January 10, 2008

The Spinka money trail—and the informant who brought them down

By Amy Klein

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As part of the scam, Weisz and Zigelman allegedly would return 80 to 95 percent of Kasirer's contributions.

On Oct. 31, 2007, the SEC issued a final judgment against Kasirer, ordering him to pay $4,991,434.

"Kasirer consented to the entry of the final judgment without admitting or denying the allegations contained in the commission's case," according to the SEC enforcement proceedings.

In the interim, according to the transcripts, Kasirer began to wear a device to record his interactions for the government. On Dec. 20, 2004, he told Zigelman, the Spinka rebbe's gabbai, that he never intended to pay the SEC.

According to the wiretapped transcripts, Kasirer told Zigelman: "The SEC investigation is done. But they want me to pay them a lot of money."

"How much?" Zigelman asked.

"Possibly one, one and a half," Kasirer said.

"Million?" Zigelman asked.

Kasirer confirmed the amount and said he had told the SEC he didn't have the money. In the transcript, Kasirer then went on to say that he'd lied to the SEC, and that, in fact he had the money but wanted to hide that fact.

"What is SEC?" Zigelman asked.

Kasirer explained, and Zigelman replied, "Yes, yes, but you don't have to give it to them."

For the next three years, Kasirer recorded conversations with targets of the government investigation, and, using government funds, conducted a dozen monetary transactions with Zigelman, according to transcripts of conversations conducted in English, Hebrew, Yiddish and Hungarian. The government also tapped the phones of Zigelman and Weisz.



CASH OR CHARGE?

For Kasirer, there were two ways the operation worked: At first he reportedly received his "donations" back in cash, and when he became uncomfortable with the large cash amounts floating around, he set up an Israeli account.

According to the transcripts, Kasirer's money was allegedly refunded to him by various men, all now defendants in the case: Naiman, Zeivald, Friedman and Lazar, all of whom have pleaded not guilty to the charges against them.

Among the transactions in the transcripts, for example, was one on Feb. 8, 2007. Kasirer FedEx-ed a check for $20,000 made out to Yeshiva Imrei Yosef to Zigelman. On Feb. 15, 2007, Lazar delivered $18,600 to Kasirer's house. On Feb. 22, 2007, Kasirer got a letter in the mail on a Yeshiva Imrei Yosef Spinka letterhead thanking Kasirer for his $20,000 donation to a tax-exempt organization, saying the "donation" was entirely tax deductible and Kasirer had received no "goods" or "services" in exchange for the contribution.

The Spinka Yeshiva charged Kasirer up to 7.5 percent for laundering the money, which was a cause for some dispute, according to the wiretaps.

On Dec. 16, 2005, Kasirer told Joseph Roth, an assistant manager at Bank Mizrahi -- which is based in Israel but has a branch in Los Angeles -- to set up a new account so he could move money internationally.

On Jan. 12, 2006, Tel Aviv lawyer Jacob Kantor -- the only one of those named in the indictment who is still at large -- is reported in the transcripts offering to Kasirer to create documents to incorporate a company called Bedford Holdings & Investments, which would be "held in confidence by the bank and can only be disclosed after a complicated procedure by the Bank of Israel, if there is evidence that the monies resulted from criminal activities, such as drugs -- tax matters are not an issue." Much like Switzerland, Israel has laws that protect investors, and the country does not investigate monetary origins, even on suspicion of tax fraud.

"So, we wanted to basically set everything up the same way as it was before," Kasirer told Roth in the affidavit transcripts. Later in the document, he tells Zigelman that Kantor set up a trust in Israel so that nothing would be left in Kasirer's name in order to hide his money from the SEC. Then he'd take a loan from the Los Angeles branch of an unnamed Israeli bank, "so I can use the money here." Later, he says in the affidavit, he would take the money back from Israel and repay the loan here.

Mizrahi Bank, which is never named in the affidavit, is under investigation by the federal government, according to Assistant U.S. Attorney O'Brien.

"We believe the bank offers this thing as a product to clients in the U.S. -- the bank pitches this as a money-laundering product. I believe there are multiple agents involved," O'Brien said, including Kantor.

The government also believes that there are many people like Kasirer, "who occupy the same role as he did in this conspiracy," O'Brien said.

But Kasirer was not the creator of this conspiracy, according to the government. His father -- the recently deceased Jacob (Yankel) Kasirer who founded the Bais Yaakov School for Girls on Beverly Boulevard in Los Angeles and is known as a "stalwart" of the Jewish community -- was involved with the scheme. According to the transcripts, when Kasirer was discussing his distress over his earlier money-laundering penalty with Lazar, the diamond dealer said, "It's not something you started."

Kasirer replied, "I was really not aware of what he did with my father."

In addition, in a taped conversation, the Spinka Rebbe told Kasirer he wanted to meet with his father.

"RK's father was engaged in this prior to RK being involved in it," O'Brien said in an interview. "We believe that this has origins much earlier than that -- beyond living memory."


CRIME IS NOT SO BAD

"There are a million ways that religious institutions defraud the government," said one Brooklyn accountant who asked that his name be withheld. However, it's not just the Jews, he claimed, "churches do the same thing." Churches and synagogues are exempt from filing tax returns -- although many do -- and the government usually does not audit unless it has probable cause. As a result, this can make fraud easier.

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