The problems with the Lubavitch


California ,Brooklyn and Israel Lubavitch money laundering,tax fraud, and diamonds
January 13, 2009, 8:05 pm
Filed under: crime

December 23, 2007

Mizrachi Bank’s Los Angeles Rep

From the New York Times:

In some cases, the contributions were returned as cash payments through what the government called “an underground money transfer network” involving businesses in and around Los Angeles’s jewelry district, the government said.

Three men in California were charged with taking part in the money transfer network: Yaacov Zeivald, 43, a professional scribe from Valley Village, Calif.; Yosef N. Naiman, 55, a tour company owner from Los Angeles; and Alan Friedman, 43, a businessman, also from Los Angeles. A fourth man, Moshe A. Lazar, 60, a diamond dealer, was charged in the scheme as well and was believed to be in Israel, the government said.

The contributions were repaid by a sophisticated series of wire transfers from businesses controlled by the Spinka sect to secret accounts in Israel, the government said. The accounts were established with the help of an official at the Israeli bank, Joseph Roth, 66, of Tel Aviv, who was arrested in Los Angeles, and a Tel Aviv lawyer, Jacob Kantor, 71, who remained at large in Israel, the government said.

According to the indictment, Mr. Roth helped the contributors get loans from a Los Angeles branch of the bank so their money would be available to them in the United States. The contributors could also hire officials of the Spinka sect to repatriate their money for them, albeit for a fee, the government said.

For about a decade, Yossi Ross aka Joseph Roth, 66, of Tel Aviv, was Mizrachi Bank’s L.A. rep. Traditional Jews had the attitude, “Let’s bank with Mizrachi Bank and make Israel some money.”

Orthodox Jews knew Yossi. He lived in the Valley. He lived an Orthodox life. At Shaarey Zedek, he’d daven from the bima (pulpit). He had a nice voice. He was a nice guy.

“You can’t tell me more people weren’t involved,” says a source. “Yossi Roth knew every frum Jew in Los Angeles.”

“I’m sure there’s going to be another indictment.”

United States Attorney’s Office
Central District of California

Thom Mrozek
Public Affairs Officer

(213) 894-6947
thom.mrozek@usdoj.gov


The United States Attorney’s Office

Central District of California

Return to the 2007 Press Release Index
Release No. 07-164

December 19, 2007

BROOKLYN RABBI AND SEVERAL ASSOCIATES CHARGED IN SOPHISTICATED TAX FRAUD AND MONEY LAUNDERING SCHEME

The Grand Rabbi of Spinka, a religious group within Orthodox Judaism, was arrested this morning along with several associates charged in an indictment that alleges a wide-ranging conspiracy to defraud U.S. government agencies, to operate a underground money transfer system and to launder money through an Israeli bank.

Grand Rabbi Naftali Tzi Weisz, 59, and Gabbai Moshe E. Zigelman, 60, both of Brooklyn, New York, were indicted yesterday by a federal grand jury in Los Angeles. The 37-count indictment, which was unsealed this morning, alleges that Weisz and Zigelman solicited millions of dollars of contributions to several Spinka charitable 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 and Zigelman would surreptitiously refund up to 95 percent of the contributions through several methods, according to the indictment. 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. Several participants in the underground money transfer network were also indicted yesterday and arrested this morning. They are: Yaacov Zeivald, 43, of Valley Village, California; Yosef Nachum Naiman, 55, of Los Angeles; and Alan Jay Friedman, 43, all of Los Angeles. Another man allegedly involved in the underground money transfer network, Moshe Arie Lazar, 60, of Los Angeles, was not arrested and is believed to be in Israel.

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, 66, of Tel Aviv, and Tel Aviv attorney Jacob Ivan Kantor, 71, both of whom are charged in the indictment. Roth allegedly assisted 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. Roth was arrested this morning in Los Angeles. Kantor has not been arrested and is believed to be in Israel.

The indictment charges Weisz and Zigelman with one count of conspiracy to defraud the Internal Revenue Service and other crimes, 19 counts of mail fraud, one money laundering conspiracy count, 11 counts of international money laundering, and one count of operating an illegal money remitting business. Zigelman is also charged with two counts of aiding in the preparation of fraudulent income tax returns. Roth is charged in both conspiracy counts; several mail fraud counts; and several international money laundering counts. Kantor is charged in both of the conspiracy counts and several international money laundering counts. Zeivald, Lazar, Naiman, and Friedman are charged in the main conspiracy count and with operating an illegal money remitting business. Zeivald is also named in one mail fraud count. If convicted, all of the defendants face substantial federal prison sentences.

In the money laundering conspiracy charge, 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 named as defendants. These entities allegedly issued fraudulent receipts for bogus charitable contributions and were the beneficiaries of fees charged for transfers of funds as part of the money laundering conspiracy.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

Weisz, Zigelman, Roth, Zeivald, Naiman and Friedman were all arrested in the Los Angeles area this morning and are scheduled to make their initial appearances in United States District Court this afternoon.

The case is part of an ongoing investigation being conducted by the Federal Bureau of Investigation and IRS-Criminal Investigation.

#####

Release No. 07-164

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