LOS ANGELES (CN) – Spinka, a Jewish sect, laundered millions of dollars through an Israeli bank by taking the money as “charitable contributions” and kicking back 95% of it, prosecutors say. A banker with Mizrahi Bank in Tel Aviv pleaded guilty to the scheme and a Brooklyn rabbi has agreed to plead guilty on Tuesday.
Joseph Roth, 66, of Tel Aviv, pleaded guilty to felony tax fraud on Friday, the U.S. Attorney’s Office said. Rabbi Moshe E. Zigelman, 60, of Brooklyn, is to plead guilty to conspiracy on Tuesday. Prosecutors say they were part of a ring that defrauded the government of taxes for a decade by taking their so-called charitable contributions to groups operating under the cover of Spinka, an Orthodox Jewish sect. The groups accepted $8.5 million in bogus contributions in 2006, and kicked back $7.8 million of it, prosecutors say.
The lead defendant – the Grand Rabbi of Spinka, Naftali Tzi Weisz – is one of a total of eight people and five charities indicted in the scheme. The remaining defendants are scheduled to go to trial on Sept. 9.