January 10, 2008
The Spinka money trail—and the informant who brought them down
And why not? The kosher shops of this self-contained ultra-Orthodox neighborhood -- practically a city onto itself -- are still a few blocks down, and here on this bleak corner, there are only three orange school buses parked in front of a four-story, dark-red brick building, which sits on a residential street, where tall, narrow houses nearly overlap. The structure (photo below) is rather nondescript and unimposing -- garbage bags are piled haphazardly by a front gate, bars protect the windows, young boys can be heard chanting from behind the locked door and a white sign with sky blue Hebrew lettering reads: "Yeshiva Imrei Yosef Spinka."
A buzzer sounds. The door opens. No one asks who rang the bell. Up the four steps, a reception window sits empty. Hazy yellow fluorescent lights illuminate the narrow hallways adorned with graying yellow paint and frayed industrial carpeting. If there are millions -- or even thousands -- of dollars going to the Spinka yeshiva, it certainly doesn't seem like it's coming here.
This despite the fact that on Dec. 19, 2007, the U.S. Attorney General's Office filed an indictment in the U.S. District Court for the Central District of California naming the Chasidic yeshiva and four other Spinka organizations, as well as eight people, in a multimillion dollar tax fraud and money-laundering ring that stretched from Brooklyn to Los Angeles to Israel and elsewhere.
Two of those indicted are Rabbi Naftali Tzi Weisz, 59, the Grand Rabbi of Spinka, a Brooklyn-based Chasidic sect, whose yeshiva is in this undistinguished building, and his gabbai (assistant), Moshe Zigelman, 60.
Weisz is just one of a number of Grand Rebbes of Spinka, a Chasidic sect that originated in Romania in the 19th century. He is the great-great-grandson of the founding rabbi, and one of about a dozen Grand Spinka Rebbes who live in Boro Park or Williamsburg, in Brooklyn, or Bnei Brak and Jerusalem in Israel.
Four Los Angeles men were among those charged with taking part in the scheme: Yaacov (Yankel) Zeivald, 43, a self-described scribe (sofer) from Valley Village (photo, right); Yosef Nachum Naiman, 55, the owner of Shatz Et Naiman, d.b.a. Jerusalem Tours; Alan Jay Friedman, 43, a businessman from Pico-Robertson who sits on the board of the Orthodox Union; and Moshe Lazar, 60, owner of Lazar Diamonds, a Los Angeles jewelry company.
Although many of the details of the case have not yet been revealed -- a trial date is set for Feb. 12, but the defendants' lawyers say it will be postponed at least a year -- what is emerging from the indictment, the search warrant and other documents of public record is a complex money-laundering scheme. According to the documents, people donated money to the Spinka institutions but then received 80 percent to 95 percent of their donations back, yet wrote off the full amount on their taxes.
These charges are just the beginning of a much larger case, Daniel J. O'Brien, an assistant U.S. attorney in the major frauds section, based in Los Angeles, said in an interview with The Journal.
"There were many other people that contributed in this fashion that would be the subject of government investigations," O'Brien said.
While O'Brien said he has documentation that the Spinka institutions took in about $750,000 through the scheme -- then writing receipts for $8.7 million -- in 2007 alone, the assistant U.S. attorney believes the fraud has been going on for decades: "I believe this goes on beyond living memory," possibly for generations.
This is certainly not the first time an ultra-Orthodox sect has been accused of attempting to break the laws of the secular government -- aramos, or schemes, were perpetrated over the centuries in the shtetls of Europe. In the last decade, arrests have occurred in religious communities in Brooklyn, Lakewood, N.J., and upstate New York.
However, this particular case has shocked Los Angeles' ultra-Orthodox community, not only because Los Angeles had largely been exempt from such cases in the past, but also because some of the city's prominent members have been charged as being at the center of the scheme.
As a result, the case has sparked a fierce debate about the type of behavior that is acceptable for observant people and what type of religious community Los Angeles would like to be. But there's also debate about the laws of a moser, an informant, because one person who was not charged was the primary source of information for the federal case -- though he allegedly started out as one of the perpetrators.
On June 29, 2004, the U.S. Securities and Exchange Commission filed civil fraud charges against Robert A. Kasirer and four executives of Heritage Healthcare of America, which sold $131 million in bonds to 1,800 investors in 36 states from 1996-1999, claiming that the money would be used to fund 10 health care facilities. In October of that year, Kasirer approached the federal government and "expressed a desire to plead guilty to criminal charges arising out of the investigation and agreed to reveal other criminal conduct he and others had committed, with a view that any sentence he might receive would be reduced," according to an affidavit for a search warrant submitted by FBI Special Agent Ryan Heaton on Dec. 18, 2007.
Although the search warrant affidavit identifies Kasirer only as "confidential witness (CW-1)" and the recent grand jury indictment refers to a witness named only as RK, the companies in the affidavit attributed to CW-1 and RK are run by Kasirer, and several members of the Los Angeles community, who asked for confidentiality, have confirmed his involvement.
In 2004, under federal surveillance, the informant identified in the transcript as CW-1 resumed activities he admitted to having conducted with the Spinka since 1990, in which "he caused several million dollars in contributions to be mailed to the tax-exempt organizations operating within the umbrella of Spinka," he is quoted in federal documents as having told the FBI.