Two unnamed Palestinian Americans are suing the custodian of Palm Beach County’s financial assets over the investment of $700 million in Israel Bonds, which allegedly help to fund the Israel-Hamas war in Gaza.
The lawsuit, which was filed May 15 in the 15th Judicial Circuit Court, alleges that the county’s comptroller and circuit court clerk, Joseph Abruzzo, invested the funds in the sovereign bonds in violation of Florida law.
“Palm Beach County has recently been making investment decisions that are putting its county funds at risk and that are ignoring vital local needs,” the lawsuit states.
The Israel Bonds make up 15% of the county’s investment portfolio, according to a March 31 county investment report. Money market investments make up the largest share of the portfolio, at 67%.
“Defendant sent $700,000,000 … to Israel amidst a housing crisis in Palm Beach County, an education crisis and a funding shortfall of $732,000,000 … in Palm Beach County’s budget that is leading several capital-improvement projects such as athletic centers, parks, animal shelters and bridges to be either delayed or canceled,” the complaint states.
The lawsuit, which describes the Gaza war as a genocide, argues that the Israel Bonds investment violated several state statutes that say investment decisions must be based on clear monetary values. Investing in a fund that supports a single country is a “political, non-pecuniary factor,” according to the complaint.
Abruzzo, however, argues that the county has a varied, healthy portfolio that benefits taxpayers.
“Investments are governed by the county’s investment policy and Florida law,” he said in a statement emailed to the Florida Record. “The county’s investment in Israel Bonds will generate significant returns for Palm Beach County, while also safeguarding taxpayer money. Our office has a proven track record of delivering significant investment returns for … county residents, including a record $172 million in investment income for taxpayers in fiscal year 2023.”
Abruzzo also called the lawsuit frivolous and indicated that he expects the complaint to be dismissed with prejudice, meaning it would not be able to be refiled.
As of March 31, the yield for Israel Bonds was 5%, while the yield for the county’s money market accounts was 5.5%, according to the county’s investment report. The yields, however, fluctuate from quarter to quarter.
Quoting university researchers, the lawsuit contends that pouring money into the economy of another nation can increase the risk of default.
“Professor Justin Marlowe, a research professor at the University of Chicago Harris School of Public Policy and the director of the University of Chicago’s Center for Municipal Finance … has indicated that he’s “not aware of any other jurisdiction that has 15% of their holdings in one type of investment. … (This represents) a greater concentration of risk in any portfolio for a public entity than I’ve seen in a long time.”
Thirty-seven members of one plaintiff’s family have been killed by Israeli Defense Forces operating in Gaza, causing the plaintiff to suffer from post-traumatic stress disorder, anxiety and depression, according to the lawsuit.
The plaintiffs are asking the court to permanently stop the defendant from investing in Israel Bonds and to declare Abruzzo’s bond investments as a violation of state law.