9/11 attacks could hurt Triad Hebrew academy

Business, North Carolina, Sep 01, 2004 by Maley, Frank

It's unlikely that Muslim hijackers had the American Hebrew Academy on their radar Sept. 11, 2001, when they crashed jetliners into the World Trade Center, the Pentagon and a field in southern Pennsylvania. After all, the Greensboro boarding school opened just the day before. But the suicide missions set off a domino effect that could yet strike a blow against Jews in the Triad.

The planes were covered by a reinsurance pool managed by Burlington-based Fortress Re, run by Maurice Sabbah and Kenneth Kornfeld. Sabbah, a Greensboro resident, is reported to have pledged $100 million to get the school started and is chairman of its board of trustees. He was such a generous giver to charitable causes that he was No. 48 on Business Week's list of the nation's top philanthropists in 2003. The magazine included him among its secret givers - "outstanding contributors who neither seek recognition nor want any thanks."

Fortress Re's pool used resources from three Japanese insurance companies to spread the risk of aviation losses so no disaster would fall too heavily on one company. When the planes crashed, the pool lost an estimated $1.4 billion. But one of the companies, Tokyo-based Sompo Japan Insurance, says it discovered irregularities while studying Fortress Re's books after the 9/11 losses. Fortress Re, Sompo contends, counted loans as revenue, which allowed it to report profits when the pool actually had lost $3.4 billion since 1996. Because it was reporting profits, Fortress Re paid commissions to itself and to Carolina Re, another company run by Sabbah and Kornfeld. Both companies paid dividends to Sabbah and Kornfeld. Sabbah used some of that money, Sompo says, to fund the school.

Sompo sued Fortress Re in 2002. In December, a three-man arbitration panel in New York City decided that Fortress Re had defrauded the Japanese company and awarded it $1.12 billion. To settle the claim against Fortress Re, Sabbah and Kornfeld agreed in July to sell or turn over assets worth at least $400 million.

Exactly how the school will be affected is unclear. No one is saying how much of Sabbah's $100 million pledge has been delivered. Sompo is negotiating with the school to get back some of the money. School officials won't comment. The school has more than 100 students from 23 states and four foreign countries, according to its Web site. Its 100-acre campus on the city's west side is far from where the planes crashed but maybe not distant enough.