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

Template:Infobox event 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 over nine years without reporting them, and that the society's employees received Education Ministry support illegally.

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.

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, 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. He consented to a forfeiture money judgment of $87,938. On 15 January 2021 Judge Denise Cote sentenced him to 84 months' imprisonment. The case concerned drug-trafficking proceeds and was not a charity prosecution.

Editor's note: Canada's Federal Court of Appeal names a "Rabbi Zalman Zirkind" as a director of Colel Chabad Lubavitch Foundation of Israel (Montreal) (see below). Court records seen for this page do not establish whether he is the same person as the SDNY defendant, so no link is asserted here.

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. The revocation took effect on publication in the Canada Gazette on 19 November 2022 (business number 138369921RR0001). 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.

Notes on excluded material

Editor's note: Civil forfeiture actions involving Ihor Kolomoisky and PrivatBank, and claims in Robert I. Friedman's The False Prophet (1990) about donations to Meir Kahane being routed through Chabad Houses, are allegations that have not been tested in court and fall outside this page's scope.

See also

• Chabad-Lubavitch