New York Officials Face Legal Warning Over Public Investments in Israeli Bonds

A prominent human rights organization has issued a stark legal warning to New York's top officials, arguing that the investment of public pension funds and other state assets into Israeli government bonds is not only ethically fraught but may constitute a breach of both international law and their fundamental duty to taxpayers.

The advisory, delivered Friday by the group DAWN, was sent to Governor Kathy Hochul, Attorney General Letitia James, New York City Mayor Zohran Mamdani, and the state and city comptrollers. It urges an immediate halt to new purchases and the divestment of existing holdings. The 26-page memo contends these investments effectively aid Israel's military campaign in Gaza, potentially implicating officials and pension beneficiaries in supporting alleged violations of international humanitarian law.

This formal warning, which raises the specter of litigation, lands amid a shifting political landscape in the U.S. where longstanding, unwavering support for Israel is facing increased scrutiny. The debate over municipal bond investments has become a new frontline in this divide, transforming a typically technical financial decision into a deeply contentious political issue.

The conflict is playing out within New York's own government. In 2023, then-City Comptroller Brad Lander allowed the city's nearly $40 million in Israeli bonds to lapse. His successor, Mark Levine, has signaled a desire to reinvest, placing him at odds with Mayor Mamdani, a vocal opponent. At the state level, Comptroller Tom DiNapoli has defended maintaining the investments, while his electoral challenger has pledged to end them.

"It's becoming harder to argue these are purely financial decisions," said Michael Omer-Man, DAWN's director for Israel-Palestine, pointing to Israel Bonds' own marketing which frames purchases as a way to "support" the state. DAWN argues the bonds are direct loans funding military operations, not passive market instruments.

The controversy extends beyond New York. Since the October 7 attacks, U.S. states and municipalities have purchased over $1.7 billion in Israeli bonds, according to Guardian reporting. In Florida's Palm Beach County—the largest municipal investor—residents have sued over a $700 million investment, claiming it violates local laws governing foreign investments.

Dani Naveh, President of the Development Corporation for Israel (Israel Bonds), defended the investments, stating over $5.7 billion has been sold worldwide since the Hamas attacks and calling them a "meaningful way to stand with and support the Jewish state." He dismissed divestment campaigns as a "small and noisy disinformation campaign driven by antisemitism."

Spokespeople for the officials offered contrasting views, highlighting the administrative tension. Mayor Mamdani's office reiterated his stance against buying bonds from any sovereign nation, while Comptroller Levine's office noted the bonds' five-decade history in the city's portfolio but did not confirm reinvestment plans. Governor Hochul and Comptroller DiNapoli did not comment.

Voices from the Public

Eleanor Vance, Retired Teacher & Pensioner, Brooklyn: "This isn't just about returns. It's about our moral responsibility. When my pension money might be funding violence overseas, that's a profound fiduciary failure. The comptrollers have a duty to protect us from both financial and ethical risk."

David Chen, Financial Analyst, Manhattan: "The legal memo raises valid points about duty and risk exposure. Regardless of one's political stance, public officials must prioritize the financial soundness and legal security of investments. If the bonds underperform or open the city to litigation, that's a clear failure of their role."

Marcus Johnson, Community Organizer, Queens: "It's outrageous. For decades, our public money has been funneled to support apartheid and occupation, wrapped in the language of 'sound investment.' This is a direct betrayal of New Yorkers, especially our communities of color who understand oppression. It has to stop now."

Rabbi Sarah Cohen, Interfaith Council Member, The Bronx: "The conversation is often framed as binary: support Israel or not. It's more nuanced. One can support the Jewish people's right to security while questioning the policies of its government. Divestment from these specific bonds is a call for accountability, not an abandonment."

The "Break the Bonds" campaign, a nationwide coalition, continues to push for divestment at local levels, targeting city funds, union pensions, and university endowments, ensuring the issue remains firmly in the public eye.