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It's better to give than to receive, but it's really bad to try to combine them.

December 23, 2009

A Los Angeles Rabbi who ran purported "contributions" through offshore accounts, where they were returned to the "donors" minus a money-laundering fee, received a two-year sabbatical yesterday courtesy of the IRS. NBC News-Los Angeles reports:

The 61-year-old rabbi, Naftali Tzi Weisz, pleaded guilty last August to criminal conspiracy charges before U.S. District Judge John F. Walter.

"I'm embarrassed beyond words,'' Weisz told the judge. "My remorse is deep and heartfelt.''

You really feel it when you stand before those big prison gates.

Prosecutors said Weisz and other sect members helped donors avoid paying federal income taxes by having them make contributions to charitable groups run by Spinka, a Brooklyn, N.Y.-based Orthodox Jewish group led by the rabbi...

According to court documents, Weisz and Zigelman secretly refunded up to 95 percent of the charitable contributions through several methods.

In some cases, the contributors received cash payments through an underground money transfer network involving various participants, some of whom owned businesses in downtown Los Angeles' jewelry district.

A second method involved wire transfers from Spinka-controlled entities into accounts secretly held at a bank in Israel, prosecutors said.

In a way it is similar to other scams, like Anderson's Ark, where taxpayers send money overseas as purported business expenses but then get most of the money back through offshore accounts. It's a good way to get a lovely Duluth vacation.

Russ Fox has more, with free 1970s rabbi detective series thrown in.