Lawsuit seeks to stop county's purchase of Israeli bonds, saying it violates state law

A Palm Beach County couple with family ties to war-ravaged Gaza has filed a lawsuit in circuit court to stop County Clerk and Comptroller Joseph Abruzzo from investing in Israel bonds.

The lawsuit claims that Florida law bars the investments because they were made for social , ideological, and political reasons. Gov. Ron DeSantis pushed for the law , saying it was designed to prevent “woke” investments based on religious, social or political beliefs. The lawsuit alleges that that is exactly what Abruzzo has done, making an investment not based on return, which is required by the DeSantis-approved law, but on his social and political beliefs.

The couple, identified only as John and Jane Doe, said they feel “anxiety, stress, depression, and guilt” knowing that their county taxes are being used to fund the death and destruction of their own family members, according to the lawsuit. They said 37 family members have died in the conflict.

John and Jane Doe are U.S. citizens of Palestinian origin. They say they are long-time Palm Beach County residents.

Abruzzo called the lawsuit "frivolous." He said he expects the courts to dismiss it quickly. He defended the purchases, calling them sound, safe investments. They are part of the reason the county will earn a record $215 million this year in interest, he noted.

Abruzzo has touted the purchase of the bonds that now total $700 million, making the county the world’s largest investor of Israel bonds .

The lawsuit claims the bond purchases represent “an economic threat to Palm Beach County’s general fund and endanger Palm Beach County taxpayers” as the Israeli economy has spiraled downward since the war began in October after Hamas killed about 1,200 civilians attending an outdoor-music festival.

Israel, in an effort to eradicate the terrorist organization, has responded with attacks on Gaza that have killed more than 34,000 Palestinians, according to the Hamas health ministry.

Abruzzo said the DeSantis law cited in the lawsuit does not apply to Israel bonds. A law passed in 2008, he noted, specifically allowed local and county governments to invest in them and was passed well before the so-called "woke" investment statute.

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Miami lawyer David Pina filed the lawsuit on behalf of the couple. He said their names were withheld to protect them from retaliation.

Abruzzo's general counsel, Amy Borman, said the courts will have to determine whether it is even possible for the lawsuit to be filed anonymously. She noted the Clerk's office has yet to receive a summons from Pina, who appeared with protesters at a rally on May 15 outside the courts building in West Palm Beach to announce the lawsuit's filing.

The protesters denounced the Hamas attack that initiated the war but maintained that the Israeli response was unjustified. They held signs saying: "Divest from genocide. Invest in housing."

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The lawsuit cited comments made by Abruzzo this year to The Palm Beach Post in which he acknowledged that some Democratic Party leaders and progressive elements of the party were upset with his actions. Abruzzo’s response: "I would say to them, they need to back off and we need to stand united with our greatest ally, Israel.”

Asked about the claim that the plaintiffs are upset that county funds are being used to fund attacks in Gaza that are killing their family members, Abruzzo said: "They need to move to another county. This county is purchasing and will continue to purchase Israel bonds."

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When Abruzzo took office in 2021, there was a 5% portfolio cap on the purchase of Israel bonds. In 2023, he obtained permission from county commissioners to raise the cap to 10%, and then to 15% this year.

The lawsuit claims the bond purchases place taxpayer funds at risk. The iShares MSCI Israel ETF is an exchange-traded fund tracking the investment results of an index composed of Israeli equities or stocks. From Jan. 11, 2022, to Jan. 15, 2024, it lost 24% of its value, according to the lawsuit.

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“The amount invested and the speed at which the exposure to Israel Bonds was increased are unprecedented in the history of fund management of taxpayer dollars in Palm Beach County," the lawsuit reported.

Abruzzo's response: "We are talking about two- to three-year bonds. While there has been one downgrade in ratings, they are still rated 'A,' which is higher than many other countries. Israel's debt is much lower than the debt in the U.S. on a per-capita basis."

The county, according to Abruzzo, is earning about $40 million a year on its investment in Israel bonds. He noted there has never been a single default since Israel was created in 1949.

Abruzzo said he plans to continue to purchase new Israel bonds once the old ones mature. And he noted that he has been urging other comptrollers throughout the state and country to follow his lead.

"I'm just getting started," he said. "I want to see billions invested."

Mike Diamond is a journalist at The Palm Beach Post , part of the USA TODAY Florida Network. He covers Palm Beach County government. You can reach him at mdiamond@pbpost.com . Help support local journalism. Subscribe today.

This article originally appeared on Palm Beach Post: Lawsuit seeks to stop county's purchase of Israeli bonds, saying it violates state law