Sunday, December 06, 2009
In fallout of fraud sting, IRS joins hunt
It was only a matter of time before the IRS began looking at the master informant behind a massive money laundering and corruption sting that led to the arrests of dozens of elected officials, rabbis and political operatives in July.
The tax inquiry, however, could also be a ticking bomb for anyone else who gave money and expected kickbacks from the religious institutions and schools at the focus of the ongoing criminal probe.
Solomon Dwek, 37, agreed to serve as an informant after authorities accused him of a $50 million bank fraud. He pleaded guilty in October to federal and state criminal charges. According to court filings, the Internal Revenue Service, in a civil proceeding, is now looking closely at the financial details behind Dwek's fraudulent transactions -- and also at the millions of dollars in contributions Dwek made to the Deal Yeshiva, a school where he once served as vice president.
The tax probe could have much further repercussions if others contributed money to the charities involved in the case and subsequently received kickbacks, as Dwek did as part of the sting.
There is precedent for thinking that, as intense as the focus has been on the politics side of the scandal, the effect on the religion side could become just as far-reaching.
In Los Angeles, more than 100 contributors to a Hasidic Jewish sect in Brooklyn are being investigated by the U.S Attorney for the Central District of California in connection with the same kind of kickbacks spelled out in the New Jersey cases.
While no one has yet been targeted in New Jersey, records from several institutions tied to the case have already been seized by the U.S. Attorney's Office for New Jersey. Officials would not say if the investigation is being expanded to look at contributors.
Dwek's bankruptcy attorney did not return calls for comment, and IRS officials declined to discuss the matter. But in sworn statements, Dwek, a one-time real estate developer, acknowledged his individual tax returns for 2005 and 2006 were being audited in connection with two $25 million checks he wrote out of a closed PNC Bank account in an effort to cover a loan he had obtained fraudulently from HSBC Bank.
"I believe they came in talking about the PNC check wondering if the income -- the money, let's say the $20 million that went from PNC to pay HSBC -- is taxable," stated Dwek.
Dwek had been involved in a far-reaching real estate Ponzi scheme, obtaining millions in loans and financing for dozens of properties that did not exist. The scheme collapsed after HSBC Bank belatedly conducted a title search and discovered it did not own the mortgages on properties it believed it was financing in Neptune on behalf of Dwek.
http://www.nj.com/news/ledger/jersey/index.ssf?/base/news-15/126005370862810.xml&coll=1
The tax inquiry, however, could also be a ticking bomb for anyone else who gave money and expected kickbacks from the religious institutions and schools at the focus of the ongoing criminal probe.
Solomon Dwek, 37, agreed to serve as an informant after authorities accused him of a $50 million bank fraud. He pleaded guilty in October to federal and state criminal charges. According to court filings, the Internal Revenue Service, in a civil proceeding, is now looking closely at the financial details behind Dwek's fraudulent transactions -- and also at the millions of dollars in contributions Dwek made to the Deal Yeshiva, a school where he once served as vice president.
The tax probe could have much further repercussions if others contributed money to the charities involved in the case and subsequently received kickbacks, as Dwek did as part of the sting.
There is precedent for thinking that, as intense as the focus has been on the politics side of the scandal, the effect on the religion side could become just as far-reaching.
In Los Angeles, more than 100 contributors to a Hasidic Jewish sect in Brooklyn are being investigated by the U.S Attorney for the Central District of California in connection with the same kind of kickbacks spelled out in the New Jersey cases.
While no one has yet been targeted in New Jersey, records from several institutions tied to the case have already been seized by the U.S. Attorney's Office for New Jersey. Officials would not say if the investigation is being expanded to look at contributors.
Dwek's bankruptcy attorney did not return calls for comment, and IRS officials declined to discuss the matter. But in sworn statements, Dwek, a one-time real estate developer, acknowledged his individual tax returns for 2005 and 2006 were being audited in connection with two $25 million checks he wrote out of a closed PNC Bank account in an effort to cover a loan he had obtained fraudulently from HSBC Bank.
"I believe they came in talking about the PNC check wondering if the income -- the money, let's say the $20 million that went from PNC to pay HSBC -- is taxable," stated Dwek.
Dwek had been involved in a far-reaching real estate Ponzi scheme, obtaining millions in loans and financing for dozens of properties that did not exist. The scheme collapsed after HSBC Bank belatedly conducted a title search and discovered it did not own the mortgages on properties it believed it was financing in Neptune on behalf of Dwek.
http://www.nj.com/news/ledger/jersey/index.ssf?/base/news-15/126005370862810.xml&coll=1
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