Brooklyn Rabbi and Operator of Charitable Organization Indicted for Role in Money Laundering Conspiracy

NEWARK, NJ—A federal grand jury indicted a Brooklyn-based rabbi and the operator of a charitable organization, or “gemach,” today for their roles in a money laundering conspiracy, U.S. Attorney Paul J. Fishman announced.

Rabbi Lavel Schwartz, 59, of Brooklyn, N.Y., was previously charged in three separate complaints with conspiracy to commit money laundering. David S. Goldhirsh, 29, of Brooklyn, N.Y., was also charged with conspiracy to commit money laundering in one of those complaints. The 14-count indictment charges both Schwartz and Goldhirsh with one count of money laundering conspiracy and adds 12 substantive counts of attempted money laundering based on specific transactions occurring between May 2008 and July 2009. Schwartz is charged in 10 of those counts; Goldhirsh is charged in seven. The indictment additionally charges both defendants with one count of operating an unlicensed money transmitting business.

According to the indictment and other documents filed in Newark federal court:

Schwartz and his brother, Rabbi Mordchai Fish, met with cooperating witness Solomon Dwek on numerous occasions between May 2008 and July 2009. During that time, they agreed to launder money for Dwek which they believed to be the proceeds of various illegal activities—including bank fraud, trafficking in counterfeit merchandise, and bankruptcy fraud. In exchange for bank checks ranging between $25,000 and $100,000 each, Fish and Schwartz agreed to provide cash to Dwek minus a fee, typically 10 percent of the face value of the check. Fish and Schwartz used an underground money transfer network to obtain the cash.

Fish would instruct Dwek to make checks payable to various charitable organizations, or “gemachs,” including Boyoner Gemilas Chesed (BGC), which was operated by Goldhirsh. Often, Fish would escort Dwek to various members of the money transfer network, who would provide Fish and Dwek with large sums of cash, including amounts exceeding $90,000. Goldhirsh provided cash directly to Fish and Dwek on two occasions in exchange for checks made payable to BGC, and at least five additional checks were deposited into the BGC account as part of other transactions.

Other defendants originally charged with Schwartz and Goldhirsh have pleaded guilty to related offenses. Naftoly Weber and Avrohom Y. Polack entered guilty pleas to operating an unlicensed money transmitting business in November 2010, and await sentencing before U.S. District Judge Joel A. Pisano in Trenton. The charges filed in the complaints against Fish remain pending.

The money laundering conspiracy count and each of the attempted money laundering counts carry a maximum potential penalty of 20 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. The charge of operating an unlicensed money transmitting business carries a maximum potential penalty of five years in prison and a fine of $250,000, or twice the gross gain or loss from the offense.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward, and special agents of IRS - Criminal Investigation, under the direction of Special Agent in Charge Victor W. Lessoff, for the investigation leading to the charges.

The government is represented by Assistant U.S. Attorney Mark J. McCarren of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

The charges and allegations contained in the indictment charging Schwartz and Goldhirsh and the complaints charging Fish are merely accusations, and the defendants are considered innocent unless and until proven guilty.