Saturday, May 26, 2012

Brooklyn Rabbi Pleads Guilty to Money Laundering Conspiracy

A rabbi based in Brooklyn, New York has pleaded guilty to conspiring to launder $200,000 to $400,000 in funds that he believed were the proceeds of unlawful activities, United States Attorney Paul J. Fishman announced.

Lavel Schwartz, 60, pleaded guilty Thursday, May 24 before U.S. District Judge Joel A. Pisano in Trenton federal court to a superseding information charging him with money laundering conspiracy. Judge Pisano continued Schwartz’s release on bail pending sentencing, which is scheduled for October 22, 2012.

According to documents filed in this case and statements made in court:

Schwartz admitted that beginning in May 2008, he and his brother, Rabbi Mordchai Fish, met with Solomon Dwek, an individual he now knows was a cooperating witness with the United States. For a fee of approximately 10 percent, Fish and Schwartz agreed to launder and conceal Dwek’s funds through a series of purported charities, also known as “gemachs,” which Fish controlled or to which he had access. Schwartz admitted that prior to laundering Dwek’s funds, Dwek informed him that the funds he sought to launder were the proceeds of Dwek’s purported illegal businesses, which included the trafficking in counterfeit goods.

In order to conceal and disguise the nature and source of Dwek’s funds, Rabbi Fish directed Dwek to make the checks payable to several gemachs, which were purportedly dedicated to providing charitable donations to needy individuals. These included Boyoner Gemilas Chesed, Beth Pinchas, CNE, and Levovous. Once he received the checks from Dwek, Fish provided them to one of his co-conspirators, who deposited them into bank accounts held in the names of the purported charities. Fish would then arrange to make cash available through an underground money transfer network, and other individuals, including David S. Golhirsh, Naftoly Weber, Avrohom Y. Polack, Binyamin Spira, Yoely Gertner, and others, would provide Fish and Dwek with the cash.

Rabbi Schwartz admitted that he would assist Rabbi Fish and Dwek with counting the cash that had been retrieved from a coconspirator and admitted to encouraging Dwek to engage in more transactions, believing that the proceeds stemmed from a counterfeit bag business and that Rabbi Fish was retaining a 10 percent fee.

Schwartz admitted that, despite knowing the illicit nature of the funds, he engaged in approximately 10 money laundering transactions with Dwek. As part of these transactions, Fish helped convert between $200,000 and $400,000 in checks into a similar amount of cash, minus the 10 percent fee that Rabbi Fish extracted from the transactions.

Today’s guilty plea stems from a two-track undercover FBI investigation into public corruption and international money laundering which resulted in charges against 44 individuals via criminal complaints on July 23, 2009. At that time, Schwartz was charged in three separate criminal complaints, all of which likewise charged his brother, Rabbi Mordchai Fish. Rabbi Fish pled guilty to conspiring to commit money laundering and is currently scheduled to be sentenced on June 18, 2012. Weber, Polack, and Spira each pleaded guilty in November 2010 to operating illegal money transmitting businesses, admitting that they transferred thousands of dollars in cash to Fish and Dwek. The charges against Gertner and Goldhirsh remain pending.

The charge to which Schwartz pleaded guilty is punishable by a maximum term of 10 years in prison and a $250,000 fine. Schwartz also agreed to forfeit approximately $90,000 by the date of sentencing which represents the 10 percent fee which Rabbi Fish charged Dwek for conducting the money laundering transactions. Rabbis Fish and Schwartz are jointly liable for this amount.

In determining an actual sentence, Judge Pisano will consult the advisory U.S. Sentencing Guidelines, which recommend sentencing ranges that take into account the severity and characteristics of the offenses, the defendant’s criminal history, if any, and other factors. The judge, however, has discretion and is not bound by those guidelines in determining a sentence. Parole has been abolished in the federal system. Defendants who are given custodial terms must serve nearly all of that time.

Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward, and Special Agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge JoAnn S. Zuniga, with the investigation leading to today’s plea.

The government is represented by Assistant U.S. Attorney Mark McCarren of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

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