Chabad and fraud

Court-verified fraud, tax-evasion and money-laundering cases involving Chabad-Lubavitch institutions or personnel, together with related civil and regulatory findings

Chabad and fraud
Type	Legal proceedings
Date	2007–2022 (proceedings)
Location	Israel; United States; Canada
Participants	Tzeirei Agudat Chabad; Chabad of Poway; Chabad at UC San Diego; Chabad of California; Colel Chabad Lubavitch Foundation of Israel (Montreal)
Court	Federal Court of Appeal (Colel Chabad appeal dismissed)
Regulator	Canada Revenue Agency (Colel Chabad, Montreal)
Convictions	Criminal convictions (Aharonov, Rubashkin, Goldstein, Hadjadj, Zalmund Zirkind, Benzion Zirkind, Mark Zirkind)
Outcome	Civil False Claims Act liability (Chabad of California); charity registration revoked (Colel Chabad, Montreal)

Chabad and fraud covers documented court cases and regulator findings involving fraud, tax evasion or money laundering by Chabad-Lubavitch institutions or by people in positions within them. The page uses careful legal language. "Convicted" means a guilty verdict or an accepted guilty plea. "Civil liability" means a judgment in a civil case. A "regulator finding" means an administrative decision, not a criminal conviction. Allegations that have not been tested in court are excluded. The cases below concern specific individuals and institutions. Chabad-Lubavitch Headquarters has described the conduct in at least one case as violating "everything that Judaism and our movement stand for".

Criminal convictions

Israel: Yosef Aharonov and Tzeirei Agudat Chabad (2007–2015)

Rabbi Yosef Yitzchak Aharonov was chairman of Tzeirei Agudat Chabad, the Chabad Youth Organisation in Israel. Police arrested him in November 2007 on suspicion of offences including aggravated fraud and breach of trust in a corporation. Under a plea agreement in the Tel Aviv District Court, he was convicted on his own admission of obtaining something by fraud in aggravated circumstances, fraud and breach of trust in a corporation, false entries in corporate documents, and tax evasion by fraud, involving millions of shekels. In November 2015 he was sentenced to 24 months' imprisonment, 12 months suspended for three years, and a fine of NIS 1.5 million. The Times of Israel reported that he admitted receiving donations intended for the Chabad movement for nine years without reporting them, and that the society's employees did not report sources of income and received Education Ministry support illegally. It gave the fine as NIS 500,000, whereas the court judgment gives NIS 1.5 million. The sentencing judgment records that he was convicted on his own admission of two counts of obtaining something by fraud in aggravating circumstances, two of fraud and breach of trust in a corporation, one of false entry in corporate documents and 18 of tax evasion, and that the court imposed 24 months' imprisonment, less 16 days in custody, 12 months suspended for three years, and a fine of NIS 1,500,000 in ten instalments. The court found that between 2002 and 2006 NIS 3,547,879 raised by the US charity Chabad Children of Chernobyl was transferred to Aharonov's private account, and that the organisation fraudulently received more than NIS 17 million in Education Ministry support in 1999–2001 on the strength of "proper management" certificates obtained with false statements; it also found that the organisation's foreign donations for 2004 and 2005 had been under-reported. The judgment notes that liquidation proceedings concerning the organisation were under way at the Central-Lod District Court (case 7418-10-15) to replace its officers, including the chairman, and that his conviction barred him by law from the board of any association. His defence said he had taken no money for himself.

United States: Sholom Rubashkin and Agriprocessors (2009)

Sholom Rubashkin was the former chief executive of Agriprocessors, a kosher meatpacking company in Postville, Iowa. On 12 November 2009 a federal jury found him guilty of 86 counts of financial fraud and related offences. Prosecutors said that the evidence showed he inflated sales to obtain loans and laundered money "by running tens of millions of dollars through bank accounts at a Postville grocery store and a religious school". On 22 June 2010 he was sentenced to 324 months (27 years) and ordered to pay $26,852,152.51 in restitution. His defence argued that he acted not for personal gain "but rather 'in order to continue what he viewed as the critical Lubavitch mission of providing kosher food to the Jewish community'". The judge rejected that argument. In December 2017 President Donald Trump commuted the prison sentence to time served; the restitution order and supervised release were left in place. This was a commutation, not a pardon.

David Biale and his co-authors describe Rubashkin and "his small circle of his fellow Lubavitch Hasidim" in Postville as "far from the center of Lubavitch", with relationships with the townspeople that were "both positive and negative". They write that a major scandal engulfed the business when Rubashkin "was accused of hiring illegal immigrants and underage workers. Although these charges were dismissed, he was convicted of financial fraud and sentenced to twenty-seven years in prison."

United States: Yisroel Goldstein, Chabad of Poway (2020–2022)

Rabbi Yisroel Goldstein was the former director of Chabad of Poway, California. He pleaded guilty to conspiracy to defraud the United States and commit wire fraud (case 20CR1916-BAS, Southern District of California). Under his plea agreement, he "received at least $6.2 million in phony contributions to the Chabad and affiliated charities and secretly refunded up to 90 percent of the donations to the 'donors'". He also admitted defrauding three Fortune 500 companies' donation-matching programmes and, with a co-defendant, defrauding FEMA, Cal OES and private foundations of at least $860,000. On 4 January 2022 he was sentenced to fourteen months in custody and ordered to pay restitution of $2,834,608. Prosecutors recommended departures from the sentencing guidelines because of his cooperation and because he was a victim of the shooting at Chabad of Poway on 27 April 2019.

Chabad-side responses: Chabad of Poway said that after an internal review "the rabbi was removed from all of his duties at Chabad of Poway, his relationship with the organization terminated, and he was dismissed by Chabad-Lubavitch Headquarters as a representative of the movement". Chabad-Lubavitch World Headquarters stated: "Rabbi Yisroel Goldstein's actions broke the law, breached the trust vested by the United States in its stewards of charitable organizations, and violated everything that Judaism and our movement stand for."

United States: Yehuda Hadjadj, Chabad at UC San Diego (2022)

Rabbi Yehuda Hadjadj, former director of Chabad at UC San Diego, pleaded guilty on 26 January 2022 to one count of conspiracy to commit wire fraud (USA v. Hadjadj, 3:22-cr-00148, Southern District of California). On 14 June 2022 the court entered judgment imposing three years' probation, no fine, a $100 assessment and $15,000 restitution. According to prosecutors, he had donors write cheques to Friendship Circle, an organisation run by Goldstein, and then returned all or most of each donation in cash, so that Qualcomm's matching funds went to Chabad at UCSD. Prosecutors said the scheme secured nearly $40,000.

United States: Zalmund Zirkind (2021)

Zalmund Zirkind, also known as Zal, a Canadian citizen, pleaded guilty on 15 October 2020 to conspiracy to commit money laundering in violation of 18 U.S.C. § 1956(h), in United States v. Bomba et al., S8 19 Cr. 463 (DLC), Southern District of New York. On 15 January 2021 Judge Denise Cote sentenced him to 84 months' imprisonment, three years' supervised release and a forfeiture money judgment of $87,938. The government's sentencing letter stated that his role was to collect or arrange for the collection of bulk cash in the United States and Canada and to move that money internationally through wire payments or mirror transactions; that "[a]t times, the defendant used his own business account to wire the money from Canada to Asia" and then obtained a fraudulent invoice; and that the evidence indicated he was involved in laundering approximately $4.4 million over about two years. The public filings describe his own business account. They do not mention Colel Chabad Lubavitch Foundation of Israel or any charity account. The case concerned drug-trafficking proceeds and was not a charity prosecution.

Defence counsel in the SDNY case referred to the defendant as "Mr. Zalman Zirkind" and as "a Rabbi", and described him as "an Orthodox Rabbi, of the Chabad sect". JTA reported on 13 January 2021 that "Zalman Zirkind of Montreal … also known as Zalmund" was due to be sentenced. Cosigners on his bond included Israel Zirkind, Shalom Zirkind and Nechama Turk, names that match three of the children of Rabbi Simcha Zirkind of Montreal listed in contemporary obituaries. On the evidence above, and given that Canada's Federal Court of Appeal names Rabbi Zalman Zirkind as a director of the Montreal foundation (see below), the SDNY defendant and the Colel Chabad director are treated here as the same person. No public filing seen for this page names the defendant as a Colel Chabad director, and no date of birth or address for him appears in a public court record.

Benzion Zirkind

Benzion Zirkind, also known as Ben, was charged in the same SDNY case as defendant no. 6. The government described him as Zalmund Zirkind's nephew; his own counsel likewise referred to Zalmund as "his uncle". He pleaded guilty on 29 October 2020 to conspiracy to commit money laundering. On 22 February 2021 Judge Cote sentenced him to a year and a day in prison, three years' supervised release and forfeiture of $20,000.

Canada: Mark Zirkind (2017)

Mark Zirkind was convicted after a judge-alone trial in the Ontario Superior Court of Justice (Ducharme J.) on 16 January 2017 of one count of trafficking in property obtained by crime and one count of possession of property obtained by crime. Police had stopped him on 23 February 2014 and found $1,136,555 in cash in his rental car. On 29 June 2017 he was sentenced to four years' imprisonment. The Court of Appeal for Ontario dismissed his conviction appeal and, though it granted leave to appeal the sentence, dismissed the sentence appeal on 16 May 2019. The US government's sentencing letter in the SDNY case referred to "the defendant's brother's conviction and sentence to four years' imprisonment in Canada" and cited the Toronto Sun article on Mark Zirkind. The appeal court recorded that he is an orthodox Lubavitch Jew. Contemporary obituaries of Rabbi Simcha Zirkind of Montreal do not list a son under the name Mark; whether that English name belongs to one of the listed sons is unresolved, and no other name is substituted here. The Toronto Sun article concerns Mark alone and does not state that brothers of his took part in the Canadian offences.

Civil liability

Chabad of California: United States ex rel. Kozak (2014–2017)

Whistleblowers Aria and Donna Kozak sued in 2010, and the United States later joined the suit. In December 2014 Judge Morrison England of the Eastern District of California granted summary judgment under the False Claims Act. He found that Chabad of California had misappropriated a $272,495 Department of Homeland Security grant meant for security cameras, spending it on operating costs such as payroll, building repairs and utilities. With treble damages and penalties, the award came to $844,985. On 7 September 2017 the Ninth Circuit affirmed. It held that the government needed to prove only "deliberate ignorance" or "reckless disregard", and that this standard was met "given undisputed evidence that Chabad ignored expert advice about handling grant funds and Rabbi Cunin's testimony about Chabad's use of the funds". This is civil liability, not a criminal conviction.

Regulator findings

Colel Chabad Lubavitch Foundation of Israel, Montreal (2022)

The Canada Revenue Agency proposed to revoke the charitable registration of Colel Chabad Lubavitch Foundation of Israel (Montreal). Its grounds included issuing official donation receipts where only a partial gift had been made, gifting funds to non-qualified donees, inadequate books and records, inaccurate information returns, having no active board, and misrepresenting fundraising solicitations. On 9 June 2022 the Federal Court of Appeal dismissed the foundation's appeal. It recorded the Minister's findings that, between 2003 and 2007, one donor received receipts for about $3.5 million while 80–90 per cent was remitted back to him through a company registered in Belize, and that board minutes for 2009 and 2010 had been falsified. Among the books-and-records findings, the court referred to the travel expenses of "one of the appellant's directors, Rabbi Zalman Zirkind". The revocation took effect on publication in the Canada Gazette on 19 November 2022 (business number 138369921RR0001). On the identity evidence set out under Zalmund Zirkind above, Rabbi Zalman Zirkind is treated here as the same person as the SDNY defendant; no public filing seen for this page names that defendant as a Colel Chabad director. This Montreal body is legally separate from Colel Chabad in the United States and Israel. The revocation is a regulator's decision upheld on appeal, not a criminal conviction, and the SDNY filings do not allege that Colel Chabad accounts were used in the money-laundering conspiracy.

Canadian Friends of Chabad Lubavitch, Montreal (2013)

The registration of Canadian Friends of Chabad Lubavitch (business number 138816400RR0001) was revoked on publication in the Canada Gazette on 6 July 2013. The notice was given under paragraph 168(1)(c) of the Income Tax Act for failure to file returns. That is an administrative revocation for non-filing, not a misconduct finding. Canada Revenue Agency filings list a Mark Zirkind as president of the charity from 1998 to 2009; the name matches Mark Zirkind, but identity with the Ontario defendant is not confirmed. The charity also appears on the list of Canadian Jewish or Zionist charities revoked by the Canada Revenue Agency since 1992. No public filing seen for this page connects the charity to the SDNY money-laundering case or to the Colel Chabad Montreal receipting scheme.

Related case: "Chabad UK" (not part of Chabad-Lubavitch)

Edward Cohen and Chabad UK, London (2014–2024)

This case is included because of its name. Chabad UK (registered charity 1118547; company 06058021) was not a Chabad-Lubavitch institution. It was registered with the Charity Commission on 26 March 2007 under the former name Brocho Vhatzlocho Limited and adopted the name "Chabad UK" on 15 December 2011. Its registered address was at 53–55 Oldhill Street, Stamford Hill, London N16, not Chabad Lubavitch UK's Lubavitch House at 107–115 Stamford Hill.

Criminal conviction. On 21 June 2019 Edward Cohen, whom the Charity Commission describes as "the manager of the charities", was convicted in his absence at Southwark Crown Court of two counts of money laundering, theft of about £165,000, and supplying false or misleading information to the Commission. He was acquitted of a further money laundering charge. The Metropolitan Police said that between March 2012 and September 2014 "nine companies of the Chabad UK group – seven of which were registered charities" processed more than £10.3 million, mostly from the sale of counterfeit erectile dysfunction and slimming pills. On 4 July 2019 he was sentenced to a total of nine years and nine months, including a consecutive term for an earlier benefit-fraud conviction; the judge called it "money laundering on an industrial scale". He is thought to have left the country before the trial.

His son David Cohen, a co-defendant, was cleared of money laundering and of supplying false information to the Commission, but was convicted of providing false information for the purpose of obtaining benefits and received a six-month prison sentence suspended for 18 months.

Regulator finding. The Commission's class statutory inquiry, opened on 13 June 2014 and reported on 16 March 2020, covered Chabad UK and seven linked charities: Havenpoint Limited (291213), Pikuach Nefesh Limited (1115619), Worldwide Hatzala Ltd (1115623), Ozer Dalim Limited (1118537), Mamosh Worldwide Limited (1118730), Or Simcha (1119522) and Havenpoint Worldwide (1122120). It found that "The charities were used for a non-charitable purpose and as a conduit to launder the proceeds of crime", that over £9 million passed through their bank accounts between January 2012 and May 2014 while most annual returns declared nil income or expenditure, and that in 2016 two trustees (unnamed in the report) who had at some stage been trustees of each of the eight charities were removed from Chabad UK and disqualified. Chabad UK was removed from the register on 30 August 2023. More than £199,000 held from the charity was later remitted by the Official Custodian to Alte Feiga Trust (1126587).

Connection to the movement. The Commission stated that "Chabad UK is a separate charity to Chabad Lubavitch UK (registered charity 227638); the class inquiry is not connected to it or any other Chabad organisations". Chabad Lubavitch UK said it "is entirely unrelated in any way whatsoever to Chabad UK" and that Chabad UK "is also totally unrelated to the worldwide Chabad Lubavitch movement", adding that the similar name had caused "concern, confusion and reputational damage for many years". After the September 2014 police raids, a Chabad-Lubavitch spokesperson told Jewish News that the movement had made "numerous attempts by us and our lawyers to stop them fundraising without making it clear they are not a part of the official Chabad Lubavitch organisation". No public court judgment for trademark infringement or passing-off was located for this research. Companies House records for the Chabad UK company network do not show shared directors with Lubavitch (UK) Limited, the corporate trustee of Chabad Lubavitch UK.

The links that do exist are the name (adopted in 2011), related former company names such as "Society of Friends of Chabad Worldwide Limited" for what became Mamosh Worldwide Limited, and Cohen's personal beliefs: the Jewish Chronicle called him a "maverick chasid" who "was an open advocate of acknowledging the last Lubavitcher Rebbe as the Messiah in waiting". Name similarity and personal messianism are not evidence of an institutional link to Chabad-Lubavitch.

See also

• Chabad-Lubavitch
• Chabad and Trump (Rubashkin commutation)