Rabbi Yisroel Goldstein pleads guilty to tax fraud

 

Other items in today’s column include
*Efforts exposed to mislead local school boards on ethnic studies
*Jewish communal workers
*Political bytes
*Recommended reading
*In memoriam

By Donald H. Harrison

SAN DIEGO — Rabbi Yisroel Goldstein, former spiritual leader of Chabad of Poway, who was welcomed at the White House after he was wounded in an April 27, 2019 attack on his synagogue by a gunman, had meanwhile been under investigation by the Internal Revenue Service and the Federal Bureau of Investigation on charges of tax fraud, to which he pleaded guilty on Tuesday in federal court.  U.S. Attorney Robert Brewer said he planned to recommend probation for Goldstein because he has helped his office obtain the convictions of five other co-defendants and is cooperating in numerous cases that are still pending.

Goldstein has already forfeited $1 million and has agreed to pay $2.509,705 in restitution, including $1.5 million to the IRS, $600,000 to the Clarence Brooks Foundation, $275,000 to the California Office of Emergency Services, and a total of $134,705 to three unnamed companies designated as Companies “A,” “B,” and “C,” Brewer said.

The charges against Goldstein involved four groups of crimes, according to Brewer.  The first was what he described as a 90-10 scheme in which people would pretend to make charitable donations to Chabad of Poway for which Goldstein would issue a receipt.  Those receipts enabled the “donors” to deduct the charitable donations on their tax returns.  Goldstein would funnel back 90 percent of the phony donations to the donors, retaining 10 percent of the donations for himself.   According to Brewer, at least 20 persons fraudulently donated $6.2 million in these kinds of fraudulent contributions to Chabad of Poway with Goldstein pocketing $620,000.  The scheme resulted in the IRS  — and the United States government– suffering a tax loss of $1.5 million. Brewer said.

The second group of frauds involved tricking Fortune 500 companies into “matching” contributions made to Chabad by their employees.  In this scheme, according to Brewer, the employees sent the money to Goldstein, who secretly returned it to them, while allowing them to claim tax deductions on their income tax forms.  Meanwhile Goldstein pocketed $134,000 in matching contributions from the unidentified Fortune 500 companies. according to Brewer.

The third tax fraud was perpetrated against the Clarence Brooks Foundation of Beverly Hills in 2013.  A co-conspirator, still under investigation, advised Goldstein “how to fraudulently obtain a grant from the foundation” by creating “non-existent expenses, payroll and phony profit and loss statements,” Brewer said.  All were submitted to the foundation to justify a grant of $600,000.  A co-defendant, Alex Avergoon, who pleaded guilty on Tuesday to a variety of charges, helped Goldstein convert the $600,000 to cash, with $400,000 going to the unnamed co-conspirator and $200,000 to Goldstein.

The fourth group of frauds involved filing false claims  for emergency assistance from the Federal Emergency Management Agency (FEMA) and the California Governor’s Office of Emergency Services (Cal OES) and private foundations for wildfire repairs and security upgrades that never occurred.  Checks for work that was never done were written to dummy corporations to create a paper trail to falsely qualify for the grants, Brewer said.

The national Chabad organization said it had been informed late last year about Goldstein’s unlawful activity and immediately “relieved Rabbi Goldstein of all of his congregational roles and Chabad-Lubavitch Headquarters dismissed him from his position as a representative of the movement.”  However, this was not announced, and the public was led to believe that Goldstein had retired from his position as a result of post traumatic stress that he suffered following the April 2019 attack on his synagogue. In a statement, Chabad of Poway explained, “We were unable to disclose this at the time so as not to interfere with the U.S. Attorney’s investigation.” Goldstein’s son, Rabbi Mendel Goldstein, succeeded him as leader of the congregation.

The statement from Chabad Lubavitch’s world headquarters went on to say: “Our hearts go out to Rabbi Goldstein’s former congregants, to his family and to the broader Poway community, all of whom have already experienced more devastation than anyone should ever know. We pray that their faith and resilience strengthens them in this difficult time as well.”

The Chabad of Poway congregation issued a statement saying:  “This is a very painful time for our congregation. Following the attack on our synagogue last year, when we were frozen with shock and fear, Rabbi Yisroel Goldstein brought us together and inspired our community.  That was the Rabbi Goldstein the world came to know.  Yet, we’ve learned that Rabbi Goldstein violated the law, contradicted what our synagogue stands for, and transgressed the very moral and ethical rules of the Torah he taught.”

The unsigned statement from Chabad of Poway added: “Despite these challenges, we are resolved to move forward together and to distinguish between Rabbi Goldstein’s misdeeds and the timeless ethical and moral Torah teachings he helped connect us to.  We will continue to serve G-d with joy, to heal and grow stronger, to share acts of goodness and kindness, and to ensure that Chabad of Poway renews its role as a beacon of light and source of inspiration for the greater Poway community and beyond.”

Poway Mayor Steve Vaus, who joined Rabbi Goldstein in meeting President Trump at San Diego International Airport during a recent visit by the President to San Diego (see photo above), commented that he was “shocked, devastated, and heartsick” for the Chabad of Poway congregation.  “Beyond that,” he said, “I haven’t processed the news yet.”

There were five co-defendants who also pleaded guilty on Tuesday.  According to the U.S. Attorney’s office, they are:

— Alexander Avergoon, who recruited “donors” to the 90-10 fraud scheme, created the fictitious Imagination Construction Company to provide invoices for work that was never done, as well as other shell companies that provided “competitive bids” that Goldstein showed to government administrators in charge of grants.  Before learning of Avergoon’s relationship to Goldstein, the FBI had been investigating what it described as a rental property Ponzi scheme in which investors were defrauded of $12 million.  After being indicted in August 2019, Avergoon was apprehended in Latvia and extradited to the United States.  He is scheduled to be sentenced on Oct. 19 by U.S. District Judge Cynthia Bashant.

–Bruce Baker, who participated since the 1980s in the 90-10 scheme with Rabbi Goldstein.  According to the U.S. Attorney, Baker pretended to donate $2.6 million to Chabad of Poway, receiving back $2.4 million, with Goldstein retaining $200,000.  That scheme, according to Brewer, “cost the IRS around $644,000 in tax losses.”

“Rather than simply paying cash or returning Bakers money in direct payments, Goldstein would pay Baker’s creditors, make large purchases on his behalf, give money to Baker’s relatives, or pay off bills on behalf of his family.” the U.S. attorney added.

To disguise the repayments, Rabbi Goldstein delivered the money in clandestine ways by, for example, paying around $200,000 to Baker’s business partner to buy the partner’s share of their business assets; more than $422,000 in tuition and fees for Baker’s son to attend dental school and a post-doctoral residency in dentistry; at least $90,000 to a construction company for Baker’s benefit, another $200,000 to a building contractor working for Baker,  $129,000 to a home builder, and more than $300,000 to Baker’s account at a construction and building supply company.  Goldstein also paid $200,000 from the proceeds of the sale of his property to Baker’s son.  Baker has since agreed to make full restitution to the IRS including all unpaid taxes, penalties and interest.

–In the 90-10 scheme, Bijan Moossazadeh pretended to donate $290,000 to Chabad of Poway, fraudulently reducing his tax liability. According to Brewer, Goldstein “communicated in code when he had cash available , referring to his cash supplies as “challah” and his supplier as “the baker.”  In 2016, for example, Goldstein texted Moossazadeh to tell him he had cash: ‘I got a call from the Baker today he’s preparing for Friday how many Challah do you need?’ Moossazadeh answered, ’22’ — by which he meant, $22,000.  The next day, Goldstein followed up: ‘Good morning.  The baker came in earlier and has today 22 challa ready for pick up.  Let me know what time?  Moossazadeh met Rabbi Goldstein at the Chabad on March 16, 2016, where he delivered a $22,000 check made payable to the Chabad (with “contribution’ written in the memo line), and in exchange Goldstein gave him $20,000 in cash (keeping the remaining $2,000).  Goldstein also gave Moossazadeh a fraudulent donation receipt thanking him for his “generous tax deductible donation.”  Moossazadeh pleaded guilty on July 12 and is to be sentenced on Oct. 19 by Judge Bashant.  He has agreed to make full restitution to the IRS including all unpaid taxes, penalties (including a 75 percent fraud penalty), and interest.

— Yousef Shemirani pretended to donate $127,650 in the 90-10 scheme, with Goldstein retaining approximately $13,765.  The scheme resulted in a tax loss to the IRS of more than $39,000.  As with Moossazadeh, Goldstein used coded language to arrange the payoffs. Shemirani also will be sentenced Oct. 19 by Judge Bashant.

—Boris Shkoller pretended to donate $122,000 to Chabad of Poway in the 90-10 scheme, receiving $109,800 back from Goldstein.  Shkoller used Alexander Avergoon as a conduit to make the payments and receive kickbacks  Like the others, he will be sentenced by Judge Bashant on Oct. 19.  He has agreed to pay $53,772 in restitution to the IRS for his tax underpayment.

Goldstein became aware that he was under investigation on October 17, 2018, when FBI and IRS agents executed search warrants at his home, office, and safety deposit box.  At that time, he was informed that one of the donors, identified only as “Individual A” was, in fact, a federal agent working under cover.  Soon after that search was executed, Goldstein agreed to become a cooperating witness — cooperation that contributed to the charges brought against the five other defendants and possibly against others still to be charged.  Omer Mizell, the FBI’s acting special agent in charge in San Diego, stated that Goldstein’s cooperation had led to the discovery of approximately $18 million in tax fraud, wire fraud and money laundering.

Six months after he learned he was under investigation, Rabbi Goldstein had his finger shot off by an intruder whom law enforcement officials have identified as John T. Earnest. Lori Gilbert Kaye was killed in the attack, and two other congregants–Almog Peretz and his 8-year-old niece Noya Dahan — were slightly wounded.  Earnest, now incarcerated, is awaiting trial in both federal and state courts.

Brewer said the attack on Chabad of Poway “was a significant mitigating factor to the final plea agreement, but it is no excuse.  We cannot look the other way.”   He said Goldstein had been involved in illegal conduct for many years “and it cannot be ignored.”  However, Brewer noted, after the attack, Rabbi Goldstein “spoke all over the world and sent a strong message of peace.”

In fact, following the attack, Rabbi Goldstein became something of an international celebrity, not only meeting President Donald J. Trump at the White House but also addressing the United Nations General Assembly on the subject of anti-Semitism.  He was the subject of numerous glowing articles and television broadcasts, never letting on that he was the subject of an ongoing tax fraud investigation.

At a news conference, Emily Allen, the lead prosecutor of the case, said that Rabbi Goldstein, following the shooting attack on his congregation, “helped to inspire our city and it reached the entire world.  His work to bring people together in the aftermath of the shooting is a part of who he is and a fair and just sentence in this case also has to account for the good work he’s done.”  She said Goldstein “had another side in which he undeniably devoted much of his life to serving others.”

The recommendation of probation, rather than a possible prison sentence of up to five years, is dependent on Goldstein continuing to help the FBI in its investigation of others involved in the 90-10 scheme and similar frauds.

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Efforts exposed to mislead local school boards on ethnic studies

A coalition of 88 Jewish and pro-Israel organizations warned on Tuesday that at least 13 California school boards have been “hoodwinked’ into adopting a rejected ethnic studies curriculum by a group that seeks to inject their “fringe political beliefs” into what is taught in the state’s high school classrooms.

So far, no school board in San Diego County has endorsed the curriculum which was rejected by the Legislature and by the California Department of Education.  However, according to Tammi Rosssman-Benjamin of the AMCHA Initiative, the following school boards were so preoccupied with the Covid-19 crisis that they accepted the word of the so-called “Save CA Ethnic Studies” group and adopted the old curriculum that is now in the process of being rewritten.  The school boards in question are those of Albany, Alhambra, Castro Valley, El Monte, Hayward, Jefferson Elementary (Daly City), Jefferson Union (Daly City), Oakland, San Francisco Unified, San Mateo-Foster City, Santa Rosa, South San Francisco, and West Contra Costa.

The rejected curriculum was sharply criticized by members of the California State Legislature’s Jewish Caucus who wrote that the draft “erases the American Jewish experience, fails to discuss anti-Semitism, reinforces negative stereotypes about Jews, singles out Israel for criticism and wold institutionalize the teaching of anti-Semitic stereotypes in our public schools.”

“We also recognize the serious concerns raised by the Jewish legislators and community leaders,” stated AMCHA Initiative’s director, Tammi Rossman-Benjamin, who coordinated the letter from the 88 organizations. “However, it is important to point out that this is so much larger than just a Jewish issue, and merely addressing that piece of this controversial curriculum does not fix the larger problem of how injecting politics into an educational curriculum will hurt all students. The curriculum drafters saw an opportunity here to advance their own fringe political beliefs and they exploited it, at the expense of our kids. We urge the Board of Education to ensure that the new curriculum is in fact educational and devoid of politics. Curriculums should educate, not indoctrinate students into the particular political ideology held by its drafters.”

The organizations in their letter urged the Department of Education to “issue an official statement pointing out the misguided and premature nature of these resolutions and urging district school board members to wait until the state’s revision process is completed before affirming support for the high school ethnic studies model curriculum or considering whether and how to implement it in their district.”

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Jewish communal workers

Sharleen Wolloch has been promoted by the Jewish Community Foundation from supervisor of the communications and marketing department to chief impact officer, Beth Sirull, president and CEO has announced.  In her new role, “Wollach will be working with the executive team including Sirull and Jeremy Pearl, CFO and Executive Vice President, guiding the Foundation into the next decade, integrating and expanding innovative practices, systems change and impact investing options, providing a deeper experience for donors,” according to an announcement.

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Political bytes

Joe Leventhal, a candidate for San Diego City Council in the 5th District, has been endorsed by the San Diego chapter of the Associated General Contractors of America.  The organization’s president predicted that Leventhal, if elected, will “support priorities that reinvigorate the local economy and improve our quality of life.”

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Recommended reading

Jack Forman of San Diego forwarded the column by Bari Weiss on why she has resigned from The New York Times.

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In Memoriam

Lois Joy (Borenstein) Singer, 80, died July 12 in Oceanside, California, Am Israel Mortuary announced. Funeral services will be conducted by Rabbi Benj Fried of Temple Emanu-El at 1:30 p.m. Wednesday, July 15, at Miramar National Cemetery., 5795 Nobel Drive, San Diego.   In a family-released obituary, it was reported that Singer “was preceded in death by her parents, David and Tillie Borenstein and her brother Lloyd. Lois was born on November 8, 1939, in Madison, Wisconsin. She grew up on the east side close to her father’s store, Borenstein’s Clothing and Shoes, on Schenk’s Corner. She had wonderful memories of that time, and especially her many years of dance lessons at Kehl’s. To her mother’s dismay, she would tap dance for customers on the street outside of the store while her mother would try to give back the coins people would throw at her feet. Eventually, her family moved to Nakoma, where she graduated from West High. After attending the University of Wisconsin-Madison, Lois sailed to Europe on the Queen Elizabeth with her mother and Aunt, where she married the love of her life, Allan Singer. A year later, after being discharged from the Army, Lois and Allan returned to Madison, and spent the next 20 years creating a wonderful life and raising their two daughters. She was a fantastic cook and enjoyed preparing meals for her family and friends. She thoroughly enjoyed spending time with her many aunts, uncles, and cousins. Lois was an active member of the sisterhood at Temple Beth El. She also enjoyed her weekly Mah Jongg games with “The girls.” Her pride and joy was operating her bath boutique “Pamper Your Bath,” until the family moved to California in 1979. She enjoyed several positions as a Sales Rep., selling gourmet giftware while traveling all over Northern California. She was thrilled to be living just outside of San Francisco, enjoying the culture and fantastic dining experiences. Lois was also a wonderful artist-she loved color. She was known for her vibrant wardrobe, and her favorite saying was “life is too short to wear beige.” She spent years drawing, painting, and making dichroic glass jewelry, which she sold at the Oceanside Museum of Art when she and Allan moved to a retirement community in Southern California in 2005. Lois battled MS for 40 years, but never let it get her down or stop her from doing what she wanted. Her positive and “can do” attitude was admired by her many friends and family. She is survived by her husband of 61 years, Allan Singer, and her two daughters, Leesa and Barri. She will be greatly missed and admired for the love she gave her family, her sense of humor, spark for adventure and a genuine ability to tell a story and make you laugh. … The Singer family would especially like to thank the staff at Brookdale Oceanside, and Season’s Hospice, for the wonderful support and care during this difficult time. In lieu of flowers, donations may be made to the MS Society or the Alzheimer’s Foundation.”

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Donald H. Harrison is editor of San Diego Jewish World.  He may be contacted via donald.harrison@sdjewishworld.com Free obituaries in memory of members of the San Diego County Jewish community are sponsored on San Diego Jewish World by Inland Industries Group LP in memory of long-time San Diego Jewish community leader Marie (Mrs. Gabriel) Berg.