who want to deduct their contributions.

Kahane Chai also enjoys the support of well-to-do Jews and prominent politicians. Past keynote speakers at Kahane Chai fund-raising dinners have included the conservative African American leader Roy Innis of CORE and Dov Hikind, assemblyman from Borough Park, which has the largest Orthodox Jewish community in America. Hikind, a longtime close associate of Kahane, is now a power in New York City politics, having become Mayor Rudy Giuliani’s unofficial liaison to parts of the Orthodox Jewish community after delivering a huge majority of Borough Park’s votes to the “fusion” candidate. Hikind said to an inquiring journalist that Kahane Chai has “probably close to zero support” in his neighborhood, and that the group’s public praise of Baruch Goldstein “made me sick.”2

Kach International, a public stock-holding company incorporated in California, was created after Kahane’s 1984 Knesset victory because “we felt the Kach name would command more respect than the JDL name among American Jews,” Ken Sidman, Kach International’s late director told me several years ago. The group became Kahane’s principal propaganda arm in America. Kach International currently raises money for the Kach Party in Israel, which has offices in both Jerusalem and Hebron, even though it still cannot run candidates in Israeli elections. On March 11, Kach International placed an ad in the Jewish Press, soliciting donations “to ensure that Dr. Goldstein’s work on behalf of Israel and the Jewish people continues.”3 Kach International officials refuse to reveal how much they have raised since Kahane’s assassination from this and other recent appeals for money. Because Kach is not a charitable organization, its financial records are private. But Barbara Ginsburg, Kach International’s New York director, boasted to Newsday that the group has raised more than $150,000 from North American Jews in the weeks after the Hebron mosque massacre.

Kach International officials not only praise Goldstein’s acts but warn that there is more terror to come. “There will be many more Dr. Goldsteins,” Max Kessler, Kach International’s director of education in Los Angeles, has promised. “Rabin’s a disaster for Jews,” the New York Kach spokesman, Mal Lebowitz, has said. “He’s in an insane rush to destroy Israel…. We will not give up the land to the Arabs. There are 140,000 settlers who would be happy to have Arafat in their gunsights.”

Settlers and their allies have set up several US-based public charities designed primarily to weaken public support for the Rabin regime and undermine the peace process. The most important of these groups is PRO ISRAEL, which was incorporated on September 26, 1990, as a tax-exempt charity in New York. Funds raised by PRO ISRAEL are passed to YESHA, the Council of Jewish Communities in Judea, Samaria, and Gaza, an organization that was set up by Gush Emunim, which has sponsored seventy-five religious settlements. The money has helped to pay for anti-government demonstrations in Israel, some of which became violent.

In a full-page and in The New York Times on February 9, PRO ISRAEL called on American Jews to stop supporting the Rabin government:

For American Jews to support such a government—a government of national suicide—would be to actually work against the people of Israel. With Israel’s survival at stake, Jews and others are morally obligated to speak out and demand that their leaders tell Rabin that his policies are endangering Israel’s existence.

PRO ISRAEL also works closely with the Likud, which is sending its leaders to the US to stir up opposition to the peace negotiations. In January and again in March, PRO ISRAEL sent Ariel Sharon on a fund-raising trip across North America with Yechiel Leiter, a spokesman for YESHA. The thirty-six-year-old Leiter was a member of the Jewish Defense League in Scranton before joining Kach in Israel fifteen years ago. He was subsequently appointed “mayor” of the radical Jewish enclave in Hebron, and helped to set up the Hebron Fund Inc., which has raised millions of dollars in the US to expand the Jewish presence in the city. Leiter then moved to the Gush Emunim settlement of Eli and became a leader of YESHA. He helped to organize PRO ISRAEL after the Likud was defeated in June 1992.

Leiter won’t disclose how much money he raises through PRO ISRAEL, but during an interview in New York in March 1993 he boasted to a journalist: “Just yesterday, I got a call for a $50,000 donation from a Toronto resident.” Recently he has been coming to the US two weeks out of every month to raise money. At a recent meeting at Beth Torah Sephardic Synagogue in Brooklyn, Leiter raised $100,000, according to the synagogue’s rabbi, Zvulun Lieberman.

Leiter freely admits that PRO ISRAEL is a conduit for YESHA and is raising tax-exempt funds to undermine the Oslo accords. Leiter says that if the final stage of the interim agreement

is ever reached, which I don’t believe it will be, I will work enthusiastically to stymie the success of such an agreement. It’s national suicide…. Our position will be intense and uncompromising, but non-violent.

If a Jewish government can make large tracts of land—the heartland—clean of Jews, then other countries will be lent a great degree of credibility in their plans to destroy Israel.

PRO ISRAEL also raises money to buy ambulances and medical equipment, according to Leiter, but knowledgeable sources in the settlement movement I have talked to say that YESHA has raised only small sums for these purposes. “We in Ariel have never benefited from their [PRO ISRAEL’s] philanthropic efforts … though they claim to be raising [money] for all the Jewish communities [beyond the 1967 border],” I was told by Dina Shalit, a top official in Ariel, the second largest settlement on the West Bank.

Much larger amounts for humanitarian purposes—perhaps as much as $10 million annually, according to estimates made by Orthodox Jewish officials in America—are passed directly to the settlements by Orthodox synagogues in North America. As Rabin cut back on funds for the settlements, donations from American Jews have become increasingly important for the settlers’ economic survival.4

When Menachem Begin came to power in 1977, fewer than five thousand Jews had settled in the Occupied Territories. Begin made the expansion of the Jewish presence in the occupied lands a principal goal of his government, and he invested billions of dollars in building settlements. No matter how much money the Likud government poured into them, however, it still wasn’t enough to support the standard of living that would keep settlers, especially those coming from the US, committed to living among two million hostile Palestinians. In the early 1980s, the Likud government devised a program in which an Orthodox synagogue in the US would adopt a settlement as a “twin” and help finance its development. A senior official of the Orthodox Union, the largest federation of Orthodox synagogues in North America, told me that “the previous government put enormous pressure on the Orthodox Union to twin themselves with a community on the West Bank.” Sharon himself came to the US and asked Orthodox Union officials to set up a twin arrangement with Karnei Shomron, a large settlement near Nablus, as a sign of solidarity with the settlement movement. “It sounds very innocent, very nice, to twin ourselves with a community,” the official says. “You support a [West Bank] yeshiva, or a girls’ town, or an orphanage, or a park. But the next thing you know, your money could be buying bullets for settlers in downtown Shilo.”

Following a divisive internal dispute, the Orthodox Union refused to endorse the twin program, but many Orthodox synagogues support it nevertheless. “Now it’s hard to suddenly tell a synagogue that has had a sister relationship with a community on the West Bank for ten or twelve years that [because of recent Labor government policy] it is a bad thing, and stop sending them aid and money,” the Orthodox Union official told me. In March, five Orthodox synagogues on New York’s Upper West Side sponsored a special Sabbath celebration to express solidarity with the settlement movement. Each of the synagogues adopted a Jewish community on the West Bank. In recent months, a number of Orthodox synagogues in New York and elsewhere have announced that they will shift charitable donations away from the United Jewish Appeal toward projects supporting the settlements. The UJA, the largest Jewish fund-raising organization in America, which raises hundreds of millions of dollars a year for Israel, does not send money beyond the green line, except for East Jerusalem.

At Lincoln Square Synagogue, there has been little dissent over its twinning program with the West Bank settlement of Efrat. The synagogue’s former rabbi, Shlomo Riskin, founded Efrat in 1983, and 200 of Efrat’s 900 families used to belong to the Lincoln Square Synagogue. Efrat has such an upper-middle-class New York cast that settlers jokingly refer to it as “occupied Scarsdale.” The former NBA superstar Earl “The Pearl” Monroe has been hired to teach basketball at Efrat’s Summer Talmud Camp. Riskin used to call in his sermons for coexistence with Arabs, but the Oslo accords turned him into a militant. He is now working with YESHA to oppose the peace negotiations, and urging Israeli soldiers, including his two sons, to refuse orders to evict settlers from their homes.

Lincoln Square Synagogue recently adopted the predominantly secular Jordan Valley agricultural communities built after 1967 by the Labor Party. The synagogue’s present rabbi, Simcha Weinberg, told me that because Lincoln Square is so heavily identified with Efrat, a religious, though not a Gush Emunim settlement, he wanted to show more ecumenical support to the settlement movement. Rabbi Weinberg said he had sent the first check—$5,000 for computers and agricultural development programs—“on the condition that our support is also used for Arab villages in the area.” The funds were sent to Israel through the Israel Community Development Foundation (ICDF), a settlers’ lobbying and fundraising group which has a tax-exempt status, and is incorporated in the US. It was founded by Efrat resident Marc Zell, an attorney with offices in both Efrat and Washington. Zell’s law partner is Douglas Feith, a former deputy assistant secretary of defense under Richard Perle, the keynote speaker at the Hebron Fund’s annual dinner at the Sheraton Meadowlands Hotel in New Jersey in 1990.5

I asked Dina Shalit, the ICDF’s executive director, whether Rabbi Weinberg’s funds would in fact go to provide humanitarian assistance to Arab villagers. She told me that ICDF has a contract with the Jordan Valley settlements requiring that the money will be used for “humanitarian purposes.” Whether or not the settlers want to honor Rabbi Weinberg’s request, she said, is up to them.6

Ms. Shalit, a resident of Ariel, a West Bank city of 15,000, is also the director of the Ariel Development Corporation, which has offices in Ariel and Miami. The Ariel Corporation’s contributors have included the Milkens and the Reichmann family, the developers of Battery Park City in Manhattan.7

While it isn’t against the law for prosettlement groups to raise tax-exempt money in the US to meet the settlers’ humanitarian needs, it is, according to Gail Harmon, a Washington attorney specializing in charitable organizations, a violation of a charity’s tax status to raise money to make large-scale purchases of Arab real estate on the West Bank and in East Jerusalem’s Old City with the primary purpose of expanding the Jewish presence there. While charities can use tax-exempt money to provide housing for the needy, it is illegal to use tax-exempt money to change the political and demographic balance of a neighborhood, according to Harmon. The American Friends of Ateret Cohanim has done precisely that, raising millions of dollars from well-to-do Jews who want to expand the Jewish presence in the heart of Arab East Jerusalem. Ateret Cohanim’s purchase of the St. John’s Hospice in the Old City’s Christian Quarter through a Panamanian front company in 1989 aroused an international protest. The Greek Orthodox Church, which owns the property, challenged the purchase of the building’s sublease, whose legality is still being argued in Israeli courts.

In spite of all the negative publicity, Ateret Cohanim has continued to attract powerful friends. In 1991, New York Senator Alfonse D’Amato delivered the main address at its fund-raising dinner in Manhattan. “I applaud the philosophy,” he said, “which holds that Jews, like everyone else, have the right to legitimately acquire lands and homes and institutions in any part of Jerusalem.” In February 1992, Secretary of Housing Jack Kemp was the group’s keynote speaker, helping to raise more than $100,000. When Shani Hikind, the group’s New York director and Assemblyman Hikind’s wife, was asked for the organization’s tax returns, which, by law, must be turned over on request, she refused. According to the group’s tax returns on file with the New York State Attorney General’s Office, it has raised more than $7.5 million between 1988 and April 1993.

The US government interagency group investigating the funding of Kahane-linked groups has run into several problems. The first is that Americans can legally contribute money to terrorist organizations. Earlier this year, when the Senate tried to amend a bill in order to make it a crime to fund specific acts of terrorism, American Arab groups lobbied against it. The Israeli government had supported the legislation, hoping to impede Hamas’s fund-raising efforts in America. American Arabs argued that Hamas finances a broad range of philanthropic work in the Occupied Territories, and it would be unfair to penalize a whole people for the work of a few terrorists. In general, Arab-American groups and Irish organizations in America feared that the law would be unevenly applied. The amendment is now part of the omnibus crime bill that the Senate has recently passed.

Anticipating that the State Department will list them as a terrorist organization, as the government of Israel has done, Kahane Chai officials have asked the ACLU to defend them. According to Norman Siegel, head of its New York office, Kahane Chai leaders claim they advocate terrorism but do not actually carry it out. Therefore, Kahane Chai maintains that taking steps against them as a terrorist group would be a violation of their rights under the First Amendment. While the ACLU secured a permit for Kahane Chai to stage a counter-demonstration at the Israel Day Parade in New York on May 22, it has not agreed to represent the group on broader civil liberties issues “at this point,” says Siegel.

Meanwhile, the government is exploring whether Kahane-linked groups are fraudulently raising money by falsely claiming tax-exempt status. They are also looking into whether those groups are transferring funds in excess of $10,000 to Israel without the required permit, and whether Kahane Chai and Kach International are acting as foreign agents for their respective groups in Israel. Neither group is registered with the Justice Department as a foreign agent. If the government concludes that the American groups are being controlled by their Israeli counterparts, they could be prosecuted under the foreign agent act. But government officials acknowledge that under existing law it is virtually impossible to stop funds going to right-wing extremist groups in Israel. “It doesn’t cost much to beat up Arabs or buy rifle cartridges,” a State Department official told me, “[but] if you can slow down their funding by a certain percentage, at least it’s a gain.”

IRS official Kobel says that groups like PRO ISRAEL, with tax-exempt status, that raise funds in the US to obstruct the peace process could be vulnerable to an IRS inquiry. The same holds true for Ateret Cohanim, because the tax code bars using tax-exempt funds to purchase tracts of real estate for noncharitable purposes.

In the mid-1980s, when the federal grand jury in Brooklyn was investigating Rabbi Kahane’s fundraising groups, the Justice Department decided not to prosecute them, even though it found widespread violations of federal tax law. A government official told me that many pro-Israel groups were raising money in the US and that Jewish organizations such as the Anti-Defamation League were afraid that all of them would suffer for the criminal activities of a few. Consequently prosecutors didn’t indict Kahane’s group because they feared opening up a “Pandora’s box,” an FBI official told me.

Abraham Foxman, the national director of the Anti-Defamation League, told Jewish Week that he opposed using federal tax laws to prosecute Kahane Chai. “We have been uncomfortable when the IRS was used in this way against groups we agreed with,” he told Jewish Week. “So we shouldn’t be in a position of advocating that the law be applied especially in this way now.” But while Jewish leaders like Foxman argue against US government action, Americans are giving tax-exempt funds to groups that are terrorizing Arabs on the West Bank, purchasing land and housing in the Occupied Territories, and trying to bring down the Rabin government.

Since 1948, American Jewish donations to Israel have contributed much to the country’s economy and security. Now a significant part of Orthodox Jewry in America is subsidizing attempts to undermine the peace accords and the Palestinian self-rule they call for. To no small extent, the obstacle to peace in the Middle East comes from the US.

This Issue

June 23, 1994