Saturday, March 06, 2010
Federal judge dismisses Hasidic charity's attempt to recover $500K seized in N.J. corruption bust
A legal challenge by a Hasidic charity over the seizure of its bank accounts after last summer’s sweeping money laundering and corruption sting has been thrown out by a federal judge.
U.S. Magistrate Judge Mark Falk in Newark said a decision on whether the non-profit’s accounts face forfeiture will depend on how the criminal case plays out.
While the charity "has an obvious interest in the use of its funds," said Falk, so does the government — which claims the money was used to help illegally launder tens of thousands of dollars.
"If the funds were returned, they would or could be used and depleted, reducing the amount available to the government should it be entitled to forfeiture in this case," Falk wrote in his opinion.
The fund, Gmach Shefa Chaim in Union City, was one of several charities the government claims played a role in the lengthy criminal investigation that led to the arrests of dozens of elected and religious officials and others.
The U.S. Attorney’s Office has charged the fund was used to cash $357,500 in checks for Solomon Dwek, a Monmouth County real estate developer who began working for the FBI as an undercover informant after he was charged in a $50 million bank fraud.
According to criminal complaints filed in the case, Moshe Altman, a real estate developer from Monsey, N.Y., had access to the gmach, and cashed Dwek’s checks through the charity’s bank accounts. A gmach, an acronym of Hebrew letters that translates to "acts of kindness," is essentially a fund in many Orthodox Jewish communities that may be formed for any number of charitable services — from interest-free loans to the lending of bride’s dresses.
Within hours after Altman was arrested with more than 40 others last July, the FBI moved to seize the gmach’s bank account as well.
In October, the charity went to court seeking a return of its money, arguing the $508,985 taken by the government was improperly seized. Attorneys for the gmach said Altman did not run the organization and did not have control over it.
However, the U.S. Attorney’s office argued the money laundering checks were deposited into two of the gmach’s operating accounts and filtered into the account that was ultimately seized. Some of the checks were drawn on the account of BH Property Management, which the government revealed to be an FBI undercover company, according to the criminal complaints.
When Altman’s office in Union City was searched July 23 after the arrests, the government said FBI agents seized approximately eight bundles of blank checks from Gmach Shefa Chaim accounts, as well as four hard drives and a laptop computer officials said contained the organization’s books and records.
Assistant U.S. Attorney Bradley Harsch, who declined comment on the matter, said in court filings "the transfer and commingling of the dirty money with clean money" rendered the charity’s accounts an instrument of the crime.
Attorneys for the charity did not return calls for comment.
Altman has been indicted in the case and is awaiting trial.
http://www.nj.com/news/index.ssf/2010/03/hasidic_charity_laundered_358k.html
U.S. Magistrate Judge Mark Falk in Newark said a decision on whether the non-profit’s accounts face forfeiture will depend on how the criminal case plays out.
While the charity "has an obvious interest in the use of its funds," said Falk, so does the government — which claims the money was used to help illegally launder tens of thousands of dollars.
"If the funds were returned, they would or could be used and depleted, reducing the amount available to the government should it be entitled to forfeiture in this case," Falk wrote in his opinion.
The fund, Gmach Shefa Chaim in Union City, was one of several charities the government claims played a role in the lengthy criminal investigation that led to the arrests of dozens of elected and religious officials and others.
The U.S. Attorney’s Office has charged the fund was used to cash $357,500 in checks for Solomon Dwek, a Monmouth County real estate developer who began working for the FBI as an undercover informant after he was charged in a $50 million bank fraud.
According to criminal complaints filed in the case, Moshe Altman, a real estate developer from Monsey, N.Y., had access to the gmach, and cashed Dwek’s checks through the charity’s bank accounts. A gmach, an acronym of Hebrew letters that translates to "acts of kindness," is essentially a fund in many Orthodox Jewish communities that may be formed for any number of charitable services — from interest-free loans to the lending of bride’s dresses.
Within hours after Altman was arrested with more than 40 others last July, the FBI moved to seize the gmach’s bank account as well.
In October, the charity went to court seeking a return of its money, arguing the $508,985 taken by the government was improperly seized. Attorneys for the gmach said Altman did not run the organization and did not have control over it.
However, the U.S. Attorney’s office argued the money laundering checks were deposited into two of the gmach’s operating accounts and filtered into the account that was ultimately seized. Some of the checks were drawn on the account of BH Property Management, which the government revealed to be an FBI undercover company, according to the criminal complaints.
When Altman’s office in Union City was searched July 23 after the arrests, the government said FBI agents seized approximately eight bundles of blank checks from Gmach Shefa Chaim accounts, as well as four hard drives and a laptop computer officials said contained the organization’s books and records.
Assistant U.S. Attorney Bradley Harsch, who declined comment on the matter, said in court filings "the transfer and commingling of the dirty money with clean money" rendered the charity’s accounts an instrument of the crime.
Attorneys for the charity did not return calls for comment.
Altman has been indicted in the case and is awaiting trial.
http://www.nj.com/news/index.ssf/2010/03/hasidic_charity_laundered_358k.html
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