In a precedent-setting case for local government investments, residents of Palm Beach County in the southern US state of Florida have filed a lawsuit challenging their county’s decision to invest $1 billion from taxpayer funds into Israel Bonds.
Individuals and institutions lend money to the Israeli government through Israel Bonds, a corporation that raises long-term funds mainly from US investors.
In return, they receive profits of four to six percent of the original amount every year until the bond matures and the original sum is returned to investors.
Israel Bonds has been on a borrowing spree to help Tel Aviv fund its $205 billion wars in Gaza, Lebanon, Syria, and Iran since October 2023.
The lawsuit is scheduled for a motion-to-dismiss hearing on Wednesday (July 8), where a judge will decide whether the case will proceed to trial.
The plaintiffs argue that the purchases of Israeli bonds were driven by political support for Israel, rather than the financial standards as per Florida law.
The lawsuit holds that county investments in Israel Bonds were never about attractive returns.
Instead, these were political acts meant to demonstrate the county officials’ allegiance to Israel, while ignoring Florida law, expert warnings, and the direct human cost to families like theirs.
With a population of nearly 1.6 million people, Palm Beach County is the single-largest worldwide buyer of debt issued by Israel Bonds. At least 35 US states and many small municipalities have also ploughed in billions of dollars into Israel Bonds.
The upcoming motion-to-dismiss hearing will have a far-reaching impact on Israel Bonds’ ability to raise funds from state, county, and municipal governments in the US.
US investors have been parking their funds in Israel Bonds since the beginning of Tel Aviv’s genocidal war on Gaza, which has killed at least 71,000 Palestinians since October 2023 by Israel’s own admission.
Even though the US government has supported Israel’s wars in the Middle East with massive military aid and extended diplomatic backing at the UN, a majority of US citizens under the age of 50 now view Tel Aviv negatively.
Six in every 10 US citizens now hold an “unfavourable view” of Israel, up nearly 20 percentage points since 2022, according to a new Pew Research Center survey.
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Investment or ‘advocacy’?
Israeli Prime Minister Benjamin Netanyahu vowed to turn Gaza into rubble immediately after the October 7, 2023, blitz by Palestinian resistance group Hamas.
He ordered Gaza residents to “leave now”, but imposed a blockade on the besieged territory the same day.
Within the next few hours, Israel started dropping bombs on Gaza in a genocidal zeal that killed and injured tens of thousands of Palestinians.
On October 10, 2023, the Palm Beach County comptroller stood before cameras and announced the investment of $25 million of taxpayer funds in Israel Bonds, declaring the county had become the first in the US to do so.
“There could be no greater advocacy that we can do in our office right now than support the state of Israel,” he said.
For the unidentified plaintiffs – named in the lawsuit merely as John Doe 1, Jane Doe, and John Doe 2 – the announcement came as they frantically messaged family in Gaza on WhatsApp.
On October 25, 2023, two Israeli air strikes destroyed the apartment building in Gaza City where John Doe 1 and Jane Doe’s relatives lived.
That day, the plaintiffs lost 37 family members, 15 of them under the age of 12, including a four-month-old infant.
A few days later, the county made the “single largest one-time investment” in Israel Bonds.
“We are investing an extra $135 million in Israel Bonds, which will earn us millions of dollars in interest. Yet, we will also stand with our strongest ally, the state of Israel,” the county official had said.
How Israel Bonds investments violated state law
The complaint filed in the Palm Beach County Circuit Court lists how Israel Bonds investments violated multiple state laws.
For example, Florida Statute 218.415 bars investment decisions based on social, political, or ideological interests.
Yet, county officials repeatedly justified the bond purchases with overt political language about standing with Israel.
Similarly, Florida Statute 518.11 requires that investment decisions must be based on financial reasoning and in the interest of constituents.
On October 11, 2023, the county’s Investment Policy Committee heard an expert economist advise against buying Israel Bonds.
