Owning a well-run, established business in a growing market is nice. But a monopoly in the same market – now that is splendid. Los Angeles may be heading to a kosher meat distribution monopoly. Until shortly before Passover 2013, LA was divided into two kosher meat silos. Most of the kosher supervision (hashgachah) in town was provided by the Rabbinical Council of California (RRC). Every restaurant, caterer and retail shop under the RRC had to buy their meat from the RRC certified distributer, Doheney Kosher Meats. The smaller Kehilla Kosher certification (under Rabbi Avrohom Teichman) required their establishments to buy meat from Western Kosher. In effect, there was a meat distribution monopoly within each hashgachah.
Then a tsunami overturned this tidy arrangement. According to the LA Times,
The controversy started Sunday when a video taken by a private investigator surfaced, purporting to show Doheny workers bringing in boxes of meat late at night without the required supervision of the independent inspector, known as a mashgiach, tasked with overseeing the store. The video later aired on KTLA-TV Channel 5. After viewing the videotape, the Rabbinical Council of California pulled Doheny’s kosher certification. A group of rabbis also met with Michael Engelman, Doheny’s owner. According to the council, Engelman initially denied any wrongdoing but later “admitted to bringing unauthorized products to the store on two to three occasions.”
This scandal could have turned into a disaster. It broke just before Passover. Imagine every caterer, restaurant, and kosher home that depended on RCC meat products being forced to toss their meat, kosher or replace their utensils, and start all over buying and cooking their food. Also consider the financial damages to consumers or businesses and their lawsuits against Doheney and the RCC.
The RCC evaded this disaster by issuing an announcement:
On Sunday March 24th, the RCC’s … leading members of the Vaad Hakashrus met and, assessing the evidence of policy violations as compelling, ordered the immediate removal of our certification……
In implementing that decision … the RCC consulted with Rav Yisroel Belsky, Rosh Yeshiva of Torah V’Daas and Posek for the OU Kashrut Division, and a nationally recognized kashrus authority. At 8pm, Rabbi Belsky issued his ruling, based on the application of normative Halachic principles, permitting the use of products purchased from the store prior to the suspension of the certification.
But the RCC’s problems were not over. Kehilla Kosher, the RCC’s main competitor did not embrace Belsky’s heter (lenient ruling). According to Yeshiva World News, on April 8 they announced,
As to the recent development involving Doheny Meats, Kehilla has not made any official statement nor has Kehilla authorized the publication of any position regarding whether or not there is a halachic need to kosher utensils in private homes, at business establishments or at catering establishments. (Moshe Zyskind, Chairman of the Board; Avrohom Teichman, Rav Hamachshir).
However, Kehilla, while it could cause some damage to the RCC, was not their biggest problem. The RCC needed to keep the meat distribution flowing, and given their policies and business interests they wanted it to be a distributor under their auspices. Returning the hashagachah to Engelman was not going to wash, not after those videos ran on local TV news.
Within a week, Doheney had a new owner, Shlomo Yehuda Rechnitz. Initial reports portrayed him as a white knight eager to rescue a vital community resource. According to the LA Jewish Journal,
Rechnitz, a prominent local businessman and philanthropist, has purchased Doheny…… on Sunday, March 31, just one week after … the RCC, revoked the store’s certification…… (as) “A favor to the community……
RCC President Rabbi Meyer H. May… (said) “He’s going to preserve the richness of the meat supply and preserve the price structure for consumers.”
Rechnitz was one of a handful of non-rabbis who attended a hastily organized meeting on Sunday, March 24, when Engelman spoke to the RCC’s leadership and rabbis ……
Over the course of a week of negotiations, Rechnitz spent between eight and ten hours with Engelman; he said he does not believe Engelman brought the unsupervised products into Doheny to respond to specific customers’ requests, as some have suggested.
Rechnitz said Engelman himself couldn’t fully explain why he brought the unsupervised meat into the store,…… Money may not have been the motivating factor, Rechnitz said, “Because it wasn’t that much of a difference, based on the quantity.” ……
Over the course of the week of negotiations he became a bit more optimistic about the business prospects for the company. “I didn’t have time to send in a forensic accounting team,” he said, but Engelman told him that Doheny’s gross sales on the retail and distribution sides added up to approximately $8 million a year.
That said, Rechnitz said he hopes to remain a mostly silent investor in Doheny, and won’t aim to build its market share at the expense of other distributors……
In his philanthropic work, Rechnitz has also come to the aid of embattled organizations. Last year, in the wake of Hurricane Sandy, Rechnitz donated $1 million to an organization that supports Jewish day schools in the New York area. In 2011, Rechnitz donated $5 million to the Mir Yeshiva in Jerusalem, which was struggling under millions in debt following the death of its chief rabbi and fundraiser. That same year, Rechnitz also helped save Chabad of California’s headquarters from foreclosure. But Rechnitz is also known for charitable giving of a very different sort. Every Saturday night, Jews line up outside his family’s home. Until six months ago, those who came walked away with checks; now they leave with gift cards to one of two kosher markets in the area near Fairfax and La Brea.
My first reaction was, wow, what a great guy! He made the culprit take a loss and he is going to sell it for the price he bought it. But then I remembered that Rechnitz was the son-in-law of Rabbi Yisroel Belsky, the man who ruled all meat bought before the closure could be presumed kosher. I knew Belsky based his ruling on the halachic principal of rov (majority) where we presume a particular item kosher under uncertain circumstances when we know that the majority of such items are kosher.
I am suspicious of Belsky. I know he is a lamdan (rabbinic scholar). But when it came to sex abuse he defended the innocence of the Kolkos because they insisted they were innocent. He maintained that position while refusing to talk to the accusers. That got me wondering how good a job he did in examining the facts in this case.
Did Belsky have any way of absolutely knowing how much non-approved meat was smuggled into the plant? Rechnitz says “that he believes Engelman with “99 percent” confidence” How the hell can Rechnitz or anyone besides Engelman know that with certainty? What sort of smart businessman trusts a known fraudster’s version when the guy has an incentive to minimize his culpability?
I would have been more impressed if the RCC reported that they did an intensive audit of Doheneys purchases and sales, and randomly verified his records by confirming them with outside buyers and sellers. Of course, they wouldn’t have been caught with their pants down if they had been doing that all along.
I also remembered that during the Rubashkin trial in 2009, prosecutors exhibited fabricated invoices to Doheney for more than a million dollars of meat when the actual debt was in the range of $300,000-$400,000. The prosecutors claimed that Rubashkin and Engelman colluded to inflate Rubashkin’s receivables to justify a larger credit line and to reduce Doheney’s tax liability. Naturally they both denied those allegations. With the benefit of hindsight I wonder if this was also a way for Doheney to fool the RCC about the size of his purchases from Rubashkin. I would hope that the RCC and Belsky seriously investigated that possibility. If he repeated that same maneuver several times a year with several suppliers, the majority of his sales of eight million dollars a year could easily have been based on meat not accounted for with purchases from kosher sources. Such numbers would have overturned any justification for a ruling based on rov.
The RCC had a conflict of interest when they investigated the fraud. They knew it was going to be exposed with video on local TV News (Link). So they had to fess up but they had motives for minimizing its scope to lessen the damage to their reputation and income.
How else can one explain the RCC claim that while the meat that was smuggled in was not glatt, it was kosher, even though they never had any proof? Incredibly, Rabbi May even admitted to a reporter, “We didn’t ask him for evidence”
So, now we have Belsky determining rov based on inadequate numbers and evidence from a sloppy investigation conducted by self-interested rabbis.
But wait, it gets worse. Rechnitz, the supposedly disinterested white-knight buyer of Doheney is not sticking to his plan of finding a buyer to restore the operation under RCC supervision. According to Jonah Lowenfeld of the Jewish Journal,
Shlomo Rechnitz … bought the shop [Doheney meats] and its distribution arm on March 31 and then transferred the agreement to David Kagan, owner of Western Kosher, the competing kosher retailer, on April 8.
Wow! LA is now a town with just one kosher meat distributor. Naturally the fight is on about which kosher agency will control it. According to the same article in the Jewish Journal,
Reached by phone on May 21, Kagan declined to comment. On Tuesday, Rechnitz declined to comment about the negotiations on the record, other than to say that they are ongoing. On that same day, [RCC President Rabbi Meyer] May said he isn’t sure exactly who currently owns the shop, but he appeared to be expecting Rechnitz to make good on his promise that the reopened Doheny would remain under the RCC’s certification. “We won’t accept that Doheny will open up under Kehilla,” May said. Whether the RCC would, in fact, be able to stop that from happening is unclear.
So now we have Rechnitz backing out of promises he made when he first got involved in the investigation and purchase. You don’t have to be a genius to realize a lot of money can be made buying a business at distressed prices and converting it into the final piece of a monopoly. Anyone who has ever traded the Monopoly Boardwalk card understands this. Rechnitz of course will claim he sold it for the price he bought it. But none of us know what that price was; the deal with Engelman included a non-disclosure agreement about the price.
I am sure Rechnitz appreciated the potential for profit in the deal. According to the LA Jewish Journal,
Rechnitz described the final selling price as “sizable,” but not as big as it might have been prior to the scandal……“It definitely came at a major discount due to the fact of what [Engelman] did, or what he tried to get away with,” Rechnitz said. “He definitely was not rewarded for his actions.”
Rechnitz has experience working with organizations at times of crisis. In his role as CEO of one of his companies, Brius Management Co., which manages multiple nursing homes across California, Rechnitz told a reporter in 2011 that his company looked mostly for “distressed facilities.”
Belsky shouldn’t have agreed to be a posek in this case. He had a conflict of interest. He knew, or should have anticipated that his son-in-law might make big bucks from his ruling. Belsky should also have offered some evidence of due diligence in his determinations other than the self-serving summaries of a superficial investigation conducted by culpable parties at the RCC and his son-in-law, Rechnitz.
Unfortunately, Belsky has a pattern of ruling in favor of his krovim (close ones) on the basis of their reports without listening to the opposing side. Belsky slandered the family of the victim of Yosef Kolko without even talking to them. He did the same for his buddy Yehuda (Joel) Kolko. Both ended up being convicted of the very abuse that Belsky denied. I have argued elsewhere that Belsky should be removed as Senior Posek of OU Kosher because of his misconduct.
Belsky’s defenders at the Orthodox Union (OU) insist that his bizarre antics about sex abuse are not pertinent to his qualifications as a posek for kosher. Maybe, now they can see that Belsky’s misconduct extends to kashrus as well.
Belsky’s dwindling band of defenders say he enhances the standing of the OU in the heimish world. Actually, his psak in LA is not working. Three establishments are already known to have dropped their RCC hashgachah and more are expected to make the shift in the coming weeks. It is time for the Orthodox Union to realize that Belsky isn’t just a bad posek; he is also a bad business decision.
Some people are writing the OU to demand that he publicly repudiate his position about the innocence of the Kolkos and his slander of the victims. I think these letter writers are aiming too low. The OU’s members and consumers deserve an honorable posek.
Let me offer a marketing argument to the mercenaries at the OU who insist they need Belsky for the heimish market. The OU cannot win by out-frumming its competitors. But it can demonstrate superior erlichkeit and integrity. They cannot win by using a beard like Belsky. They can win by showing they are worthy carriers of the legacy of the Rav, Joseph B. Soloveitchik. Of course he had and has his detractors in the heimish world. But very few in that world disputed his towering lomdus and integrity. It is time for the OU to draw on, and play to, the strengths of Modern Orthodoxy instead of cowering and trying to disavow their congregations and rabbis. Belsky is not the way to do it. Even if they insist on having a high profile heimish posek there are many worthy alternatives.