Tuesday, December 22, 2009

Chasidim and the Spinka Rebbe

Are Chasidim more prone to fraud against the government than other religious Jews? Is it common in their circles? According to this document it is not only common but generational.

I just received and read a copy of the US attorney’s sentencing recommendations for the Spinka Rebbe. It seems pretty clear that the type of thing that the Spinka Rebbe was found guilty of is a fairly common and widespread practice among other Chasidic groups. From that document:

The Court has already made findings in related cases involving Spinka contributors that this scheme is far reaching and widespread. According to the informant, the tax fraud and underground banking network is a tradition engaged in by a number of Hasidic groups… Public news reports similarly indicate that this tax fraud scheme, money laundering, and hawala banking network is widely engaged in by Hasidic rabbinical organizations other than Spinka.

In fact this very point was mentioned as a mitigating factor (among others) arguing for a lighter sentence:

The government concurs with the PSR’s (the probation office) assessment that the offense predated Weisz’s involvement, having origins generations past, and that it appears to be replicated by a number of other Hasidic organizations throughout the world today. This is a mitigating factor in that Weisz cannot accurately be considered the “mastermind” of the scheme.

One might say that is is forbidden to believe such things from non Jewish sources and that the informant was a Moser not only against the Spinka Rebbe but against the entire Chasidic community. But I would argue that the Chilul HaShem of such criminal activity is so huge… so entrenched… and so taken for granted that only public exposure will have any chance of affecting a change in their behavior.

It is very apparent that they see nothing wrong with cheating the government in this way. That it is so widely done is a shameful black mark all of Jewry. This is an almost unprecedented Chilul HaShem in scope and size. I am embarrassed and ashamed that those who pride themselves on being the most religious among us are so deeply involved in governmental fraud.

As for the Spinka Rebbe himself - it is quite clear from that document that he knew what he was doing and that he was not all that forthcoming in his admission of guilt. He tried to shift the blame to others saying that he was not involved with the details of the money laundering. He even claimed mental deficiency!

The US attorney’s office recommended the 3 year prison term which is apparently the minimum standard sentence for this kind of crime. The probation office had their own recommendations: a reduced sentence of 2 years instead of three due to the mitigating circumstances.

I am not here to argue in favor of either sentence. I in fact feel sorry for the Rebbe. I’m absolutely certain that his entire purpose in doing this was to fund his Mosdos. There was no direct personal gain.

But I also understand the US attorney’s point. The widespread type of criminal activity by Chasidim needs a deterrent. And a stiff criminal sentence for a high profile Chasidic leader might just send the necessary message. Lest someone say that the Rebbe is being scapegoated… I would contend that he is not. He is guilty of a crime and the sentence is being fairly applied to him. And less severe than would be the case if he had for example used the proceeds for his own personal gain.

The fact is that he used the funds for his charitable causes - like his Yeshiva, Imrei Yosef. They will most certainly be fined all the amount of all the ill gotten proceeds and then some. The Rebbe will only receive a nominal $100 fine, if I understand correctly.

Although he acknowledged his crime and afterwards went to great lengths to preach compliance with the law post conviction, he still tried to claim ignorance - shifting the blame away from himself. But as this document clearly shows evidence not only of his involvement but that he masterminded the whole thing. He knew very well what was going. A sample of a conversation with his Gabbai and co-defendant Zigelman excerpted in this document amply demonstrates this.

Here are some more damning excerpts:

Weisz directed others to perform the actual transactions and tasks; however, he worked out the financial intricacies himself. His conversations with co-defendant Zigelman appear clear and lucid, he corrects Zigelman’s errors and engages in mathematical calculations with precision and accuracy.

This transcript (of a recorded conversation with Zigelman) as well as other transcripts filed with the Court in connection with the sentencing of Weisz’s co-defendants, reveals Weisz to be a very hands on director of the scheme, painstakingly going through every contribution and reimbursement, reconciling accounting entries for both contributors and money remitters, determining reimbursement rates, and determining when, how and where money should be remitted.

The government agrees that the Defendant has accepted responsibility for his actions and that his outreach efforts urging similarly situated religious institutions to initiate compliance programs are helpful and extraordinary. These statements are not without qualification, however… the tardiness of his plea also goes to his level of remorse and his acceptance of responsibility.

Defendant’s characterization of his wrongful acts pose similar concerns. In his plea agreement, Weisz states that his error lay in his participation in the quid pro quo arrangement of giving cash back for contributions, his knowledge that contributors could use the charitable contribution receipts to justify tax deductions, and his “failure to inquire” as to whether receipts reflected the actual amount contributed after refunds.

The government holds a much more stark view of this case and Weisz’s involvement in that the entire purpose of reimbursing contributions appears to have been a device to promote a tax fraud and operate as a money laundering vehicle. There is no legitimate explanation for reimbursing contributions with millions of dollars of cash, or assisting individuals in wiring money from Israel to the United States by routing it through a series of Spinka nominee accounts. Moreover, there is ample evidence that Weisz was keenly aware that contributors were using the receipts to justify unlawful tax deductions.

There is much more in this document but I do not need to belabor the point.

That there is widespread fraud against the government in Chasidic circles is all but an established fact. The Spinka Rebbe knew what he was doing. He was caught and eventually admitted guilt. But in his plea agreement he did not fully admit the extent of his culpability. And in public comments he never publicly said that he was all that wrong in what he did but mostly just regretted being responsible for this massive Chilul HaShem.

I do not wish this man any more harm. He meant well. For him - it was all about his Mosdos. He has certainly already paid a very high price for what he has done. His stature has been substantially diminished. His institutions may suffer irreparable harm and even close down. And he will most certainly be serving some jail time.

I don’t want to pile on. But it cannot emphasized enough that none of this outweighs the Chilul HaShem he has caused. His ‘apologies’ did not satisfy me. My hope is that the Chasidic groups involved in this kind of thing are paying close attention and change their ways. Because if they don’t this could end up being the biggest Chilul Hashem in American history.


It's a 2 year senetence: From today's Ha'aretz:

Rabbi Naftali Tzvi Weisz, the Brooklyn-based Grand Rebbe of the Spinka sect, was sentenced to two years in federal prison Monday for a decade-long fraud and money-laundering scheme.