Rabbi Naftali Tzvi Weisz, the Brooklyn-based grand rabbi of the Spinka sect, along with four local associates, pleaded guilty to criminal conspiracy charges in downtown federal district court Monday.
As part of the plea agreement, Weisz, 61, admitted he worked with others in a decade-long $8.5 million tax fraud and money-laundering scheme, which was set up to fund four charities and a school for Spinka, an ultra-Orthodox sect that originated in 19th century Romania and has adherents in Israel, Europe and Brooklyn.
The Spinka pleas come nearly two weeks after U.S. prosecutors charged five Syrian rabbis from New York and New Jersey in a public corruption and international money-laundering investigation that included three mayors and two state assemblymen. But local prosecutors say the July 23 arrests had no direct influence on Monday’s guilty pleas.
“They had executed the plea agreement prior to the arrests in New Jersey,” U.S. assistant attorney Dan O’Brien said.
According to the federal prosecutors, the Spinka scam began in 1996 and continued until 2007, laundering money back to donors — up to 95 percent, based on court documents — 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.
In his plea agreement, Weisz admitted learning from his assistant, Gabbai Moshe E. Zigelman, that Spinka charities received nearly $8.5 million in 2006 and had “profits” of $744,596 after deducting amounts paid back to various contributors.
Los Angeles 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.
The four local Spinka associates who also pleaded guilty Monday for their roles in the money-transfer network included Alan Jay Friedman, 45; Moshe Arie Lazar, 62; Yosef Nachum Naiman, 57; and Yaacov Zeivald, 44.
In March, Weisz’s assistant, Zigelman, 62, was sentenced to two years in federal prison after he pleaded guilty in June 2008. Joseph Roth, an Israeli banker who also pleaded guilty in June 2008 for his role, was sentenced to 14 months and released on time served.
Weisz is scheduled for a Nov. 16 sentencing and is expected to face a maximum sentence of three years in federal prison. Friedman, Lazar and Zeivald will be sentenced Nov. 23, while Naiman will appear on Nov. 30.
Defense attorneys were not immediately available for comment.
Federal prosecutors are still investigating more than 100 contributors to Spinka charities, and O’Brien said he expects two plea agreements from contributors in the coming weeks.
Attorneys for five Spinka charitable organizations are scheduled to appear before U.S. District Judge John F. Walter regarding a plea agreement for Spinka’s charities on Wednesday. Yeshiva Imrei Yosef Spinka is expected to enter a guilty plea to similar conspiracy charges, and will likely face a fine. As part of the plea agreement, which was filed Tuesday, O’Brien said other Spinka charities would not be charged but would face strict compliance rules, including maintaining detailed accounting records and adopting corporate ethics rules.
Sentencing for the yeshiva is also expected to take place in November.