Since last fall, one of counseling’s living legends, Albert Ellis, has been engaged in a fervent battle with the board members of the Albert Ellis Institute, the not-for-profit organization he founded more than 50 years ago. During the past three months, the dispute has escalated into a mud-slinging campaign complete with name-calling, message board flaming and pending lawsuits — actions some may say are far from the teachings of rational emotive behavior therapy, which Ellis developed in 1955.
According to Michael Broader, former executive director of the Albert Ellis Institute, the spark that finally ignited this heated dispute took place in September 2005. That’s when independent auditors told the board Ellis had received “excess benefits” of more than $500,000 in 2004 and they were obligated to report this on the institute’s tax return.
The Internal Revenue Service defines excess benefits as compensation paid to an employee or consultant, in either cash or noncash benefits, at a level higher than reasonable market value. Both the recipient of the benefits and those who govern the nonprofit organization may be penalized. Broader, who is still one of the institute’s board members, stated the excess benefits resulted from the institute paying living, business and mounting medical expenses for the 92-year-old Ellis.
The Albert Ellis Institute hired attorney Daniel Kurtz, a leading expert in nonprofit law, for guidance. Kurtz suggested that the institute take immediate action to avoid putting its tax-exempt status in jeopardy and to steer clear of hefty IRS fines for both the institute’s leaders and Ellis. Kurtz also advised that Ellis be removed from all positions of responsibility in the institute. The board members convened Sept. 18, 2005 — without Ellis present — and voted 5-0, with one abstention, to officially remove Ellis from the institute’s board of directors.
“The excess was corrected by doing two things: by removing Dr. Ellis from the board and authorizing me to make a demand for the return of the excess,” Kurtz said. “That is the way it was reported for the tax filing in 2004. That is, it was reported that there was an excess benefit for that year, and we are seeking to correct it.” He noted that failure to take action would have been a huge risk for both the institute and Ellis. The institute has asked Ellis to return more than $400,000 to cover the excess. “His total compensation was well over $500,000,” Kurtz said, “because you have to also include the value of his housing.”
Ellis purchased a six-story Manhattan town home for the Albert Ellis Institute in 1959, and he currently resides in an apartment on the top floor. The estimated value of the property is said to be approximately $15 million.
“He gets free housing, and it’s prime real estate,” Kurtz said. “Estee Lauder used to live across the street. It’s not a run-down neighborhood. He also received a substantial amount (of money) in 2003, but he repaid most of that, if not all of that, although it was extended to him as a loan. (But) loans to people on nonprofit boards are illegal, so it shouldn’t have been extended to him at all. There were some serious legal problems that the institute faced — and still face — if it didn’t take action to correct the abuses.”
Being removed from his own institute was the last straw for Ellis. After nine months of negotiations between lawyers, he moved forward last November and filed three separate lawsuits against certain board and staff members. The first lawsuit alleges that the board members removed Ellis illegally and against the bylaws of the institute. The lawsuit called for his immediate reinstatement to the board. Ellis said he would have no problem being a voting board member and lawfully participating in any decision calling for his removal. The second lawsuit largely claims a “waste of assets,” which in essence accuses the board members of mismanaging the Albert Ellis Institute and spending monies to further their own interests rather than to benefit the institute. The third lawsuit alleges that the staff and board members failed to accommodate and provide better equipment for Ellis’ hearing impairment and that they terminated his services (Ellis’ well-known Friday Night Workshops) without just cause. The suit also includes charges of defamation, alleging people associated with the institute have told potential clients and fellow mental health professionals that Ellis is “losing it” or is “too old” to work.
Bob Juceam, the attorney representing Ellis in two of the three lawsuits, said the “dire emergency” to take immediate action on the excess benefits claim was completely unnecessary. He instead charges it was a veiled justification for exiling Ellis.
“There’s an allegation that he got an excess of benefit, and somehow they had to act promptly or they would lose their status. All of that is wholly untrue,” Juceam said. “The fact of the matter is that there was no emergency. No regulator, not the IRS or the New York state attorney general has come in to claim there has been an excess of benefit. Even on their theory — even if there was an excess of benefit — they recorded it on their books as a loan. The most that would happen is that Ellis would have to repay the loan with interest.” He noted that Ellis has offered to repay the debt.
“If you read the accounting report, it doesn’t say what they say it says,” according to Juceam. “The report says that if someone found it to be excessive, there could be these consequences. They have largely tried to defend themselves by saying it was an emergency and they had to do it. That is unadulterated balderdash. That argument is a fraud — it didn’t have to be that day and that way. What Al has objected to is that they alone have determined what is legal. It’s not the government deciding what is legal, it’s not a court — they have decided to determine for themselves what is legal in their view and act on it.”
Ellis’ lawyers have offered to work with the institute, the IRS and the accountants, but, according to Juceam, the institute has failed to agree to those meetings.
An unhealthy arrangement
Juceam said the only money that could be considered an excess benefit went to pay for Ellis’ around-the-clock nursing care. He explained that the board agreed to allot money to pay for Ellis’ medical care in July 2004. “The ones who created the benefit and voted for it are these guys (the board members),” Juceam said. “Ellis didn’t vote for it — he was in the hospital.”
The institute’s board members agreed to pay Ellis’ medical expenses when he was hospitalized with a serious infection in which doctors had to remove most of his intestinal tract. Later in the fall, according to Juceam, the board realized it might have bitten off more than it could chew, as Ellis’ around-the-clock nursing care climbed close to $500,000.
“When he got sick and had these needs at age 90-plus,” Juceam said, “I think there was big residue of sympathy because he had made so many contributions to the institute over the years. They thought that covering his nursing cost was sensible. I think at one point they were — in good faith — trying to figure out how to help out Al and take care of his nursing costs. But now, they want to keep control of these assets and run the institute their way, and they want to call it ’excessive.’ At some point, when they decided they should make a grab for the place, all of sudden they no longer talk about what they did and how they discussed it — all they want to talk about is that Al got this amount of money and the lawyer says its excessive and they are all going to get in trouble. These are not the shining white knights in armor coming to protect the institute from a ravenous evil Ellis, but that’s the story they want to spin.”
Ellis agreed. “They are very vicious, and they are deliberately doing (this) to make use of all the money I’ve saved over the years from my private practice and other things,” he said. Ellis said the institute promised to pay for his medical expenses for the rest of his life.
“This is not a story about greed by Ellis,” Juceam said. “He is a guy who until three years ago took $25,000 salaries. Others are making $100,000 to $150,000 salaries.” Juceam also noted that the royalties from every book written by Ellis go back to the institute.
There is also the question of how Ellis could be charged with receiving an excess of benefit when, according to the institute, Broader made more than $400,000 in 2004 working part time. Broader defended his earnings by claiming that he put in several 60-hour weeks at the Albert Ellis Institute meeting with lawyers and financial advisers and dealing with the “crisis” surrounding Ellis and the board members. He also said he greatly underreported the hours billed for his services in favor of the institute.
Juceam said he and Ellis have tried several times to meet and negotiate civilly on the issues outside of the courtroom, but as of presstime the two sides had been unable to reach a settlement. Kurtz, the institute’s lawyer, said that many proposals had been presented but Ellis’ demands were just too aggressive.
Said Kurtz: “He wanted millions of dollars, and we would not give it because a) the organization can’t afford to turn over most of its money to Dr. Ellis to take care of himself and b) as nice as that might be, it’s not legally recognized as an exempt function (of a nonprofit) to take care of a frail, ailing old man. That’s not charity in the way the law sees it. It’s not a charitable tax-exempt purpose to provide for Dr. Ellis’ old age. You and I could not set up a charity to take care of some old guy no matter how great and famous he is. The IRS would say that’s not a charity. You do that out of your personal resources; you don’t get a tax deduction for that. The law couldn’t be clearer. There is no wiggle room for this.”
Tension and animosity had been brewing for well over a year between Ellis and the institute. Negotiations for Ellis’ retirement and compensation package began in December 2004, only to stall after months of debate. The institute was left to pay Ellis’ $130,000 attorney fee for the unresolved issue. It has since stopped paying for Ellis’ legal representation.
And in July 2005, which was a very busy time for the institute because of trainings and fellowships, board members and institute staff received some negative feedback pertaining to Ellis’ presentations and lectures. “We were getting a lot of complaints,” Broader said. “He couldn’t hear people. He was getting intemperate and lashing out at people (during therapy sessions), and one of the things we are responsible to do as psychologists is protect the public. So I tried to talk to him about it to see if there were some ways we could do this differently and address these concerns. He didn’t want to talk about it and got very, very angry at the suggestion that anything be changed.”
The institute staff then suspended Ellis’ famous Friday Night Workshops because, according to Broader, they determined that the workshops “were just not working.” The board ratified the staff’s decision and informed Ellis he could no longer hold the popular public therapy workshops at the institute.
But what many board members feel was the true beginning of the end was the October 2004 employment termination of Debbie Joffe, who up until that time had been a Fellow at the institute and a close assistant to Ellis. “There was an ethical violation in one of her groups,” Broader said, “and we had to terminate her. Before that, Ellis and I had always had a very cordial relationship. We could no longer maintain Debbie’s work visa once she was let go and, at that point, Dr. Ellis married her.”
Joffe, an Australian citizen, strongly denies any ethical wrongdoing and maintains that rumors questioning the legitimacy and integrity of the nuptials are false. She scoffs at accusations that Ellis married her to allow her to stay in the country or that she is after his dwindling assets. She and Ellis both proclaim a deep affection for each other despite their 40-year-plus age difference and the fact that he is largely bedridden.
“That is one of the many complete lies (by board members). Debbie and I really love each other, and we have a great marriage. She isn’t at all interested in money — they are,” Ellis asserted, his voice painfully hoarse.
“My dedication now is being with Al and working with him,” Joffe said. “The money is irrelevant to me. The love between us is a very deep and profound love. It’s a magnificent relationship.”
In December 2005, Ellis and Joffe resumed the Friday Night Workshops in office space next door to the Albert Ellis Institute. They continue to be very well attended — often standing room only — and receive positive reviews, according to Ellis and Joffe. The husband and wife team maintain that the board’s reasons for canceling the workshops are simply excuses to further remove Ellis from his institute. “The workshops were and are going fine,” Joffe said. “Al is incredible. They were going brilliantly — they are going brilliantly. There was no rational justification of stopping them.”
“That’s one of their 20 to 30 lies. (The workshops) have been working very well for 40 years,” said Ellis, his comment punctuated by a coughing fit.
Joffe added, “He was recently in Anaheim, Calif., and gave eight official presentations and two spontaneous ones and received standing ovations. One of (the board’s) complaints is that he’s not hearing well enough, but he heard very well. I’m there to fill in the gaps, but he hardly even needed me in California, and we have the tapes to prove that.”
Joffe said the ongoing situation has proved to be one of the most difficult episodes of her life, but she finds resolve in watching her husband prevail under the stress. “This has been going on a year and a quarter,” she said, “and it has been astonishing and inspiring to me that, despite the difficulties, Al without fail practices what he preaches.” She said that through the use of rational emotive behavior therapy, Ellis, though saddened by the events, remains happy and does not harbor anger for the institute. “It’s inspiring to see the authenticity of this man,” she said. “He’s incredible.”
Both parties have resorted to pleading to the virtual masses and telling their sides of the story on the World Wide Web. Ellis has cut ties with the institute’s website (www.rebt.org) and claims a new home at www.albertellis.info as his official portal. His new site links to several essays Ellis has penned retorting comments and dispelling “lies” from the board. Meanwhile, the Albert Ellis Institute has posted statements on its website and distributed press releases across the Web in attempts to explain its actions.
Elsewhere in cyberspace, people are taking sides. There is even an online petition to have Ellis reinstated to the institute’s board. “The goal is to provide a vehicle for people to express their support for Dr. Ellis and their disapproval of the AEI board’s actions,” said Jim Byrne, the petition’s creator and an Ellis supporter in the United Kingdom. He noted that as of mid-January, the petition included more than 650 signatures from people around the world.
The institute is asking that people separate the Albert Ellis Institute — and its legacy — from Albert Ellis the man and counseling legend. Similar situations arise quite frequently at nonprofits, Kurtz said, referring to it as “founder’s syndrome.”
“It is when you have a founder, like Dr. Ellis, who fails to separate himself from the organization which he founded,” Kurtz said. “He confuses himself with the organization, and this is what it leads to. Part of being an effective leader of a charity or nonprofit is planning a transition, planning a succession, but this was never done here. You don’t wait until someone is 92 to decide there is going to be a second act. The reality is that if Dr. Ellis had planned that appropriately he probably would have been taken care of — if he would have had a regular 401(k) plan for God’s sake. If he wanted to own the Albert Ellis Institute, he should have set it up as a business.”
Juceam rebutted: “It is blatantly wrong in what they have paraded in the public press so far. Al Ellis has said in writing — it’s on the Net, it’s in court papers — that he doesn’t want a penny he can’t legally have. I’m hoping we can put this to bed in a way that meets everyone’s needs. It’s in the best interest of everyone to have this settled.”
Kurtz noted that depending on Ellis’ resources and his health, the dispute could go on for years. Ellis said he wants his supporters to know “the whole truth and nothing but the truth — to realize they have been lied to and I have been lied to, and to discount those lies and know the facts.”
All in all, the accusations, facts, lies, laws and blame seem to be more twisted and intertwined than a loaf of marble rye. As of presstime, however, both parties were engaged in discussions and were optimistic that a fair settlement could still be reached.