SAN DIEGO (CN) — The rabbi whose hand was mutilated in a San Diego-area synagogue shooting in 2019 pleaded guilty to federal tax fraud charges Tuesday, following an FBI investigation into his charitable organizations which preceded the attack on his congregation during the sacred Jewish holiday of Passover.
Rabbi Yisroel Goldstein was arraigned Tuesday in the Southern District of California on charges of conspiracy to commit wire fraud. According to court records, Goldstein appeared telephonically and initially pleaded not guilty before changing his plea before U.S. Magistrate Judge Karen Crawford.
A plea agreement Goldstein entered Tuesday was filed with the court under seal, which has since been lifted.
U.S. Attorney Robert Brewer said during a press conference Tuesday Goldstein had personally made off with $620,000 in kickback payments for helping five Chabad of Poway donors evade paying personal income taxes. He called it “The 90/10 Tax Scheme.”
“Sadly the facts of this case show a willful effort to deceive on the part of a trusted community leader,” Brewer said.
“There is no doubt Rabbi Yisroel Goldstein was the victim of a horrific hate crime which terrorized him and the Chabad community. That event was a significant mitigating factor in the final plea agreement,” Brewer said.
“But we cannot look the other way because the perpetrator of a crime becomes the victim of a crime. The illegal conduct occurred for many years and it cannot be ignored.”
Brewer said when Goldstein is sentenced later this year, the U.S. Attorney’s Office will recommend probation. He cited Goldstein’s past and ongoing cooperation, community contributions and “exemplary” example as “a significant advocate for peace and the elimination of violence and religious hatred” following the 2019 shooting.
Goldstein will pay $2.5 million in restitution as part of the plea agreement, Brewer said.
The 7-page charging document details a scheme where Goldstein is accused of establishing several nonprofit organizations affiliated with the Chabad of Poway synagogue he founded in 1986, including the Friendship Circle of San Diego and Congregation Bnei Yisroel.
While some of the nonprofits provided community services, others were shell entities with bank accounts used to conceal illegal transactions and avoid detection by synagogue officials and law enforcement, according to the complaint.
Goldstein worked with 18 or more taxpayers from 2010 to 2018 to fraudulently lowering their tax liabilities by obtaining $6.2 million in fraudulent donations, representing $1.5 million in tax losses to the IRS, according to the complaint.
Goldstein was additionally accused of fraudulently seeking emergency assistance including FEMA and California Emergency Management Agency wildfire relief funds, grant donations and private loans, according to the complaint
An additional $550,000 in losses to public grant programs and private foundations was also a casualty of the scheme, according to the complaint.
The investigation preceded the shooting at the synagogue, with IRS and FBI investigators executing a search warrant at Goldstein’s home in October 2018. Agents told Goldstein during the search they had been investigating him for tax evasion since 2016.
Brewer said Goldstein has cooperated since 2018 and will cooperate with ongoing investigations into others involved in the tax fraud scheme.
Five donors, listed in the complaint only by their initials E.A., B.B., Y.S. and B.M. and associates of A.A. apparently made tax-deductible donations to Goldstein, the Chabad or one of the nonprofit entities, for which Goldstein would provide a receipt for the “generous tax deductible donation.”
But Goldstein would secretly funnel 90% of the funds back to the purported donors, keeping approximately 10% of the money for himself, according to the complaint.
The donors falsely claimed to the IRS their payments to Chabad were 100% tax-deductible charitable contributions, reducing their personal income tax obligations without disclosing Goldstein’s kickback of payments.
In one case listed in the complaint, Goldstein made two deposits in December 2017 from fraudulent donations by congregant E.A. totaling $1.16 million.
Seeking to disguise the fraudulent donation, E.A. asked Goldstein to funnel the funds back to the co-conspirator by purchasing $1 million in gold bars and coins. Goldstein kept $160,000 for himself.
Brewer said Tuesday the $1 million in gold bars and coins had already been forfeited to the FBI.
The scheme even extended to employees engaging in employer match donation programs, with other donors listed as J.E. and V.R. making donations to Chabad and inducing their employers to make matching donations, only to have the funds secretly funneled by Goldstein back into the employees, according to the complaint.
Goldstein served as the director and head rabbi of the Chabad of Poway until he retired last year, citing exhaustion following the April 27, 2019, shooting at his congregation.
Goldstein was wounded in the shooting, suffering injuries to both hands and losing an index finger. Congregant Lori Kaye was killed in the shooting and several others suffered shrapnel injuries, including an 8-year-old girl.
The accused shooter, John Earnest, has pleaded not guilty to federal and state murder and hate crime charges being prosecuted simultaneously. San Diego District Attorney Summer Stephan announced last year her office will seek the death penalty against Earnest.
Following the shooting, Goldstein became an international figure in the fight against hate crimes and gun violence, giving several high-profile speeches and meeting personally with President Donald Trump.
He was named one of nonprofit news outlet Voice of San Diego’s 2019 Voices of the Year and was considered by The San Diego Union-Tribune for person of the year.
Goldstein is scheduled to be sentenced Oct. 19.
Follow @@BiancaDBruno
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
Additional Reads
-
Jan. 6 sentences April 19, 2024 -
-
Sex offenders and their kids April 19, 2024 -
Funneling Russian money April 19, 2024