October 5, 2012 – LawFuel.com – IRS Law News
Spinka Would Secretly Refund 93% of the Defendants’ Contributions
LOS ANGELES – Two Los Angeles defendants who made contributions to a variety of charitable organizations, including those operating under the umbrella of Spinka, pleaded guilty today to tax fraud.
Bencion Jakobovits, 89, and Serena Jakobovits Apfel, 55, both of Los Angeles, each pleaded guilty before United States District Court Judge John F. Walter to three counts of tax evasion.
According to the plea agreements, during the period 2004 through 2007, Bencion made contributions to a variety of charitable organizations, including those operating under the umbrella of Spinka, totaling $463,650. During that same time period, Bencion accepted kickbacks on all his Spinka-related contributions totaling $431,195, or 93% of the contribution. Similarly, Serena made contributions to Spinka-related entities for the years 2003 through 2007 totaling $528,500. She received kickbacks totaling $491,505.
Each defendant filed their respective tax returns claiming the inflated contribution amount for the purpose of tax evasion. However, following the arrest of the Grand Rabbi of Spinka in December 2007, each defendant decided not to claim the 2007 contributions as tax deductions. Consequently, the tax loss to the government for the remaining years was $58,347 with respect to Bencion, and $97,454 with respect to Serena.
According to the plea agreements, Bencion and Serena each entered into an arrangement through which they could make contributions to Spinka charitable organizations, including Yeshiva Imrei Yosef, Congregation Chakal Yitzchok, Mosdos Spinka International, Machne Sva Rotzohn, Mifal Hachesed, and Central Rabbinical Seminary. In return, agents of Spinka would secretly refund 93% of the defendants’ contributions with cash payments arranged through various third parties. In addition, agents of Spinka would mail on behalf of the Spinka charitable organizations charitable contribution receipts in the full amounts of the defendants’ contributions.
Spinka was a religious group within Orthodox Judaism. Spinka established a variety of charitable organizations which represented themselves to be public charities, contributions to which could be tax deductible under the Internal Revenue Code.
When sentenced by Judge Walter on February 4, 2013, the statutory maximum sentence each defendant will receive is 15 years imprisonment, and a fine of at least $750,000. In addition, each defendant may be obligated to pay the cost of prosecution, estimated at $50,000, as well as restitution of $58,347 for Bencion and $97,454 for Serena.
The investigation and prosecution of Bencion and Serena was conducted by IRS-Criminal Investigation’s Los Angeles Field Office, in conjunction with the United States Attorney’s Office for the Central District of California.