Rabbi got lighter sentence in massive fraud scheme due to CA synagogue attack, feds say
A California rabbi has been sentenced to prison after a years-long, multi-million-dollar donation fraud scheme, federal prosecutors said. While criminal proceedings were underway, the rabbi became the victim of an antisemitic attack on his synagogue.
Rabbi Yisroel Goldstein, 60, is the former director of Chabad of Poway, a California synagogue. He was accused of defrauding the Internal Revenue Service, several San Diego Fortune 500 companies and multiple other agencies, according to a Jan. 4 news release.
Goldstein pleaded guilty to conspiracy to defraud the United States and commit wire fraud, as well criminal forfeiture. He is accused of veiling over $2.8 million in fraud schemes, the release said.
Goldstein’s lawyer did not immediately respond to a request for comment from McClatchy News.
The rabbi belonged to the Chabad, an Orthodox Jewish Hasidic movement that provides nonprofit humanitarian aid to those in need around the world, court documents said.
But according to prosecutors, Goldstein allowed people to fraudulently donate to his causes so they could be eligible for tax deductions.
Goldstein would reimburse the “donors” 90% of the money they gave and create fake receipts on Chabad letterhead, prosecutors said. Goldstein would then keep the other 10% of the money, which totaled over a half a million dollars, court documents show.
These fraudulent donations totaled at least $6.2 million dollars, according to court documents.
The supposed donors would then tell the IRS that these alleged payments to Chabad were tax-deductible charitable contributions, court documents said.
These tax losses to the IRS totaled over $1.5 million during the eight-year scheme, the release said.
“Yisroel Goldstein exploited his position and stature as a faith leader to commit well-planned and carefully executed crimes of greed,” said U.S. Attorney Randy Grossman in the release.
Additionally, Goldstein reportedly defrauded multiple Fortune 500 companies by tricking them into matching the supposed donations of their employees. He worked with the employees, prosecutors said, to defraud both the IRS and their employers. Goldstein was able to keep the “matched” donations of the employers for himself, the release said.
At least two of these employees were the same “donors” Goldstein allowed to fraudulently report their taxes, prosecutors said.
Goldstein allowed his brother to conceal money in Chabad bank accounts — about $700,000 — and hide it from the IRS, while also taking a cut of the money himself, the release said.
He also fabricated information and records to be eligible for emergency grants and loans like Federal Emergency Management Agency funds, the release said. These funds totaled at least $860,000 in losses, prosecutors say.
Goldstein has been sentenced to 14 months in prison and ordered to pay $2,834,608.
He, along with his synagogue members, were the victims of a hate crime shooting in April 2019. Goldstein suffered gunshot wounds to the hands, and one woman was killed during the attack.
He lost a finger during the shooting, The Mercury News reported. The defense argued for home confinement instead due to the synagogue attack and his cooperation during the proceedings.
Prosecutors said this attack, which happened during the criminal proceedings, was taken into consideration when he received a 14-month sentence for a crime that has a maximum penalty of five years in prison.
“As his serious criminal conduct was under investigation, the rabbi became a victim in a devastating attack on the synagogue he led,” Grossman said in the release. “Today’s sentence accounts for these extraordinary circumstances and our office’s mission to always seek justice.”
Goldstein expressed “tremendous regret” for his actions in a sentencing memo.
“I have fallen prey and worshiped the Golden Calf of money. I have let myself down and everything I have been taught, and everything that I have preached for 40 years, and allowed myself to be seduced to a very dark place, allowing the power of money to get the better part of my soul,” he said in the sentencing memo.
He also reflected on the attack on his synagogue and said he thought he was spared in the attack for a purpose.
“It was at that moment that my life flashed before me and I grasped the frailty and preciousness of life. I realized at that moment that if my life was spared, it must be for a reason,” he said while describing the shooting.
The judge on Goldstein’s case said despite the 2019 attack, he needed to spend time in prison to “send a message.”
“You dragged down so many congregants. Many of those individuals thought that they were committing these offenses to benefit the Chabad or the synagogue in general, when in fact it was to benefit you,” U.S. District Judge Cynthia A. Bashant said in the release. “ I just can’t ignore that. … I think time in custody is important. It’s important to send a message to the community, and it’s important to send a message to you.”
This story was originally published January 6, 2022 at 12:44 PM with the headline "Rabbi got lighter sentence in massive fraud scheme due to CA synagogue attack, feds say."
