Four Defendants Indicted for Securities Fraud, Conducting International Pump-and-Dump Scheme, and Money Laundering
Assistant U. S. Attorneys Valerie H. Chu (619) 546-6750 and Michelle L. Wasserman (619) 546-8314
NEWS RELEASE SUMMARY – January 4, 2022
SAN DIEGO – Rabbi Yisroel Goldstein, former director at Chabad of Poway, was sentenced in federal court today to fourteen months in custody for his years-long, multi-million-dollar schemes to defraud the Internal Revenue Service, several San Diego Fortune 500 companies, and multiple public and private agencies. He was also ordered to pay restitution totaling $2,834,608.
According to his plea agreement, while Rabbi Goldstein was director of the Poway synagogue, he received at least $6.2 million in phony contributions to the Chabad and affiliated charities and secretly refunded up to 90 percent of the donations to the “donors.” After Rabbi Goldstein provided these donors with fake receipts, they illegally claimed huge tax deductions for these nonexistent donations, and the rabbi kept about 10 percent – more than half a million dollars over the course of the fraud - for himself. Tax losses to the IRS were more than $1.5 million.
Rabbi Goldstein also admitted that he defrauded three different Fortune 500 companies by tricking them into matching supposed charitable donations of their employees. Working with the employees, Rabbi Goldstein fabricated receipts and then secretly returned their fake “donations.” This allowed the employees to claim tax deductions for the completely fabricated donations, and allowed Rabbi Goldstein to collect the companies’ matching funds—including some that matched double their employees’ donations. Rabbi Goldstein helped to orchestrate this scheme with at least six taxpayer-employees and two other associates who helped recruit new donors or conceal the true recipient of the funds. In total, Rabbi Goldstein defrauded the companies out of at least $144,000, and helped the taxpayer-employees to claim nearly as much in fictitious tax-deductible charitable contributions to the IRS.
Rabbi Goldstein admitted that he also helped his brother Mendel Goldstein conceal approximately $700,000 in income by allowing him to use Chabad bank accounts to deposit his income, thereby hiding it from the IRS. As his cut, Rabbi Goldstein kept 10 percent of this individual’s income—more than $70,000.
Separate and apart from the tax evasion scheme, Rabbi Goldstein and another defendant, Alexander Avergoon, used false information and fabricated invoices and other records to pretend to be eligible for emergency funds, grants or donations, and private loans. These frauds on the Federal Emergency Management Agency (FEMA), the California Governor’s Office of Emergency Services (Cal OES), and private foundations resulted in losses to these programs of at least $860,000.
According to sentencing documents, the United States Attorney’s Office recommended departures from the sentencing guidelines for Goldstein because of his cooperation against other individuals, and because of the extraordinary events he suffered as a victim of the April 27, 2019 shooting at the Chabad of Poway.
In imposing sentence, U.S. District Judge Cynthia A. Bashant commented, “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. 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.”
“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. “As his serious criminal conduct was under investigation, the rabbi became a victim in a devastating attack on the synagogue he led. Today’s sentence accounts for these extraordinary circumstances and our office’s mission to always seek justice.” Grossman thanked the prosecution team, the FBI and the IRS for their excellent work on this case.
“The defendant used the Chabad of Poway’s tax-exempt status as a religious organization to compile millions of dollars in fraudulent ‘donations’,” said FBI Special Agent in Charge Suzanne Turner. “This scheme enabled Rabbi Goldstein to line his own pockets; reward his fake ‘donors’ with reimbursement for their contributions; and provided receipts enabling the ‘donations’ to be written off as charitable contributions, all in furtherance of the scheme. The FBI will continue to root out fraud disguised as charitable donations which ultimately hurts those organizations relying on the generosity of donors.”
“Rabbi Goldstein veiled over $2.8 million in fraud schemes he perpetrated with at least ten other co-conspirators by exploiting the non-profit statuses of the Chabad of Poway and the Friendship Circle of San Diego, organizations entrusted to him to serve the community,” said Special Agent in Charge Ryan L. Korner of IRS Criminal Investigation's Los Angeles Field Office. “IRS Special Agents were proud to work alongside the FBI and the U.S. Attorney's Office in this multimillion-dollar tax and grant fraud investigation that uncovered decades of illegal conduct. In addition to holding Rabbi Goldstein accountable for cheating U.S. taxpayers and businesses for personal gain, my fervent hope is that today's sentencing brings closure and healing to all who were affected by his crimes.”
Rabbi Goldstein was ordered to surrender into federal custody by noon on February 23, 2022.
DEFENDANT Case Number 20CR1916-BAS
Yisroel Goldstein Age: 60 Poway
SUMMARY OF CHARGES
Conspiracy to Defraud the United States and Commit Wire Fraud, in violation of Title 18, USC 371
Maximum Penalty: Five years in prison
Federal Bureau of Investigation
Internal Revenue Service – Criminal Investigation