Mendel Goldstein guilty of tax fraud
Mendel Goldstein, the owner of a videography business based in Brooklyn, New York, pleaded guilty in federal court On Monday to tax evasion charges relating to a long-running conspiracy with his brother, Rabbi Yisroel Goldstein.
Until around 2018, Yisroel Goldstein was the director and
head rabbi at Chabad of Poway, a tax-exempt organization that the brothers used
to divert Mendel Goldstein’s income and conceal more than $700,000 in earnings
from the IRS. They hid the money by
depositing it into Chabad accounts, then secretly funneling it back to Mendel
Goldstein by writing checks to fictitious names like “Mr. Green,” “Mr. Gold,”
or “Mr. Fish.”
According to his plea agreement, beginning in 2012, Mendel
Goldstein agreed with his brother Yisroel Goldstein that Mendel Goldstein could
deposit his freelance videography income directly into bank accounts owned by
Chabad of Poway. This allowed Mendel Goldstein to avoid reporting his entire
income to the IRS. In return, the
brothers agreed that Yisroel Goldstein would keep 10 percent of Mendel
Goldstein’s income as his fee—amounting to about $70,000. Mendel Goldstein saved approximately $155,881
in taxes he should have paid to the IRS.
As Mendel Goldstein admitted today, the conspiracy operated
for several years until December 2018. At that time, Yisroel Goldstein
discovered that he was under investigation for tax evasion and other
crimes. He warned Mendel Goldstein about
the investigation and encouraged him to conceal his tax evasion by filing
delinquent tax returns.
In July 2020, Yisroel Goldstein, along with five other
associates, pleaded guilty to fraud charges, admitting that he participated in
a complex, years-long, multi-million dollar tax-evasion scheme and other
financial deceptions involving theft of public money. Among the schemes he
admitted as part of his guilty plea, Yisroel Goldstein outlined the tax
avoidance conspiracy he operated with Mendel Goldstein. Yisroel Goldstein has agreed to cooperate
with the ongoing investigation. He is
scheduled to be sentenced by U.S. District Judge Cynthia Bashant on April 26, 2021.
“People who cheat on their taxes are cheating all honest
taxpayers,” said U.S. Attorney Robert Brewer. “We will not tolerate the
exploitation of non-profit and religious organizations to line the
perpetrators’ pockets at society’s expense.”
“The law clearly states that income is subject to tax and
must be reported, from whatever source derived, including compensation for
services,” said Ryan L. Korner, Special Agent in Charge of IRS Criminal
Investigation. “Mr. Mendel Goldstein admitted that he broke the law by hiding
over $700,000 in income and willfully evading his taxes for over six years. His
tax crime is made even more egregious because he exploited the tax-exempt
status of Chabad of Poway to cheat the United States. Today’s guilty plea
demonstrates that the IRS will diligently continue our important enforcement
efforts despite the ongoing challenges posed by Covid-19. We will work
alongside our law enforcement partners in a collective effort to enforce the
law and ensure the public trust.”
“This investigation uncovered a conspiracy of crimes
involving fraud, deception and evasion that used the cloak of a tax-exempt
religious organization, the Chabad of Poway, for personal financial benefit,”
said Suzanne Turner, Special Agent in Charge of FBI’s San Diego Field
Office. “The FBI takes seriously the
harm that financial crimes have on our country. We are all expected to follow
the rule of law, and the FBI is charged with enforcing these laws. Today,
Mendel Goldstein has been reminded of this important lesson, as he acknowledged
with his guilty plea.”
Judge Bashant presided over Monday’s arraignment and guilty
plea. Mendel Goldstein is next scheduled to appear at a sentencing hearing on
December 14, 2020 at 9 a.m.
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