Bloomberg News

Ex-Psychotherapy Institute Administrator Sentenced in Theft

October 24, 2012

A former administrator of a New York psychotherapy institute was sentenced to at least 3 1/3 years in prison for stealing $2.5 million from the organization.

Jeffrey Bernstein, 62, the former director of administration for the Albert Ellis Institute on East 65th Street in Manhattan, was sentenced today by New York State Supreme Court Justice Gregory Carro to an indeterminate sentence of 3 1/3 to 10 years.

Bernstein pleaded guilty last month to one count of first- degree grand larceny. Prosecutors said he made almost 80 unauthorized wire transfers to two business accounts that he controlled from January 2010 to February 2011 and used the stolen money to pay personal and business expenses, including loan repayments, legal and accounting fees and credit card bills.

“‘Follow the money’ is a familiar saying in law enforcement,” Manhattan District Attorney Cyrus R. Vance said in a statement. “In this case, we followed the money through numerous accounts, all of which led back to the defendant. The financial well-being of nonprofits depends on earning the trust of donors to support the goals and missions of the organization. Those who violate that trust not only harm themselves, they harm the entire organization.”

Institute ‘Devastated’

The institute is a not-for-profit psychotherapy organization founded in 1959 by its late namesake, Dr. Albert Ellis. It is “committed to promoting emotional well-being through the research and application of effective, short-term therapy with long-term results,” according to its website.

The theft has “devastated” the institute, which is “fighting to stay alive” and is unlikely to recover the stolen funds, director Kristene Doyle told Carro before today’s sentencing and asked the judge to impose the maximum sentence.

“Jeff Bernstein saw vulnerability in us and took advantage of our good nature,” Doyle said, her voice cracking and her hands shaking.

Bernstein, a divorced father of two, declined to speak before his sentencing. Carro also ordered him to pay full restitution and urged victims of the case to tell the parole board, which will ultimately determine the length of Bernstein’s sentence, if they aren’t fully compensated.

Accepted Responsibility

“He accepted his responsibility by means of the plea agreement,” Bernstein’s attorney, Aaron Goldsmith, said after the sentencing. “He’s working to do everything to ensure that the institute will receive as much as possible.”

The institute sued JPMorgan Chase & Co. (JPM:US) in federal court in Manhattan over the theft in August 2011, saying the bank let it happen. JPMorgan asked for the complaint to be dismissed, saying that the institute had given Bernstein the authority to make the transfers and transactions.

The two sides have had settlement talks and the case was assigned to a U.S. magistrate judge for settlement on Oct. 17, according to court filings.

Bernstein was first elected to the institute’s board of trustees in March 2006 and was chosen as president of the board in July 2006, the institute said in the lawsuit.

He was named acting director of administration in January 2010 and appointed to the permanent post the following month, according to the lawsuit. Bernstein resigned from all offices he held after the fraud was discovered in February 2011.

Bernstein also resigned as head of the Manhattan Chamber of Commerce in August 2011 after the institute filed the suit against JPMorgan.

The criminal case is New York v. Bernstein, 00045/2012, New York State Supreme Court, New York County (Manhattan). The civil case is Albert Ellis Institute v. JPMorgan Chase Bank NA, 11-cv- 5504, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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