Fraud and Lubavitch Youth

Lubavitch Youth (Tzach) in Israel is embroiled in a lawsuit over more than $3 million in missing funds. Rabbi Yosef Yitzchok Aranow, the head of Tzach, accuses his former CFO Yosef Segal of stealing the money. Segal accuses Aronow of taking al that money – and much more, of croynism and illegal payments to friends and family, and of stealing money specifically earmarked for Children of Chernobyl. Tzach gets about $20 million annually from the Israeli government alone.

Aronow refused to go to police, he claims, because of mesira, the prohibition against informing. This could be true. But the government refused to clear Tzach’s nonprofit status until the police were called and the thefts investigated. Aronow refused to make that call so the government did it for him. Knowing how readily Aronow has resorted to secular couts and authorities in the past, I think Aronow and his henchmen are dirty, and have done everything Segal claims – and more. Which is the real reason Aronow would not call the police.  Segal himself may have stolen money – or he may be innocent. Time will tell.  Ha’aretz reports:

… Segal did not restrain himself either. He appended to his defense brief
pictures of the no less luxurious home of Rabbi Aharonov. He also
provided juicy details of dozens of flights by the rabbi in first class
all around the world. He told of the rabbi’s luxury limousine with a
driver and personal assistant.

In his defense, Segal claimed that Aharonov received conditions
befitting the CEO of a multi-million dollar corporation – and not of a
not-for-profit organization whose declared purpose is to work for good
deeds, education and immigrant absorption. He further claimed that
Rabbi Aharonov often stayed in luxury hotels and part of the cost of
maintaining his house was paid for by the charitable organization.

Segal also said there were 16 employees who received double salaries: a
small, official salary; and an additional $2,000 a month that he
personally passed on to them in an envelope filled with cash.

This turns out to be one of his explanations with regard to the personal accounts he had at the Union Bank.

The additional cash payments were not reported to the tax authorities,
says Segal. According to a simple calculation, over the 15 year period,
about $6 million were hidden from the taxman.

Another disclosure was that at least part of the expenses recorded for
absorbing the children from Chernobyl were fictitious. Segal says that
after checks for these purposes were signed, he cashed them at the bank
and used the money to pay other cronies and friends of Aharonov.

This money was also reported in the organizations books, and certainly not reported for taxes.

The lawsuit is expected to be heard in court soon. Both sides are
promising to bring in earth-shattering evidence to prove their claims.
"Even in the world of ultra-Orthodox non-profit organizations, which
have seen stories of fraud in the past, we have still not seen such
famous and influential names linked to such serious accusations," said
commentators who specialize in the sector.

Even if the case "only" involves the theft of NIS 17 million by a
financial manager, one thing is clear: the State of Israel and the
donors have already paid the bill.

[Hat Tip: Tzemach Atlas.]

http://www.haaretz.com/hasen/spages/780436.html

Where did Chabad’s money disappear to?
By Guy Leshem

It all started with a suit by the non-profit organization of the "Young Chabad" movement against their former financial manger, Yosef Segal.

Segal is accused of stealing NIS 17 million.

The Young Chabad group is today considered the most important of all the Chabad streams. Since the 1990s, it has been involved in bringing Jewish children harmed by the Chernobyl nuclear disaster to Israel. It also runs Chabad houses in Israel and in the former Soviet Union. At least that is how it looks in its public relations brochures.

In practice, the non-profit organization – and in particular its head Rabbi Yosef Yitzhak Aharonov – dealt quite a bit in politics.

In the past, Aharonov has been called Chabad’s Aryeh Deri – being compared to the Shas Party’s dynamic former leader and convicted criminal.

Aharonov has a collection of pictures of him with most of Israel’s prime ministers, and even with a number of American presidents. His people have been behind the 1996 campaign: "Netanyahu is good for the Jews," which helped push Netanyahu into the prime minister’s office in those elections.

In addition, the movement has been involved behind the scenes in the appointment of the chief rabbi of Moscow through its political connections to various government offices.

Even though the late Lubavitcher Rebbe, Menachem Mendel Schneerson, the movement’s spiritual leader, ordered his Hassidim before his death not to become involved in politics – Rabbi Aharonov seemed to know that betting on the right horse would lead to budgets.

And it has come true: since the days of Netanyahu, the organization’s budget – and its daughter organizations which run 220 Chabad houses – have continued to grow. The group and its subsidiaries, each of which is officially registered as a separate non-profit organization, have received an average of NIS 100 million a year in government support.

Aharonov’s supporters have even presented huge stacks of thank-you notes and requests from local authorities and government agencies this week in his support.

But the defense brief filed this week by Segal, the financial manager, and Aharonov’s close confidante until a year and a half ago, raises claims that government funds and tens of millions of dollars donated by world Jewry were used to improve the lifestyle of Aharonov and his friends.

Aharonov’s organization, on the other hand, says Segal is the one who stole huge sums for years and deposited them in his private accounts in the Union Bank (Igud). The organization has even supplied documentation of transfers of small sums, which they claim Segal hid in his financial reports that were submitted to the organization’s accountants.

The documents accompanying the lawsuit also contained big color pictures of a house the organization claims Segal built with the stolen money.

According to the organization’s attorneys, Segal even admitted to the accusations against him; but he claimed he did not have the resources to return the stolen money.

Whatever the facts may be, the not-for-profit religious group did not think the matter needed to be brought to the attention of the police. The registrar in the Justice Ministry responsible for such non-profit organizations insisted that he would not provide the required annual certificate that the group was being run properly if it did not pass the information on to the police. The organization was in no hurry to speak to the police, and requested that the registrar pass the information to the police himself.

"It is not acceptable in our circles to pass on information to the police," said organization sources. "Jews should not turn in another Jew."

Segal did not restrain himself either. He appended to his defense brief pictures of the no less luxurious home of Rabbi Aharonov. He also provided juicy details of dozens of flights by the rabbi in first class all around the world. He told of the rabbi’s luxury limousine with a driver and personal assistant.

In his defense, Segal claimed that Aharonov received conditions befitting the CEO of a multi-million dollar corporation – and not of a not-for-profit organization whose declared purpose is to work for good deeds, education and immigrant absorption. He further claimed that Rabbi Aharonov often stayed in luxury hotels and part of the cost of maintaining his house was paid for by the charitable organization.

Segal also said there were 16 employees who received double salaries: a small, official salary; and an additional $2,000 a month that he personally passed on to them in an envelope filled with cash.

This turns out to be one of his explanations with regard to the personal accounts he had at the Union Bank.

The additional cash payments were not reported to the tax authorities, says Segal. According to a simple calculation, over the 15 year period, about $6 million were hidden from the taxman.

Another disclosure was that at least part of the expenses recorded for absorbing the children from Chernobyl were fictitious. Segal says that after checks for these purposes were signed, he cashed them at the bank and used the money to pay other cronies and friends of Aharonov.

This money was also reported in the organizations books, and certainly not reported for taxes.

The lawsuit is expected to be heard in court soon. Both sides are promising to bring in earth-shattering evidence to prove their claims. "Even in the world of ultra-Orthodox non-profit organizations, which have seen stories of fraud in the past, we have still not seen such famous and influential names linked to such serious accusations," said commentators who specialize in the sector.

Even if the case "only" involves the theft of NIS 17 million by a financial manager, one thing is clear: the State of Israel and the donors have already paid the bill.

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1 Comment

Filed under Chabad Theology, Crime

One response to “Fraud and Lubavitch Youth

  1. formally frum

    “mesira” is a BS excuse that frum people use when they are caught stealing. They used it when I was young and many Rabbis got caught stealing from the government, whether it was false lunch programs, or bogus youth core program etc. One judge even told the son of a leader of a major Boro Park Hasidic sect (who was caught stealing). Your religion is very interesting, it allows you to steal millions of dollars, but “mesira” is prohibited.

    From what I do know about “mesira” (I did look it up many years ago) it does not apply to any of these cases. In addition, the halacha was made in a time when a Jewish person could not get a fair trial. It simply does not apply today and would never have been applied in a Jewish state.

    And what about the absurd statement a Rabbi said on the TV special about child abuse. The person “mesira” who went to the authorities on the child abuse, is worse (greater sinner) than the abuser. Have they, the frum people lost their mind.

    Interestingly, when it is to a Rabbis benefit (to get money) they have no problem going to court and suing each other and calling the police against another Jew. Just look at Satmer. If “mesira” is so bad why not just settle it by going to “beis din”

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