Rabbi Who Was Shot in Poway Synagogue Attack Pleads Guilty to Tax-Fraud

Rabbi Yisroel Goldstein following shooting, Youtube
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San Diego: Rabbi Yisroel Goldstein, who was wounded in an April 2019 shooting at his synagogue in Poway, pleaded guilty to federal charges of tax and wire fraud involving fake donations to the Chabad of Poway. He admitted to participating in a 90/10 scheme in which “donors” would give large donations, receive a charity write-off to lower their taxes, and then 90% of the money would be returned to them while the rabbi kept 10%. A similar scheme involved corporations matching donations to other “donors” who had their money refunded while Goldstein kept the corporate contribution. The rabbi fraudulently obtained FEMA grants. He also falsely certified that his associates performed community-services to fulfill sentencing requirements for criminal offenses. According to his lawyer, Goldstein had been preparing to plead guilty to the tax and wire fraud since 2018. He is unlikely to serve jail time due to “helping the community heal” following the shooting attack. -GEG

A longtime San Diego rabbi wounded in an April 2019 shooting at his synagogue in Poway, California — and hailed as an “exemplary” community leader — pleaded guilty Tuesday to federal charges of elaborate tax and wire fraud involving fake “donations” to the Chabad of Poway.

Rabbi Yisroel Goldstein, 58 – who was shot in the hand during the 2019 attack on the Chabad of Poway – pleaded guilty to a scheme involving the misuse of at least $6.2 million in contributions and donations to the synagogue. Of those millions, Goldstein admitted to keeping approximately $620,000 for himself.

Robert Brewer, United States Attorney for the U.S. District Court for the Southern District of California, held a news briefing Tuesday in San Diego to detail what he called “an elaborate, long-term scheme” by Goldstein that “involved careful planning, attention to detail and significant deception all to give the appearance of legitimate donations to the Chabad and lawful deductions.”

Brewer said it was a “difficult day” for the community to learn of such a scandal involving a prominent local leader.

“Sadly, the facts of this case show a willful effort to deceive on the part of a trusted community leader,” Brewer lamented.

Brewer said there is no doubt that Goldstein was the victim of “a horrific hate crime” at the Chabad of Poway in April 2019, but added, “We cannot look the other way because a perpetrator of a crime becomes, suddenly, a victim of a crime.”

We cannot look the other way because a perpetrator of a crime becomes, suddenly, a victim of a crime.

Robert Brewer, U.S. Attorney for the U.S. District Court for the Southern District of California

And, while Brewer commended the rabbi for his community leadership after the synagogue shooting, Brewer said the illegal conduct that Goldstein pleaded guilty to Tuesday – which went on for decades – “cannot be ignored.”

According to Brewer, the investigation into Goldstein’s alleged tax fraud began as early as November 2016. The rabbi knew he was under federal investigation long before the Chabad of Poway shooting and, according to Brewer, had been preparing to plead guilty to the tax and wire fraud since late 2018.

The complaint said Goldstein allegedly worked with at least 18 or more taxpayers throughout the years to help them in lowering their tax liabilities through fraudulent “donations” to the Chabad. The donations resulted in tax losses to the IRS of at least $1.5 million, the document said.

The federal document said agents with the IRS and FBI executed search warrants at Goldstein’s home and the synagogue on Oct. 17, 2018 – six months before the synagogue attack.

Agents told Goldstein they had been investigating “his tax evasion and other fraudulent activity for quite some time,” the complaint said.

“After learning he was under investigation, Defendant took steps to warn certain of his co-conspirators of the investigation, which allowed his co-conspirators to take steps to conceal their tax evasion scheme,” the complaint continued.

Goldstein established the Chabad of Poway in 1986 and served as the head of the synagogue until 2018. Chabad of Poway said in a statement Goldstein was relieved of his duties and his relationship with the synagogue was terminated when the board learned of the allegations against him. He was also dismissed by Chabad-Lubavitch Headquarters.

The federal complaint said Goldstein created several nonprofits affiliated with the Chabad of Poway, including the Friendship Circle of San Diego.

The documents said that while some of Goldstein’s nonprofit organizations provided services to the community, “others were non-functioning shell entities that existed primarily on paper or simply as bank account holders.”

The complaint alleges that Goldstein used bank accounts held in those nonprofits to “conceal his illegal financial transactions and avoid detection by other Chabad officials, from the IRS, and from law enforcement.”


How the Scheme Worked

According to the federal complaint, the Chabad of Poway is a public charity and tax-exempt organization. People who donate to the Chabad of Poway can deduct the amounts of their donations, reducing their personal income taxes. To claim a tax deduction of $250 or more from a public charity like the Chabad, a donor must obtain a receipt and document the contribution.

The complaint alleges that Goldstein, on behalf of the Chabad, gave donors receipt letters – usually signed by Goldstein on the Chabad’s letterhead – documenting a donor’s “generous” contribution and marking it “tax-deductible.”

Those fake receipts were then used by “donors” to claim huge tax deductions on their tax returns.

Brewer said Goldstein would secretly funnel back 90% of these “donations” to his co-conspirators and keep 10% for himself. Investigators aptly named this scheme the “90/10 Tax Fraud Scheme.”

The 90/10 Tax Fraud Scheme: Mid-1980s to 2018
Brewer said, with the cooperation of Goldstein, that five taxpayers – or “co-conspirators” – entered guilty pleas in federal court this week tied to the 90/10 Tax Fraud Scheme.

Those co-conspirators admitted to knowingly participating in the scheme by either recruiting donors, concealing donations, or making fraudulent tax-deductible claims on tax returns.

Brewer said one taxpayer – Bruce Baker – admitted he had been partaking in this scheme with Goldstein since the mid-1980s. Over the years, Brewer said Baker had made several million dollars through this scheme.

In all, including Goldstein, Baker, and four other co-conspirators, the 90/10 Scheme involved about 20 people, some of whom remain under investigation.

In the 90/10 Scheme, Brewer said a donor would hypothetically make a $100,000 donation to the Chabad of Poway. Goldstein controlled all the finances for the Chabad, and the rabbi would sign a receipt for the supposed donation.

Goldstein would then funnel $90,000 of that donation back to the donor and keep $10,000 for himself.

In one instance – in December 2017 – Goldstein allegedly made two deposits totaling nearly $1.2 million in fraudulent donations to the Chabad from one co-conspirator identified by Brewer as “E.A.” That large “donation” to the Chabad came just in time to reduce the co-conspirator’s tax liability for the year.

To hide the source of the donation, in January 2018 Goldstein allegedly funneled the funds back to E.A. by buying valuable gold coins and delivering them to E.A.

The coins included 246 Suisse Fortuna 1-ounce rectangular gold ingots, 246 Canadian Maple Leaf 1-ounce coins, and 246 American Eagle 1-ounce coins worth a combined total of about $1 million, the complaint detailed.

In that deal, Goldstein kept about $160,000, Brewer said.

In October 2018, when E.A. learned of the investigation into this case, Brewer said E.A. tried to return the gold coins to the rabbi “in order to conceal the fraud.” Goldstein forfeited the $1 million in gold coins from that case to the United States, Brewer added.

The rabbi would again use gold coins in exchange for cash proceeds in a May 2018 deal with a co-conspirator worth $50,000, the complaint said.

In August 2018, Goldstein offered to launder $900,000 cash for that same co-conspirator in the May 2018 deal “by purchasing real estate, in exchange for a 20% fee.”

In all, Brewer said at least 12 taxpayers were involved in the 90/10 Tax Fraud Scheme, and “donations” totaled at least $6.2 million, of which Goldstein kept approximately $620,000 for personal use. The tax loss to the IRS in this scheme is at least $1.5 million, Brewer said.

Omer Meisel, Acting FBI Special Agent in Charge of the San Diego Division, said the FBI used an undercover agent to meet with Goldstein on several occasions as they investigated the 90/10 Tax Fraud Scheme.

“During these meetings, Rabbi Goldstein offered to launder money for the undercover agent and did, in fact, exchange money for the undercover agent consistent with the 90/10 charitable donation scheme,” Meisel explained.

Corporate Matching Donation Fraud: Since Before 2010 to 2018
Brewer said the second part of Goldstein’s tax fraud involved what investigators dubbed “Corporate Matching Donation Fraud.”

In this part of the scheme, a donor would, hypothetically, write a check for $25,000 to the Friendship Circle – one of Goldstein’s Chabad-affiliated nonprofits – and then get a corporation to make a matching $25,000 donation to the same entity.

Goldstein would then funnel the entire $25,000 back to the donor and the donor would make that tax deduction on his tax forms. Brewer said the $25,000 matched donation from the corporation would then go to Goldstein.

Brewer said six co-conspirator employees participated in the Corporate Matching Donation Fraud from 2010 to 2018. At least three Fortune 500 companies were defrauded in this manner – and Brewer said those companies “had no idea.”

The Fortune 500 companies made at least $134,000 in matching donations over the years, which “all went to Goldstein,” Brewer added.

Grant and Insurance Fraud: Since at Least 2010
Brewer said the “Grant and Insurance Fraud” part of Goldstein’s scheme mainly involved co-conspirator Alexander Avergoon.

Avergoon ran a phony construction company and the duo created fake invoices from that company, allegedly for repairs to the Chabad of Poway supposedly caused by Southern California’s October 2007 wildfires.

The damage to the synagogue, according to Brewer, never happened.

Goldstein took those invoices and submitted them to the Federal Emergency Management Agency (FEMA) and Cal OES. In 2010 and 2011, based on those fake invoices for work that was never done to repair the “damaged” synagogue, FEMA and Cal OES wrote checks totaling $185,537 directly to Goldstein.

Brewer said the rabbi kept that money.

In 2012, 2017 and 2018, Cal EMA, Cal OES and FEMA gave “tens of thousands of dollars in grants” to pay for security systems and other upgrades for nonprofit organizations tied to the Chabad.

In all, Brewer said Avergoon gave Goldstein $75,000 and the rabbi wrote five backdated checks to Avergoon. Goldstein submitted those invoices to Cal OES, and, in March 2012, Cal OES paid the Chabad of Poway $75,000 based on those false invoices and backdated checks.

Brewer said this part of the scheme also involved Goldstein figuring out a way to get a grant from the Clarence Brooks Foundation of Beverly Hills in the amount of $600,000. Avergoon helped Goldstein convert that grant into cash, of which Avergoon kept $400,000 and Goldstein kept $200,000.

Meisel said Avergoon fled the country and went to Latvia but was ultimately found by investigators. He was arrested in October 2019.

Brewer also detailed Tuesday a 2018 deal between Goldstein and an unnamed co-conspirator who’s still under investigation that involved phony invoices and checks made to a construction company in order to obtain a grant for $76,750 from FEMA.

Brewer said that money was used by Goldstein to upgrade his personal home.

In this part of the scheme, Brewer said the funds obtained by Goldstein totaled $937,000 in grants and Goldstein misappropriated $875,000.

What’s Next for Goldstein?

In addition to the $1 million already forfeited by the rabbi, Brewer said Goldstein will pay $2.5 million in restitution.

Goldstein is set to be sentenced on Oct. 29, 2020, and while the rabbi faces a maximum of five years in prison, Brewer’s office will recommend probation based on Goldstein’s cooperation and his “lifetime of service” to the community via the Chabad of Poway.

“His role after the 2019 terrorist attack was exemplary,” Brewer said. “He became a significant advocate for peace and the elimination of violence based on religious hatred. He spoke all over the world and sent a strong message of peace.”

Ryan L. Korner, IRS Los Angeles Field Office Special Agent in Charge, said Tuesday that Goldstein had “abused his position of trust and leadership at a religious organization that has served the community of Poway for years.”

Poway Mayor Steve Vaus told NBC 7 he was deeply saddened by the scandal.

Read full article here…

Additional source:

https://www.delmartimes.net/news/story/2020-07-23/details-of-crimes-by-five-of-poway-rabbis-conspirators

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