LawFuel.com – August 04, 2009 – LOS ANGELES – The Grand Rabbi of Spinka, a religious group within Orthodox Judaism, pleaded guilty this morning to a criminal conspiracy charge, admitting that he worked with others to obstruct the Internal Revenue Service by soliciting charitable donations with secret promises to refund donors the vast majority of the money they “donated.”
Grand Rabbi Naftali Tzi Weisz, 61, of Brooklyn, New York, pleaded guilty to the felony charge before United States District Judge John F. Walter. The conspiracy had two objects: to obstruct the IRS and to operate an unlicensed money transmitting business. Weisz, several associates and five charitable organizations associated with Spinka were indicted by a federal grand jury in late 2007 in a scheme in which Weisz and his assistant solicited millions of dollars of contributions to the Spinka organizations by promising to secretly refund up to 95 percent of the contributions. In this manner, the contributors could claim as tax deductions the full amounts of their contributions, while actually having contributed as little as 5 percent of the amount they would declare on their federal income tax returns.
Weisz’s assistant, Gabbai Moshe E. Zigelman, 62, also of Brooklyn, pleaded guilty in June 2008 to conspiring with Weisz and has been sentenced to two years in federal According to court documents, Weisz and Zigelman surreptitiously refunded up to 95 percent of the contributions through several methods. In some cases, the contributors received cash payments through an underground money transfer
network involving various parties, some of whom operated businesses in and around the Los Angeles jewelry district. Yaacov Zeivald, 44, of Valley Village, California; Yosef Nachum Naiman, 57, of Los Angeles; Alan Jay Friedman, 45, of Los Angeles; and Moshe Arie Lazar, 62, of Los Angeles, have entered into plea agreements in which they admit their roles in the illegal money transfer network.
These four defendants are scheduled to plead guilty this afternoon.
A second method used to reimburse contributors was wire transfers from
Spinka-controlled entities into accounts secretly held at a bank in Israel. The accounts were established with the assistance of an international accounts manager at the bank, Joseph Roth, who previously pleaded guilty in the scheme.
Roth, 66, of Tel Aviv, helped contributors in the United States obtain loans from the Los Angeles branch of the Israeli bank, loans that were secured by the funds in the secret bank accounts in Israel, so the contributors could have the use of the funds in the United States. After their money was placed in the secret accounts at the Israeli bank, contributors also could hire Spinka to help secretly repatriate the money into the United States in exchange for an additional money laundering fee, the indictment alleges.
In his plea agreement, Weisz admitted that he learned from Zigelman that
the Spinka charitable organizations had received $8,493,659 in 2006 and that
Spinka had “profits” of $744,596, after deducting the amounts paid back to the various contributors. Weisz is scheduled to be sentenced by Judge Walter on November 16. At
sentencing, Weisz faces a statutory maximum penalty of five years in federal prison.
Three individuals who made “donations” to Spinka entities have pleaded
guilty to tax evasion after having taken tax deductions for “donations” that were secretly refunded. Prosecutors have said they are investigating more than 100 individuals who were contributors to Spinka organizations. In sentencing one donor earlier this year, Judge Walter rejected a bid for probation and imposed a six-month prison sentencing, saying the crime reflected “arrogance” and that other contributors who do not come forward to authorities could face “significantly higher” sentences.
Attorneys for five Spinka charitable organizations – Yeshiva Imrei Yosef,
Yeshivath Spinka, Central Rabbinical Seminary, Machne Sva Rotzohn, and
Mesivta Imrei Yosef Spinka, all based in Brooklyn – are scheduled to appear before Judge Walter on Wednesday.
The case was investigated by the Federal Bureau of Investigation and IRSCriminal Investigation.