Rabbi shot dead in attack on Poway synagogue, sentenced to prison for fraud
The founding rabbi of a Poway synagogue, who gained national notoriety after being injured in an anti-Semitic shooting, and was later exposed as the perpetrator of multi-million dollar fraud schemes, was convicted on Tuesday to 14 months in prison.
In a rare deal in even rarer circumstances, prosecutors and defense lawyers had recommended home confinement rather than time behind bars for Yisroel Goldstein. They cited his leadership in the weeks following the attack on Poway’s Chabad in 2019, the immense physical and emotional trauma the former rabbi continues to combat, and his cooperation in the FBI fraud investigation.
But the judge dismissed the sentence as inappropriate given the gravity of the crimes.
“You not only committed this offense yourself, but you took a lot of people with you,” US District Judge Cynthia Bashant told Goldstein, 60.
“I think it’s important to send a message to the community, and I think it’s important to send you a message,” she added.
Goldstein is also due to pay around $ 2.8 million in restitution, an amount shared with several other defendants who have been prosecuted as participants in the financial scams.
He is due to surrender by February 23, although he may appeal for a later date if COVID-19 continues to rise. The judge agreed to recommend that he be housed in a medium security federal prison in Otisville, NY, which his lawyer says is known to house observant Jews.
As a rabbi of the Chabad movement – which practices Orthodox Judaism but is also known for his welcoming character – Goldstein relied on the generosity of his congregation for his salary. He found other ways to supplement his income.
The FBI says Goldstein was involved in a number of fraudulent schemes exploiting tax loopholes, corporate benevolence and government grants.
Prosecutors said he personally earned at least $ 620,000 from the conspiracies.
The most common of these schemes is known as the “90/10” fraud. Donors have regularly made large charitable contributions to Chabad of Poway or one of its affiliated nonprofits, to be amortized on their taxes. But instead of the money going to organizations, Goldstein secretly returned 90% to the donor, keeping 10% to himself.
At least a dozen people hired Goldstein as part of the tax evasion scheme, resulting in at least $ 1.5 million in tax losses for the Internal Revenue Service, prosecutors said.
In a variation of the program, donors would solicit their businesses for matching charitable contributions. Goldstein would then return the entire original amount to the donor while retaining the company’s matching funds. Companies received fraudulent donation receipts and many took advantage of tax deductions.
At least three Fortune 500 companies – Qualcomm, Johnson & Johnson and Northrup Grumman – have been defrauded of nearly $ 145,000 in total.
In deciding the sentence, the judge said she was struck by the number of people Goldstein had dragged with him.
“A lot of people thought when they did their crime for the benefit of Chabad, the academy or the synagogue or the organization in general, when in fact it was just to profit you,” Bashant said. . “It was for your personal benefit and your own greed, and I cannot ignore that fact.”
In a letter to the judge and other statements to the court, Goldstein expressed deep remorse.
“I ask for mercy to accept my repentance and allow myself to right the wrongs and be able to live the rest of my life with remorse and to have the opportunity to do whatever I can to help others to the best of my ability,” “He told the judge on Tuesday.
Goldstein, who opened the synagogue at Rancho Bernardo in the 1980s, had long been known as a leader of the local Jewish community. But he became an international figure, delivering a powerful anti-hate message, when he and three members of his congregation were shot dead in an anti-Semitic attack on April 27, 2019. Faithful Lori Gilbert-Kaye, whom he described in court as a sister, was killed.
The shooter, John T. Earnest, now 22, was recently sentenced to two life sentences on state and federal charges.
Bullets hit the rabbi with both hands, causing him to lose one finger and seriously injure another.
Yet in the hours and days following the attack, he spoke hopeful words – including an impromptu speech as he stood in a chair right after the shooting and the White House appearances. and the United Nations.
No one else knew at the time that he had been the subject of an open fraud investigation for over a year.
Goldstein discovered he was under investigation in 2018 when the FBI raided his home and office. He immediately warned a co-conspirator of the investigation, but soon after began to cooperate with agents.
Goldstein resigned as rabbi in November 2019, citing exhaustion. News of his crimes did not become public until the following summer, when he pleaded guilty to tax and electronic fraud.
His misdeeds came to the attention of the FBI as agents investigated a separate Ponzi scheme led by San Diego real estate agent Alexander Avergoon. The Rabbi continued to show up in Avergoon’s financial tangles, and soon agents discovered other long-standing frauds.
With Avergoon’s help, Goldstein has requested $ 937,000 in aid and money over the years, mistakenly claiming the funds were needed to improve synagogue security, repair non-existent damage from the fires. of 2007, implement a special program or modernize its living quarters.
The funds were awarded by federal and state emergency agencies and a private Beverly Hills foundation. The vast majority have been pocketed.
Hannah Kaye, daughter of the worshiper killed in the shooting, attended the hearing Tuesday with her aunts to bear witness to Goldstein’s fate.
“We hold him partly responsible for my mother’s murder because he stole security grants meant to protect the synagogue which were instead used for his personal gain,” Kaye said in an interview.
She said she was taken aback by the sentimental comments Goldstein made in court about her close relationship with her family.
“I think it was an exploitative and manipulative tactic used to elevate her victim status,” she said.
Avergoon also helped Goldstein recruit donors for the “90/10” fraud, as well as apply for mortgages and a construction loan on false statements. In turn, Goldstein falsely certified that Avgoon and his associates performed community service hours in Chabad under a court order.
Avergoon was sentenced on Monday by the same judge to more than five years in prison for the schemes and an unrelated $ 12 million Ponzi scheme in which investors believed they were buying rental property.
To prepare for sentencing, Goldstein took the unusual step of producing a documentary-like video to submit to the court telling his side of the story.
He dates his criminal actions to around 2010, when many of Chabad of Poway’s major philanthropists moved or died, and the full weight of the synagogue administration and its organizations fell on his shoulders. He said he was sparked by memories of the financial hardships of his childhood as the ninth of 10 children in Brooklyn, and the rough early days of the synagogue plantation in northern San Diego County.
The fraud started small as a balm to the growing anxiety he struggled for his ability to support himself and his growing family, he said.
“I became prey and worshiped the golden calf of silver,” Goldstein wrote to the judge in a letter, referring to an Old Testament idol. “I let myself down and everything that I’ve taught, and all that I’ve preached for 40 years, and let myself be seduced into a very dark place, allowing the power of money to get hold of it. best part of my soul. “
However, the investigation found that some of Goldstein’s schemes date back to the 1980s, including a long-standing conspiracy to help at least one man protect himself from taxes of over $ 2 million in the form of bogus donations.
Goldstein is accused of helping his own brother in New York City also hide $ 700,000 in income by depositing money in Chabad bank accounts, with the then rabbi getting a share. Mendel Goldstein has pleaded guilty and will be sentenced next month.