Rabbi Yisroel Goldstein, former director at Chabad of Poway, was sentenced in San Diego federal court on Tuesday to fourteen months in prison for 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, the US Justice Dept. reported.
According to his plea agreement, Rabbi Goldstein received at least $6.2 million in phony contributions to Chabad and affiliated charities when he was director of the Poway synagogue, and secretly refunded up to 90% of the money to the “donors.” Armed with Rabbi Goldstein’s fake receipts, the “donors” illegally claimed huge tax deductions and the rabbi kept his 10% – more than half a million dollars over the course of a year. The government estimates that the resulting tax losses to the IRS were more than $1.5 million.
Rabbi Goldstein also admitted to defrauding three different Fortune 500 companies by getting them to match donations by their employees—who presented them with fake receipts from Rabbi Goldstein, who then secretly returned their “donations.” The employees claimed tax deductions for the fabricated donations, Rabbi Goldstein collected the matching funds. In some cases, the companies even doubled their matching funds. It is estimated that the rabbi stole at least $144,000 from these companies while helping their employees to claim fictitious tax-deductible contributions.
Rabbi Goldstein also admitted that he helped his brother Mendel deposit about $700,000 in income in Chabad bank accounts to hide it from the IRS, in return for the rabbi’s usual 10%, or $70,000.
Rabbi Goldstein and another defendant, Alexander Avergoon, used false information and fabricated invoices and other records to claim their eligibility for emergency funds, grants, donations, and private loans. They defrauded the Federal Emergency Management Agency (FEMA), the California Governor’s Office of Emergency Services (Cal OES), and private foundations to the tune of at least $860,000.
Nevertheless, the United States Attorney’s Office recommended going easy on Rabbi Goldstein because he offered incriminating information on other individuals, and because he was a victim of the April 27, 2019 shooting at the Chabad of Poway (Rabbi, Young Israeli Girl Among Wounded in Shooting at Chabad Shul in Poway, California). He lost his right index finger in the attack.
In imposing sentence, US District Judge Cynthia Bashant told the rabbi: “You dragged down so many congregants. Many of those individuals thought that they were committing these offenses to benefit 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.”
FBI Special Agent Suzanne Turner was also angry with Goldstein, and said: “The defendant used the Chabad of Poway’s tax-exempt status as a religious organization to compile millions of dollars in fraudulent ‘donations.’ 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.”