New York’s Israel Bonds fight turns into a vote

A little-known Israel Bonds program—built to help Israel access capital when it couldn’t attract mainstream investors—has become a central flash point in New York’s comptroller race. With Thomas DiNapoli facing challengers Raj Goyle and Drew Warshaw, activists

On election day, New York voters aren’t just choosing a comptroller. They’re deciding whether public workers’ retirement money should keep flowing into Israel Bonds—a little-known investment vehicle that has quietly helped finance Israel for decades, and has now become a live wire in state politics.

For Thomas DiNapoli, the stakes are personal and financial. The state comptroller has been elected four times and. over his time in office. has invested hundreds of millions of taxpayer dollars in Israel Bonds. He has also built a close relationship with the U.S. company that sells the bonds—an intimacy challengers say goes too far.

Raj Goyle and Drew Warshaw—both running against DiNapoli in what the article describes as the only primary race of his career—have criticized DiNapoli for pursuing what they call unethical investments. Both have promised that if they are elected, they will cease reinvestment in Israel Bonds.

The controversy lands in a larger national fight. After October 7. sales in Israel Bonds spiked. and as the war deepened. pro-Palestine human rights advocates launched campaigns aimed at stopping taxpayer support for the conflict. Israel Bonds differ from bonds sold by the Israeli Finance Ministry: they are sold on a retail basis in the United States by a third party and are not traded on the public market. That makes divestment difficult for financial officials. But it also creates a practical lever: officials can opt not to reinvest once a bond matures.

Jewish Voice for Peace says sustained pressure campaigns have already led to that choice in multiple places, including Louisiana and more than a dozen counties in Ohio. The push has also secured divestment wins from Israel sovereign bonds.

The policy debate is rooted in how Israel Bonds began and why they were built this way—an origin story that helps explain why activists see the stakes as moral and why some officials see them as investment management.

Israel Bonds were created after the founding of Israel, when the newly formed government was desperate for cash. Prior to 1948, Zionist leadership in Palestine relied largely on donations from Jewish American communities. But. as University of Southern California professor Dan Lainer-Vos charts in his book. Sinews of a Nation. after Israel’s founding. those donations started to dwindle—partly because Jewish American nonprofits that collected the funds began to take a larger cut.

At the same time, Israel’s economic situation—including an overvalued currency and state control of key sectors—made it nearly impossible for Israel’s leadership to attract conventional foreign investors.

In 1948. UJA chair and former secretary of the Treasury Henry Morgenthau—who had raised almost $200 billion to finance World War II through U.S. “war bonds”—approached Prime Minister David Ben-Gurion with an idea. Morgenthau proposed a similar program: instead of just soliciting donations, sell bonds to the Jewish diaspora. The goal was to give Israel access to new pools of capital and foreign currency while reducing dependence on philanthropy.

Ben-Gurion was skeptical at first, but by 1950 the economic situation was dire enough that he agreed to try it. He advocated the creation of a new organization to issue the bonds: the American Financial Development Corporation for Israel (AFDCI), later reconstituted as the DCI.

From the beginning, the structure mattered. AFDCI’s U.S. leadership worried that fluctuations in bond value could impact the Israeli economy and threaten the long-term survival of the bond program. So the bonds were made nontransferrable. They could not be traded on a public bond market and were. with a few exceptions. paid out by AFDCI when they reached maturity.

The bonds sold by AFDCI/DCI have always been distinct from sovereign bonds sold by the Israeli Finance Ministry, which can be resold after purchase—subject to shifting valuation on the public market.

Israel Bonds are debt instruments: the seller agrees to repay principal plus regular interest. But the nontransferrable terms meant traditional investors typically wouldn’t touch them. The program’s target investors were people who. the article says. were driven by emotional ties to Israel—and who could accept “lesser terms and a lower rate of return.”.

Mitu Gulati. a professor of law at the University of Virginia who studies sovereign debt. describes this as a “patriotic discount.” He says that if there is a subset of people willing to lend at lower rates during bad times. then it can function like a form of insurance—something Israel has. and that “other countries would desperately like it.”.

In 1951, the first set of bonds were issued. Since the program’s founding, Israel Bonds has brought in $57 billion to Israel, which the article says constitutes about 25 percent of Israel’s foreign debt.

That structure—emotional appeal, nontraditional terms, and a specialized U.S. sales pipeline—also helped Israel Bonds shape diasporic identity in the United States.

In 1951, Meyer Steinglass, a playwright and writer living in New York, was hired as Israel Bonds’ national publicity director. His job was to craft a marketing and messaging plan. Steinglass’s grandson, Torrey Townsend, is a playwright in Brooklyn. Townsend’s recent theatrical production, The Jewish Plot, required years of archival and historical research into his grandfather’s work.

Townsend said, “So much of Israel Bonds is a play on language—Israel Bonds. The bond, the form of kinship, it’s not a rational relationship. It’s an emotional relationship.” Under Penderglass’s leadership. Israel Bonds marketed itself by urging American Jews to remember their obligations. A 1951 ad in Life magazine declared, “Men died so that these bonds could be born.”.

The DCI also tied sales to Jewish ritual life. Bonds were marketed on important dates in the Jewish calendar and promoted as gifts tied to Jewish life-cycle events. including B’nei Mitzvot and weddings. As part of the marketing plan. Penderglass produced an annual Israel Bonds Hanukkah festival at Madison Square Garden. with famous choreographers and dancers and other celebrities performing to a sold-out crowd.

Townsend says he has seen written materials from the first few annual meetings. including pamphlets with statistics about how many people were living in Palestine before the creation of Israel. He says senior staff were aware of the Nakba while still promoting the idea of “a land for a people for a people without a land.” Townsend said. “This is my grandfather. my direct ancestor. They knew that the Palestinians were there. They knew that the land was theirs, but they made a choice.”.

Over time, the money also came from unexpected places.

As the decades passed, the DCI sought investment from pensions, credit unions, and trade unions. In the 1970s, the Teamsters bought at least $27 million in Israel Bonds as part of an image rehabilitation strategy. The article says the DCI courted these funds and held dinners honoring Teamsters with known connections to organized crime. At a June 1975 dinner, the Israeli ambassador to the U.S. inducted future general president Jackie Presser into the exclusive Prime Minister’s Club—reserved for those who had secured significant investments for Israel Bonds.

When it came to selling bonds, violence was framed as a tool. The article quotes Steinglass as saying in Steve Brill’s The Teamsters: “In this union the guys at the top can make the locals buy the bonds. I mean, you know what they say, ‘You can find yourself under a truck if you don’t obey.’”

That long-running story helps explain why the post–October 7 backlash has targeted more than a financial product—it has targeted the networks around it.

The controversy sharpened after October 7 because Israel’s war spending and financing needs accelerated. As Israel began its military assault on Gaza. the country’s spending ballooned. jumping almost 30 percent in November 2023 compared to the same month the year before. These spending increases continued.

The article cites data published by the Stockholm International Peace Research Institute saying Israeli military expenditure rose by 65 percent in 2024. described as “the steepest annual increase since the Six-Day War.” It also says Israel was losing tax revenue. in part due to tax deferments implemented after the start of the war that allowed some Israelis to delay filing and paying taxes.

Israel needed fast cash. especially as interest rates on Israel’s sovereign debt spiked—from a yield to maturity of 3.871 percent in 2022 to 5.77 percent in 2023. The article says that environment led the DCI to lean on the “patriotic discount. ” pointing to how more people purchasing Israel Bonds at lower rates gave Israel access to cheaper money while expenses and deficit grew rapidly.

One month after the attacks, Israel Bonds announced it had reached a new fundraising record, securing over $1 billion in sales. By May 2026, the article says Israel Bonds had sold $7.7 billion.

As the economic circumstances of the war tightened. Palestine advocates renewed attention on an instrument they say helped sustain Israel’s violence through economic support. In a 2025 report by the United Nations Special Rapporteur on the Situation of Human Rights in the Palestinian Territories. Francesca Albanese is cited as listing Israel Bonds as an “enabler” of “settler-colonialism. ” and an entity “directly involved in Israeli occupation and genocide.”.

Activists in New York and elsewhere, the article says, have not only made a moral case against reinvestment. They argue there is an economic and legal rationale as well—saying financial officials are violating fiduciary obligations to taxpayers and pensionholders by buying Israel Bonds as political signaling.

The article notes that in 2024, Israel’s credit rating was downgraded by all three major credit rating agencies—yet public officials in the United States continued investing hundreds of millions in Israel Bonds.

The question of fiduciary duty is at the center of the debate. Richard Painter. a professor of law at the University of Minnesota and a former White House ethics lawyer for George W. Bush. says that to meet their fiduciary obligation. comptrollers and other financial officials must make decisions in the best interest of the beneficiary. He also warns officials to be “very wary of those who will wine and dine you in order to sell you bonds because that creates conflicts of interest. ” and says such incentives are “quite common” in the bond industry.

For a 2024 investigation. reporters at the International Consortium of Investigative Journalists obtained more than 2. 000 pages of public records exploring the relationship between Israel Bonds and public officials managing taxpayer dollars. They found that Israel Bonds staff went to great efforts to court these officials. and that officials who bought the bonds gained access to gala dinners and private meetings with senior military officials.

Human rights advocates have tried to litigate too. The article says that in 2024. the Internationalist Law Center filed a lawsuit against Palm Beach County County Comptroller Joseph Abruzzo. alleging he violated his fiduciary duty by investing 15 percent of the county’s total overseas funds in Israel Bonds.

Supporters of Israel Bonds have also faced legal questions about whether the program required registration under the Foreign Agent Registration Act. The article says Israel Bonds leadership understood their work likely triggered registration requirements under FARA. which requires individuals or entities conducting domestic lobbying on behalf of foreign governments to register with the Department of Justice.

The AFDCI/DCI secured a FARA exemption by claiming it was a for-profit corporation acting in its own interest without any immediate relationship to Israel. The article adds that some actors in the federal government were skeptical that the DCI could sell bonds without inserting political propaganda on behalf of Israel. and says the FBI ordered that confidential informants be developed in the Israel Bonds sales network—but nothing ever came of the investigation.

The article identifies Dani Naveh as the current president and CEO of Israel Bonds, described as a former Israeli cabinet member.

The DCI’s strategy, the article says, also included enabling public investment at the state level. In 2003 and 2004, it says the DCI lobbied state legislatures in at least four states to allow public pensions to invest in foreign bonds. In 2008, Florida followed.

In 2023 and 2024, the human rights organization DAWN wrote to the DOJ asking for its FARA unit to investigate the DCI for failing to comply with the law.

And in the post–October 7 period, Israel Bonds became tied to a wider partisan fight inside U.S. politics.

The article says Republican-led jurisdictions represented the greatest state and municipal investors in Israel Bonds following October 7. It adds that among those Republican states that opted to invest. many financial officials were active in the State Financial Officers Foundation. described as a right-wing organization seeking to end publicly funded use of socially and environmentally responsible investing.

It points to the SFOF drafting a model bill called the Energy Discrimination Elimination Act—based on anti–Boycott, Divestment, and Sanctions bills—and designed to protect the fossil fuel industry from boycotts.

New York is described as a major exception.

In April 2024, DiNapoli spoke on an exclusive Zoom meeting hosted by Israel Bonds for the SFOF. On the call were two conservative figures in SFOF, including Ohio Treasurer Robert Sprague and Texas Comptroller Glenn Hegar. The article says DiNapoli’s decision to direct the purchase of Israel Bonds and speak at SFOF-linked events aligned him with Republicans who criticize diversity. equity. and inclusion initiatives and socially responsible investing. as David Armiak—described as a research director and investigative journalist with the Center for Media and Democracy—has argued.

The DCI, the article says, has moved quickly to take advantage of Israel Bonds’ incorporation into the anti-woke agenda. It says Israel Bonds has been a corporate sponsor of the SFOF since as early as 2021. though the precise amount is unknown. It also says Israel Bonds sought other ways to court these officials by creating a Government. Industry. and Financial Services Leadership Group featuring many of the same officials.

Armiak says that by sponsoring SFOF for years and hosting SFOF events, it becomes “an obvious example of pay to play.”

The New York holdings sit at the heart of the political firestorm. As of 2024—the article’s stated last year for which data is available—theNew York State Common Retirement Fund (NYSCRF). the pension fund for state workers. held at least $300 million in Israel Bonds. making New York the state with the greatest holdings in the country. The article says local activists have been outraged. and that the vast majority of those bonds were purchased under DiNapoli’s tenure.

The article includes another detail activists point to: although New York does hold Israeli sovereign bonds. Israel Bonds make up about 90 percent of its holdings of Israeli debt. It says that at the end of fiscal year 2024–25. the NYSCRF held about $332.5 million in Israel Bonds as well as $35 million in Israeli sovereign bonds.

It also says DiNapoli has long had a close relationship with the DCI and regularly appears at fundraisers. including DCI brunches in the Hamptons and glitzy NYC real estate luncheons. where he’s praised Israel Bonds as a “mainstay of our investment portfolio” and expressed his desire to invest in what he calls the only democracy in the Middle East.

After October 7, that advocacy accelerated. At a November 2023 fundraiser where DiNapoli was a featured guest, the article says he received a standing ovation and was thanked by Israel Bonds President Dani Naveh. In 2024, it says DiNapoli made his sixth trip to Israel since becoming comptroller.

Painter, the former ethics lawyer, is again cited warning against conduct that could create the appearance of close alignment with bond sellers, including promotional appearances.

The article further says that in February 2024. the New York State Commission on Ethics and Lobbying in Government wrote a letter to DiNapoli raising concerns that a sponsored trip to Israel—in which the comptroller was scheduled to meet with Israel Bonds staffers—could give the appearance of improper political influence. as reported in a recent story published by The Intercept.

Divestment efforts are part of what has propelled the debate into mainstream election politics. The article says JVP and other groups have launched campaigns calling for an end to public investment in all Israeli government debt. including Israel Bonds and sovereign bonds. It lists announced campaign wins in states including North Carolina and Maryland.

It also says a number of U.S. counties and cities have opted to divest or not renew Israel Bonds holdings, including more than a dozen counties in Ohio, according to Jewish Voice for Peace Cleveland.

Internationally, the article points to additional outcomes. In November 2024, the Norway Sovereign Fund announced it was divesting its entire $500 million holding in Israel Bonds. The next fall. after internal pressure. the Central Bank of Ireland ceased approving the sale of Israel Bonds to states within the European Union. forcing Israel Bonds to ask Luxembourg to do so instead.

Back in New York, activists continue pressing for an end to investment in Israel Bonds. Dani Noble. the senior campaigns organizer for Jewish Voice for Peace. is quoted saying: “This unethical material support for Israeli apartheid. occupation. and genocide has to end. It’s harmful for Palestinians. It’s harmful to Israelis. And it’s harmful to our communities.”.

For DiNapoli, the argument is likely to be about fiduciary duty and investment strategy. For his challengers, the case is about where public money goes and what that choice signals—especially after October 7.

Either way, the question now in New York’s primary is no longer confined to boardrooms, portfolios, or distant hearings. It has become a ballot question about whether the state will keep reinvesting in a program that was designed to survive Israel’s financial emergencies—and whether voters will demand a different choice going forward.

Israel Bonds Thomas DiNapoli Raj Goyle Drew Warshaw New York comptroller election NYSCRF pension investments Foreign Agent Registration Act DAWN Jewish Voice for Peace divestment Palestine advocacy