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March 30, 2009

Spinka Rabbi Sentenced to 24 Months

http://www.jewishjournal.com/community/article/spinka_rabbi_sentenced_to_24_months_20090330

Moshe Zigelman (third from left holding book in front of his face) with supporters as they cross the street to the federal courthouse in downtown Los Angeles on
Dec. 31, 2007. Photo by Dan Kacvinski

Moshe Zigelman (third from left holding book in front of his face) with supporters as they cross the street to the federal courthouse in downtown Los Angeles on
Dec. 31, 2007. Photo by Dan Kacvinski

[UPDATE] Rabbi Naftali Tzi Weisz sentenced to two years on Dec. 21, 2009

Rabbi Moshe Zigelman, one of two co-conspirators who pleaded guilty last June in a tax fraud and money-laundering scheme, was sentenced in federal district court Monday to 24 months in prison.

The decade-long scam was set up to fund four charities and a school for the Spinka sect, an ultra-Orthodox group that originated in 19th century Romania and has adherents in Israel, Europe and Brooklyn.

The sentencing comes in advance of plans by federal prosecutors to broaden their investigation to include more than 100 contributors to Spinka organizations and a June 19 trial for Spinka’s head rabbi and four alleged local co-conspirators.

In addition to Zigelman, an Israeli banker and two local “donors” have already pleaded guilty to their involvement.

Speaking through an interpreter prior to sentencing on Monday, Zigelman, 61, reiterated his admission of guilt and his hope for leniency by drawing a parallel to Kol Nidre and teshuvah (atonement). “I understand I have sinned against the American government. Therefore, I accept and acknowledge my behavior. I have to make amends for what I did,” he said.

More than 50 ultra-Orthodox Jews filled the downtown federal courtroom, crowding seats in the center pews to support, pray and cry for Zigelman. Among those who flew in from Brooklyn for the sentencing were the rabbi’s wife and 10 of his 12 children.

Zigelman is scheduled to begin serving the two-year sentence on May 4.

L.A. businessman Robert Kasirer, who had helped raise money for Spinka, first tipped off investigators about the scam in October 2004, when he turned state’s evidence in exchange for a reduced sentence on civil fraud charges stemming from his health care business. Debate raged in the ultra-Orthodox community as to whether Kasirer should be deemed a moser — an informer, who, according to traditional Jewish law, must be killed for turning against a Jew and is denied access to “the world to come.”

U.S. District Judge John. F. Walter cited the moser issue as an important factor in the sentencing.

“Since no one ratted [Zigelman] out, the deterrence factor was more important,” he said, adding that this type of scheme has likely been going on for generations.

Zigelman is the gabbai (assistant) to the Brooklyn-based Chasidic sect’s Grand Rabbi Naftali Tzi Weisz. Weisz and Zigelman were arrested Dec. 19, 2007, in Los Angeles on charges that they solicited millions of dollars in contributions for five Spinka charities with the understanding that the organizations would issue a receipt for the full amount and then secretly refund between 80 percent to 95 percent of the original contribution back to the donor.

According to the federal indictment, the scam started in 1996 and continued until 2007, laundering money back to donors through a network of Los Angeles businesses, including some in and around the city’s downtown jewelry district, as well as through donors and the Tel Aviv-based United Mizrahi Bank and its Los Angeles branch.

Zigelman, whom many described in letters to the court as an experienced fundraiser, focused on charitable giving, helped solicit more than $8.5 million in 2006 alone, of which $750,000 was kept by Spinka charities.

Only two men directly involved in the scam have pleaded guilty. In addition to Grand Rabbi Weisz, four Los Angeles men were indicted in 2007 — Yaacov (Yankel) Zeivald, a self-described sofer (scribe) from Valley Village; Yosef Nachum Naiman, owner of Shatz Et Naiman, d.b.a. Jerusalem Tours; Alan Jay Friedman, a businessman from Pico-Robertson; and Moshe Lazar, owner of Lazar Diamonds — and will face trial with Weisz on June 19. Five Spinka charities, all based in Brooklyn, have been named as defendants, as well. Joseph Roth, an Israeli banker who last June pleaded guilty for his role in the alleged conspiracy, was sentenced to 14 months and released on time served.

Two local Hancock Park “donors,” David Hager and Uri Mandelbaum, also pleaded guilty in 2008 to tax-evasion charges stemming from the Spinka case.

Hager, 55, is the first person to be sentenced as a Spinka contributor. After pleading guilty in October, he was sentenced on March 3 to six months in prison and ordered to pay a $30,000 fine and perform 1,500 hours of community service once he is released. In a plea agreement filed in U.S. District Court in Los Angeles, Hager admitted to filing tax returns from 2001 to 2006 that fraudulently claimed contributions to Spinka organizations.

Mandelbaum, 70, pleaded guilty in July 2008 to two felony tax charges and agreed to pay back taxes totaling more than $1.5 million. In his plea agreement, Mandelbaum admitted that the Spinka organizations returned 95 percent of his donation to him, but that he claimed the full amount as a charitable contribution on his taxes for 2005 and 2006.

Both Hager and Mandelbaum also admitted in their plea agreements to receiving cash from Spinka groups to be given as kickbacks to others.

Lawyers for Zigelman portrayed him as a servile do-gooder with below-average IQ and emotional problems who was focused on raising money for charity, not for personal gain. “It’s motivated, as the probation office noted, as a pure motive. This idea of charity is ingrained,” defense attorney David Willingham said.

But federal prosecutor Dan O’Brien said Zigelman clearly intended to perpetrate a tax fraud, estimating the government sustained a $4.9 million tax loss. “To say it’s a pure motive is pushing it. His community benefited at the expense of other American communities,” he said. “It’s a Robin Hood argument, but America is a democracy, not the Sheriff of Nottingham.”

During Monday’s sentencing hearing, Judge Walter said that Zigelman, as the No. 2 man in the operation, was involved in a very serious, wide-ranging tax fraud scheme and was well aware of his role.

“It’s difficult to understand how such an individual could lose his moral compass,” Walter said.

After the sentencing, community reaction ranged from stunned silence to quiet resolution.

“I think the judge was fair. He [Zigelman] shared his remorse and it will serve as an example to the community in the future,” said a longtime Zigelman friend who asked not to be identified. 

For family and friends, the sentence was as painful as it was personal.

“I’m hurt. I wish that he would get away with probation,” said Rabbi Judah Lefkowitz, a friend. “I’m shattered into pieces.”

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