Charity Is Cleared by Atty. Gen.

The California attorney general’s office has closed its yearlong investigation of City of Hope, saying that it had found no evidence of wrongdoing by the cancer charity, officials said Friday.

The investigation was sparked by allegations of financial malfeasance from former City of Hope officials, including its ex-president. The former president, Dr. Sanford Shapero, is under federal investigation on charges of conducting an extortion scheme against his former employer.

“We feel fully vindicated in having steadfastly maintained all along that we are an exceptional philanthropic and charitable organization that is beyond reproach,” said Glenn Krinsky, City of Hope general counsel.

In a letter to City of Hope, the attorney general’s Charitable Trusts Section said it had conducted a civil investigation into whether officers and directors of City of Hope had violated their fiduciary duties. It said no evidence of wrongdoing was found.

The investigation was one facet of a bitter dispute between the cancer research and treatment center and Shapero.

Shapero, a 68-year-old Beverly Hills rabbi, left City of Hope in early 1996. His deputy, Andrew Leeka, followed months later. After leaving, Shapero allegedly threatened to destroy City of Hope’s reputation unless his settlement package was upgraded. He has denied the allegations.

In November 1996, the FBI began investigating City of Hope’s complaints that it was the victim of an extortion scheme conducted by Shapero, Leeka and their onetime attorney, Hugo Gerstl. They allegedly threatened to demean the institution to authorities and the media.

A short time later, Shapero wrote a list of complaints about his former employer, which he gave to a friend and former City of Hope director, who contacted the attorney general’s office.

Shapero maintains that City of Hope sparked the federal investigation in retaliation for his attempts to expose wrongdoing.

Gerstl has also denied any wrongdoing. Leeka has declined all comment, citing an arbitration judgment that subjects him to a $500,000 fine if he talks about City of Hope.

No charges have been filed against any of the three men.

Also on Friday, City of Hope announced that it had received the most prestigious designation bestowed by the National Cancer Institute. It joins 32 comprehensive cancer centers nationwide that are recognized for integrating research and treatment of cancer and that can apply for select federal grants.

“Through this whole, horrible ordeal” City of Hope has stressed that its medical operations were not hurt, Krinsky said. The designation is proof that “the organization is stronger than ever,” he said.