20 December 2007
The grand rabbi of an ultra-Orthodox Jewish group has been arrested in Los Angeles after US authorities unsealed an indictment on 37 counts alleging that he operated a decade-long tax fraud and money laundering scheme stretching from Israel through New York to Los Angeles' jewelry district, authorities said. Rabbi Naftali Tzi Weisz, head of the Spinka group, and his assistant, Gabbai Moseh E. Zigelman, are accused of soliciting "tens of millions of dollars" in contributions to Spinka charities while secretly promising to refund up to 95 per cent of contributors' donations, federal prosecutors said according to the ‘Los Angeles Times’. The contributors then illegally claimed tax deductions on their bogus donations.
Weisz and Zigelman calculated in January that Zigelman alone had solicited nearly $9 million in 2006, with a $700,000 profit for Spinka after donors were repaid, according to the indictment. Spinka Jews are members of the Hasidic group within Orthodox Judaism. The sect originated in Romania and has a large population in Israel, Europe and Brooklyn, where Weisz and Zigelman reside. The indictment charges Weisz, 59, and Zigelman, 60, with conspiracy to defraud the IRS and to launder money. They also face a number of counts of mail fraud, international money laundering and of operating an illegal money-remitting business. Additionally, Zigelman is accused of helping to prepare fraudulent income tax returns. The indictment alleges that beginning in 1996, the pair reimbursed contributors through several channels. One involved cash payments transferred through an underground network that included businesses in and around Los Angeles' jewelry district.
