Haredi Pell Grant Fraud

According to this report, Forward editor J.J. Goldberg:

[L]et the crowd in on a detail never published before. When the Senate held a special hearing on Pell grant fraud, every single name on the list was a chassidishe or yeshivishe figure. Someone gave the list to the ADL, whose Abe Foxman called John McCain to complain that it looks like an anti-Semitic witch hunt and that neo-Nazis will have a field day with it. John McCain wrote back that he cannot help that only Yidden committed fraud, so the hearings will continue.

[Hat Tip: Dr. R-F.]

I found the following document from the US Government’s General Accounting Office that seems to back up this claim:

Download pell_grant_yeshiva_fraud_gao.pdf.

I also found a court decision finding against Beth Rochel, which is mentioned in the above PDF in Appendix III.

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14 Comments

Filed under Crime, Haredim

14 responses to “Haredi Pell Grant Fraud

  1. D

    First link is incorrect.

  2. Unfortunately, there has been huge fraud involving government grant money for years in the private Jewish school system. Food programs and computer grants are amongst the programs that have been targetted.

    I think you now understand part of the reason these institutions fight against any oversight by the State, even oversight that would protect children from molesters.

    Yes, that’s right children sacrificied so gnaivut and gnavim can thrive.

  3. From the report:

    The Department of Education identified to us 37 of over 85 yeshivas or yeshiva-operated institutions in the New York City area. It was concerned that the 37 were engaging in potentially abusive misconduct involving the Pell Grant Program. In all 23 institutions investigated thus far, we have found some evidence of the use of false documents to support both the students’ Pell Grant applications and the schools’ eligibility to participate in the Pell Grant Program. The yeshivas submitted documentation to the Department of Education for (1) “ghost” students–students who
    never applied for Pell Grants or individuals who never enrolled or attended the yeshivas that used their names; (2) ineligible high
    school students; (3) individuals whose biographical information was sold to yeshivas by “brokers” for use in obtaining Pell Grants; and (4) misrepresentation of their academic programs and other eligibility criteria. The false documents included Pell Grant applications; supporting documentation for the applications, such
    as high school diplomas and income verification; academic transcripts and other documentation maintained in students’ files;
    and false documents submitted to the Department of Education for institutional eligibility, such as program curricula and falsified Israeli correspondence documenting offshore schools. At least 6 of the 23 schools used brokers to obtain legitimate information from actual individuals and then used the information to obtain Pell Grants from the Department of Education.

  4. In fact, one of the cases I dealt with the Awareness Center and media with, we found a Yeshiva protecting an administrator/educator/Rabbi with a long history of allegations of child molestation. We were able to get enrollment numbers for the Yeshiva from the Federal and State Child Nutrition Programs. It showed enrollment far in excess of the number of students actually seen attending and payments of tens of thousands of dollars for food no one at the Yeshiva had seen.

    After a spot check, enrollment numbers in the program for that Yeshiva in question dropped 213% the next minth (mid-year) and payments from the program ceased the following month.

    The Yeshivas financial statements reflect
    that about 5% of state and federal payments for its food program went to actually purchase food.

  5. By the grace of G-d
    Shalom everyone!
    When a government expects Jewish (and other religious parents) to pay taxes for other children to be taught in public schools besides paying private schools tuition such behavior is a natural response of opressed population groups. You can thank your friends at the ACLU and the activist Liberal judges driving the “wall of separation ” between “church and state” up to te sky (which is not mentioned anywhere in the constitution and has been practiced to this extent only in last 50 years or so) for causing situation that encouraged such behavior.
    Of course with school vouchers and other fair laws current President and congress and various state governments have passed the excuses for this are being removed or diminished…

  6. Lawrence M. Reisman

    “When a government expects Jewish (and other religious parents) to pay taxes for other children to be taught in public schools besides paying private schools tuition such behavior is a natural response of opressed population groups.” Am I also oppressed because my taxes are being used to support beaches I don’t go to, parks I don’t use, a war I don’t support, etc.? This argument leads to anarchy.

    “You can thank your friends at the ACLU and the activist Liberal judges driving the “wall of separation ” between “church and state” up to te sky (which is not mentioned anywhere in the constitution and has been practiced to this extent only in last 50 years or so) for causing situation that encouraged such behavior.” Maybe we should attack the liberals who supported “Pierce v. Society of Sisters (voided a law requiring all children to attend public schools) or Wisconsin v. Yoder (allowed Amish to keep their children out of high school).

    “Of course with school vouchers and other fair laws current President and congress and various state governments have passed the excuses for this are being removed or diminished…” How about attaching some conditions to the vouchers, like they can only be used at schools that teach the entire secular curriculum of the public schools (knock out 90% of the yeshivas). All right, 50% of the curriculum (still knocks out 60% of the yeshivas). 25% of the curriculum? Still knocks out Oholei Torah and similar Chabad institutions.

    Anywhere government money is involved, there will be strings, some of which you don’t want. The yeshivas in Quebec found this out when the government was adding requirements to it grants.

    Years ago, the Satmar Rebbe, ztl, said that government programs would ruin us. He wasn’t wrong.

  7. Loislaw Federal District Court Opinions – U.S. v. BERGER, (S.D.N.Y. 1998

    U.S. v. BERGER, (S.D.N.Y. 1998
    22 F. Supp.2d 145
    UNITED STATES of America, v. Chaim BERGER, a/k/a “Herman Berger,” Avrum
    David Friesel, a/k/a “David Friesel,” a/k/a “Avraham Friesel,” a/k/a “A.
    David Friesel,” a/k/a “Aron Friesel,” Kalmen Stern, David Goldstein, Jacob
    Elbaum, a/k/a “Yitzchok Elbaum,” and Benjamin Berger, Defendants.
    No. 97 Cr. 410(BSJ).
    United States District Court, S.D. New York.
    September 14, 1998
    West Page 146

    Mary Jo White, U.S. Atty., Deborah E. Landis, Joanna C. Hendon, Mark
    F. Mendelsohn, Asst. U.S. Attys., New York City, for U.S.

    Morvillo, Abramowitz, Grand, Iason & Silberberg, P.C., Elkan
    Abramowitz, and Michael R. Marra, New York City, for Kalmen Stern.

    Michael Rosen, New York City, for David Goldstein.

    Kirkpatrick & Lockhart, L.L.P., Michael F. Armstrong, New York City,
    for Benjamin Berger.

    Gerald L. Shargel, New York City, for Jacob Elbaum.
    West Page 149

    MEMORANDUM & ORDER

    JONES, District Judge.

    Defendants are charged in a 57-count Indictment with conspiring to
    defraud and with defrauding the federal government of millions of dollars
    in federal funds. Specifically, the Indictment alleges that defendants
    participated in a scheme to defraud the government of student-aid Pell
    Grants administered by the U.S. Department of Education (“DOE”) and
    Tuition Assistance Program (“TAP”) funds administered by the New York
    State Department of Education, rental subsidies administered by the U.S.
    Department of Housing and Urban Development (“HUD”), small business funds
    administered by the Small Business Administration (“SBA”), and benefits
    administered by the Social Security Administration (“SSA”). The
    Indictment further alleges that defendants defrauded the Internal Revenue
    Service (“IRS”).

    All of the defendants, except David Goldstein, are members of the
    Hasidic community residing in the Village of New Square, a small,
    incorporated village located in Rockland County, New York. The Indictment
    alleges that defendants individually, collectively, and through their
    positions in various community organizations fraudulently obtained
    government subsidies in order to support themselves, other members of the
    Hasidic community, and community institutions such as the Yeshiva of New
    Square.

    Pending are pretrial motions filed by defendants Kalmen Stern,
    Goldstein, and Benjamin Berger, on behalf of themselves and defendant
    Jacob Elbaum.[fn1] Defendants seek dismissal of Counts One, Two, Four,
    and Five on the ground that these Counts allege only violations of civil
    regulations, and not federal criminal statutes. Defendants further move
    to dismiss Count One on the ground that it is duplicitous, Count Two on
    the ground that it fails to properly allege theft of federal program
    funds as charged, and Count Five on the ground that it is barred by the
    statute of limitations. Additionally, David Goldstein and Benjamin Berger
    move for severance of the charges against them, pursuant to Rules 8(b)
    and 14, Federal Rules of Criminal Procedure. Finally, Goldstein moves to
    dismiss Counts One, Four, Five and Twenty-Two on statute of limitations
    grounds, and Counts Fifty-One and Fifty-Two for improper venue.[fn2]

    The government does not contest Goldstein’s motion to dismiss Counts
    Fifty-One and Fifty-Two for improper venue. Accordingly, Goldstein’s
    motion as to those Counts is granted. In all other respects, defendants’
    motions are denied.

    DISCUSSION

    A.

    Defendants’ first argument is that Counts One, Two, Four, and Five
    should be dismissed because those counts allege only violations of
    regulatory schemes, rather than criminal statutes. The Court disagrees.

    Count One charges that defendants conspired to defraud the federal
    government and conspired to commit a wide variety of offenses, in
    violation of 18 U.S.C. § 371. Counts Two, Four, and Five charge that
    all of the defendants, except Benjamin Berger, fraudulently obtained more
    than $10 million in Pell Grant funds from the DOE, in violation of
    18 U.S.C. § 666 (theft of federal program funds), 18 U.S.C. § 1343
    (wire fraud), and 18 U.S.C. § 1341 (mail fraud), respectively.

    As defendants correctly point out, the government’s evidence of these
    alleged offenses necessarily will reference various federal regulations.
    Thus, to prove that defendants fraudulently obtained Pell Grant funds,
    the government will have to prove that defendants contravened regulations
    promulgated by the DOE and obtained funds to which they were not
    entitled. Nevertheless, that the government’s proof will include
    evidence
    West Page 150
    that defendants violated federal regulations does not mean that the
    government’s allegations fail to charge defendants with a federal crime.
    Put differently, if the government can prove the elements of the crimes
    charged, it matters not that the methods used by defendants to defraud
    the federal government also may have violated civil administrative
    regulations. See United States v. Christo, 614 F.2d 486, 490 (5th Cir.
    1980).

    Here, Count One charges defendants with conspiring to defraud the
    government. Under section 371, a conspiracy to defraud includes “any
    conspiracy for the purpose of impairing, obstructing, or defeating the
    lawful function of any department of government.” Dennis v. United
    States, 384 U.S. 855, 861, 86 S.Ct. 1840, 16 L.Ed.2d 973 (1966)
    (quotations and citations omitted); see also United States v.
    Ballistrea, 101 F.3d 827, 831 (2d Cir. 1996), cert. denied,
    ___ U.S. ___, 117 S.Ct. 1327, 137 L.Ed.2d 488 (1997). Such a conspiracy “need not
    involve the violation of a separate statute,” United States v.
    Rosengarten, 857 F.2d 76, 78 (2d Cir. 1988), cert. denied,
    488 U.S. 1011, 109 S.Ct. 799, 102 L.Ed.2d 790 (1989), so long as the
    government proves that “deceitful or dishonest means [were] employed to
    obstruct governmental functions,” Ballistrea, 101 F.3d at 832. See
    also United States v. Barker Steel Co., 985 F.2d 1123, 1131
    (1st Cir. 1993) (rejecting argument that conviction under section 371
    requires proof of separate violations of other substantive offenses); United
    States v. Bucey, 876 F.2d 1297, 1312 (7th Cir.) (“In order to
    convict under the conspiracy to defraud clause of section 371, the
    government need not charge or prove that [defendant] agreed to commit, or
    actually did commit a substantive offense. He merely must have agreed to
    interfere with or obstruct one of [the government’s] lawful functions by
    means that are dishonest.” (internal quotations and citations omitted)),
    cert. denied, 493 U.S. 1004, 110 S.Ct. 565,
    107 L.Ed.2d 560 (1989).

    The government’s allegations, as alleged in the Indictment, properly
    charge defendants with a conspiracy to defraud the federal government in
    violation of section 371. As the First Circuit explained in Barker
    Steel,

    The allegations in this case do not present a
    situation where defendants conspired to do something
    which, in itself, was innocent, but which had the
    unintended effect of thwarting the [government]
    programs. Nor were the defendants engaging in open
    defiance or protest against the [government]
    programs. The defendants’ actions, as alleged,
    involved deceit and trickery to benefit the defendants
    by hampering a lawful government function. A
    conspiracy of this kind has long been recognized to
    defraud the government.

    985 F.2d at 1134.

    In the same vein, Counts Two, Four and Five properly allege theft of
    federal program funds, mail fraud, and wire fraud, respectively. Each of
    these offenses entails the taking of money or property through fraudulent
    means. Once again, the violation of the federal regulatory scheme
    — while obviously interwoven with the government’s allegations
    — is merely ancillary to the ultimate issue of whether the
    Indictment properly charges a criminal offense. Here, the government’s
    allegations, as charged in the Indictment, sufficiently plead the
    elements of the charged crimes.

    Accordingly, defendants’ motion to dismiss Counts One, Two, Four, and
    Five for failure to charge a federal offense is denied.

    B.

    Defendants also challenge Count One on the ground that it is
    duplicitous. Specifically, defendants claim that Count One improperly
    charges four unrelated schemes as a single conspiracy.

    An indictment is duplicitous if it combines two or more distinct crimes
    into a single count. See United States v. Aracri, 968 F.2d 1512, 1518 (2d
    Cir. 1992). A conspiracy charge, however, “presents `unique issues’ in
    duplicity analysis because `a single agreement may encompass multiple
    illegal objects.'” Id. (quoting United States v. Murray, 618 F.2d 892,
    896 (2d cir. 1980)). As a result, an indictment is not duplicitous merely
    because it alleges a conspiracy to commit multiple crimes. See id.;
    Murray,
    West Page 151
    618 F.2d at 896; United States v. Conesa, 899 F. Supp. 172, 174
    (S.D.N.Y. 1995). Rather, “`acts that could be charged as separate counts
    of an indictment may instead be charged in a single count if those acts
    could be characterized as part of a single continuing scheme.'” Aracri,
    968 F.2d at 1518 (quoting United States v. Tutino, 883 F.2d 1125, 1141
    (2d Cir. 1989), cert. denied 493 U.S. 1081, 110 S.Ct. 1139,
    107 L.Ed.2d 1044 (1990)).

    In considering defendants’ claim that the conspiracy count is
    duplicitous, the Court is mindful that “[w]hether the government has
    proven the existence of the conspiracy charged in the indictment and each
    defendant’s membership in it, or instead, has proven several independent
    conspiracies is a question of fact for a properly instructed jury.”
    United States v. Johansen, 56 F.3d 347, 350 (2d Cir. 1995); see also
    United States v. Gabriel, 920 F. Supp. 498, 504 (S.D.N Y 1996), aff’d,
    125 F.3d 89 (2d cir. 1997). Moreover, an indictment will not be found to
    be impermissibly duplicitous unless it implicates the underlying policy
    considerations of Rule 8(a) and threatens to expose the defendants to a
    risk of unfairness. United States v. Margiotta, 646 F.2d 729, 733 (2d
    Cir. 1981); United States v. McGuinness, 764 F. Supp. 888, 892 (S.D.N Y
    1991).

    Based on this analysis, the Court rejects defendants’ claim that the
    conspiracy count is duplicitous. The Indictment charges defendants with
    conspiring to obtain federal benefits for themselves and their
    community’s institutions, including the Yeshiva of New Square, by
    defrauding the federal government of program funds. Defendants allegedly
    obtained these benefits through the use of false and fraudulent documents
    submitted to various federal agencies, including the DOE, HUD, SBA, and
    SSA. The Indictment further alleges that to further the conspiracy and to
    disguise defendants’ illegal activities, defendants engaged in a scheme
    to defraud the IRS.

    Although each of the defendants are not charged with defrauding each of
    the federal agencies named in the Indictment, the Indictment sufficiently
    alleges a nexus between the defendants and the alleged criminal
    activities to link defendants to a single overarching conspiracy.
    Notably, the Indictment alleges a pattern of similar and interwoven
    contrivances used by defendants to defraud the federal agencies. These
    include the use of alter-egos and nominee bank accounts, and the
    distribution of off-the-book income through interest-free loan
    organizations, or “gemachs,” many of which allegedly are affiliated with
    the Yeshiva of New Square. For example, with respect to the scheme to
    defraud the DOE, the Indictment alleges that Chaim Berger, Friesel,
    Stern, and Goldstein caused W-2 forms and paychecks to be issued to sham
    faculty members and administrators, including “Arye Reich,” “Chaya
    Reich,” and “Cheindel Bernat,” all of whom were in fact living in
    Israel. These checks were then deposited into bank accounts allegedly
    controlled by the co-conspirators. Of necessity, with respect to the
    related IRS scheme, defendants allegedly used each of these same names.
    They also allegedly used the names “Arye Reich” and “Cheindel Bernat”
    with respect to the scheme to defraud HUD, and the name “Arye Reich” with
    respect to the scheme to defraud the SSA. In each of these instances, the
    Indictment alleges a pattern of interrelated methods used by the
    defendants. Moreover, defendants’ contention notwithstanding, the
    Indictment alleges far more connection between defendants than the mere
    fact that they belong to the same religious community. Such connections
    include that defendants held prominent positions in entities used in the
    alleged conspiracy and that defendants were directly affiliated with the
    seminary at the center of the DOE fraud.

    None of the minor differences highlighted by defendants between the
    methods and means used by defendants to defraud each of the federal
    agencies convinces the Court that the conspiracy count is duplicitous.
    Nor does defendants’ characterization of defendants’ alleged conduct as
    constituting four unrelated conspiracies change the Court’s analysis.
    Rather, the government’s allegations, as pled in the Indictment,
    sufficiently charge defendants with a single integrated and continuing
    conspiracy founded on and
    West Page 152
    furthered by mutual dependence and assistance by each of the defendants.

    Accordingly, defendants’ motion to dismiss Count One as duplicitous is
    denied.

    C.

    Count Two alleges that defendants “did embezzle, steal, obtain by
    fraud, intentionally misapply, and without authority convert” over $10
    million in Pell Grant funds that had been received by the Toldos Yakov
    Yosef Seminary (“TYY”) from the DOE, in violation of 18 U.S.C. § 666
    and 2. Defendants argue that this count, as plead, is defective in two
    respects.

    1.

    First, defendants argue that the government’s allegations fail to make
    out a violation of section 666 because the Indictment alleges that TYY
    itself fraudulently obtained the Pell Grant funds from the DOE. According
    to defendants, they cannot be convicted under section 666 of embezzling
    funds from TYY if TYY obtained the funds unlawfully, because
    “embezzlement” requires that the property in question first come lawfully
    into the defendant’s possession.

    Section 666 criminalizes the wrongful obtainment of property from an
    organization that receives more than $10,000 in benefits from the federal
    government in any one-year period. See 18 U.S.C. § 666(a)(1)(A),
    (b); United States v. Delano, 55 F.3d 720, 729 (2d Cir. 1995). The
    section was enacted “to `create new offenses to augment the ability of
    the United States to vindicate significant acts of theft, fraud, and
    bribery involving Federal monies that are disbursed to private
    organizations or State and local governments pursuant to a Federal
    program.'” United States v. Zyskind, 118 F.3d 113, 116 (2d Cir. 1997)
    (quoting S.Rep. No. 98-225, at 369 (1983) (“Senate Report”), reprinted in
    1984 U.S.C.C.A.N. 3182, 3510). Contrary to defendants’ claim, nothing in
    the statute requires the government to prove that the organization which
    originally received the funds did so in a lawful manner. Rather, the
    “manifest purpose [of the statute] is to safeguard finite federal
    resources from corruption and to police those with control of federal
    funds.” United States v. Rooney, 37 F.3d 847, 851 (2d Cir. 1994); see
    also Zyskind, 118 F.3d at 116 (“The purpose of the legislation was to
    `protect the integrity of the vast sums of money distributed through
    Federal programs from theft, fraud, and undue influence by bribery.'”
    (quoting Senate Report at 370, 1984 U.S.C.C.A.N. at 3511)); United States
    v. Urlacher, 979 F.2d 935, 938 (2d Cir. 1992) (noting that terms
    “embezzling, stealing, obtaining by fraud, [and] converting” as used in
    section 666 “cover any possible taking of money for one’s own use or
    benefit”).

    Here, the government’s allegations, as contained in Count Two, properly
    charge defendants with a violation of section 666. As alleged, defendants
    wrongfully obtained over $10 million in federal funds from, and through,
    TYY. That TYY itself may have unlawfully obtained some or all of these
    funds does not remove defendants’ conduct from the scope of the statute.
    On the contrary, defendants’ conduct, as alleged, falls directly within
    the statute’s prohibitions. Accordingly, defendants’ motion to dismiss
    Count Two for failure to properly allege embezzlement is denied.

    2.

    Second, defendants argue that Count Two should be dismissed because the
    Indictment fails to allege the minimum statutory amounts required under
    section 666 for each of the years alleged in the Indictment.

    To convict defendants of Count Two, the government will have to prove
    that defendants wrongfully obtained property. worth more than $5,000 from
    TYY within a one-year period and that TYY received federal benefits in
    excess of $10,000 within one year of defendants’ offense. See
    18 U.S.C. § 666(a)(1)(A)(i), (b); United States v. Valentine,
    63 F.3d 459, 462-63 (6th Cir. 1995). Here, the Indictment sufficiently
    alleges these minimum statutory amounts.

    An indictment meets the requirements of Rule 7(c) “when it charges a
    crime with sufficient precision to inform the defendant of the charges he
    must meet and with enough detail that he may plead double jeopardy
    West Page 153
    in a future prosecution based on the same set of events.” United States
    v. Stavroulakis, 952 F.2d 686, 693 (2d Cir.), cert. denied,
    504 U.S. 926, 112 S.Ct. 1982, 118 L.Ed.2d 580 (1992). Normally, “an
    indictment need do little more than to track the language of the statute
    charged and state the time and place (in approximate terms) of the alleged
    crime.” Id. (quoting United States v. Tramunti, 513 F.2d 1087, 1113
    (2d Cir.), cert. denied, 423 U.S. 832, 96 S.Ct. 54, 46 L.Ed.2d 50 (1975)).
    In considering the sufficiency of the allegations in an indictment, “common
    sense must control,” and the indictment must be read to include facts
    which are necessarily implied by the specific allegations made. Id.

    Here, Count Two of the Indictment alleges that from in or about
    November 1987 through in or about October 1992, defendants wrongfully
    obtained more than $10 million in Pell Grant funds from TYY and that TYY
    “received within the one-year period before and during the commission of
    this offense benefits in excess of $10,000.” The Indictment further
    alleges in the Overt Acts section of Count One, that TYY received more
    than $700,000 in Pell Grants in 1988, more than $1.6 million in 1989,
    more than $2.1 million in 1990, more than $2.9 million in 1991, and more
    than $2.8 million in 1992. These allegations, which generally track the
    language of the statute, suffice to charge defendants with a violation of
    section 666, pursuant to Rule 7(c)(1).

    Defendants’ claim that the Indictment is defective because it fails to
    break down the amount that defendants obtained for each year alleged in
    the Indictment is without merit. The Indictment, as pled, suffices to
    notify defendants of the crime charged and the specific facts alleged.
    The jury will be instructed at trial as to the elements of the offense,
    including the statutory requirements that defendants wrongfully obtained
    more than $5,000 within one year and that TYY received more than $10,000
    in benefits within one year of the commission of defendants’ offense. If
    the government is unable to make this showing, defendants will be able to
    challenge the sufficiency of the evidence against them. At this point,
    however, the allegations in the Indictment are sufficient.

    Accordingly, defendants’ motion to dismiss Count Two for failure to
    allege the minimum statutory amounts for each year listed in the
    Indictment is denied.

    D.

    Defendants move to dismiss Count Five on statute of limitations
    grounds. In addition, Goldstein moves to dismiss Counts One, Two, Four,
    Five, and Twenty-Two on statute of limitations grounds as applied to
    him.

    1.

    Count Five charges each of the defendants, except Benjamin Berger, with
    mail fraud related to the alleged scheme to fraudulently obtain federal
    Pell grants, in violation of 18 U.S.C. § 1341. The statute of
    limitations period for mail fraud is five years, pursuant to
    18 U.S.C. § 3282. This period runs from the date of the charged
    mailing, regardless of whether the defendants’ actions concerning the
    alleged scheme to defraud occurred before the statutory period. See
    United States v. Eisen, 974 F.2d 246, 263 (2d Cir. 1992), cert. denied,
    507 U.S. 998, 113 S.Ct. 1619, 123 L.Ed.2d 178 (1993).

    Here, the Indictment, which was filed May 28, 1997, alleges that
    defendants caused the DOE to mail Student Aid Reports to individuals
    apparently enrolled as students at various post-secondary institutions,
    including TYY and Rockland Community College, in furtherance of
    defendants’ scheme to fraudulently obtain student grant money. The
    predicate mailings occurred as recently as October 1992. This is within
    the five-year period of the Indictment’s filing.

    Defendants’ contention that Count Five should be dismissed because it
    fails to allege that a specific mailing occurred within the statute of
    limitations period is rejected. If the government falls to prove at trial
    that any of the mailings occurred within the limitations period,
    defendants can renew their motion. At this point, however, defendants’
    challenge to the Indictment is premature. See United States v. Persico,
    621 F. Supp. 842, 873 (S.D.N.Y. 1985).
    West Page 154

    2.

    The Court also rejects Goldstein’s arguments for dismissal of Count
    One, Two, Four, Five and Twenty-Two on statute of limitations grounds.

    The primary basis for Goldstein’s argument is a letter he apparently
    sent to Chaim Berger on August 1, 1991, which notified Berger that
    Goldstein was resigning from TYY, effective September 1, 1991, to work
    for an accrediting organization called the Accrediting Council for
    Continuing Education and Training (“ACCET”). According to Goldstein, this
    letter provides conclusive evidence that his involvement in any of the
    charged criminal conduct ended by September 1, 1991, more than five years
    before the Indictment was filed.

    While this letter may provide Goldstein with an argument that he
    severed his ties to any of the alleged criminal endeavors prior to
    September 1, 1991, it is far from dispositive at this stage. A properly
    instructed jury will decide whether Goldstein withdrew from the
    conspiracy and ceased all activity in the other charged offenses and
    whether that withdrawal was prior to the statute of limitations period.
    At this point, however, the Indictment properly alleges that Goldstein
    committed the charged offenses within the statutory period and that he
    continued to bear responsibility for the substantive acts committed by
    his co-conspirators in furtherance of the conspiracy. Accordingly,
    Goldstein’s motion to dismiss Counts One, Two, Four, Five, and Twenty-Two
    on statute of limitations grounds is denied.[fn3]

    E.

    Benjamin Berger and Goldstein move for severance of the charges against
    them, pursuant to Rules 8(b) and 14. The gist of their claims is that the
    charges against them are minor compared to the elaborate schemes alleged
    in the Indictment and that joint trials with the other defendants will
    serve neither the interests of justice nor judicial economy.

    Rule 8(b) provides that defendants “may be charged in the same
    indictment . . . if they are alleged to have participated in the same act
    or transaction or in the same series of acts or transactions constituting
    an offense or offenses.” Fed.R.Crim.P. 8(b). Under Rule 8(b), joinder is
    permissible where two or more persons’ criminal acts are “`unified by some
    substantial identify of facts or participants,’ or `arise out of common
    plan or scheme.'” United States v. Attanasio, 870 F.2d 809, 815 (2d Cir.
    1989) (quoting United States v. Porter 821 F.2d 968, 972 (4th Cir.
    1987), cert. denied, 485 U.S. 934, 108 S.Ct. 1108, 99 L.Ed.2d 269
    (1988)). Even where joinder is proper under Rule 8(a), however, the Court
    in its discretion may grant a severance under Rule 14 if failure to do so
    would unduly prejudice the defendant. See Fed.R.Crim.P. 14; United States
    v. Cervone, 907 F.2d 332, 341 (2d Cir. 1990), cert. denied,
    498 U.S. 1028, 111 S.Ct. 680, 112 L.Ed.2d 672 (1991); U.S. v.
    Reale, No. S4 96 Cr. 1069, 1997 WL 580778, at *10 (S.D.N Y Sept. 17,
    1997).

    Here, having reviewed the charges made in the Indictment and considered
    the government’s anticipated evidence, the Court concludes that
    defendants properly were joined under Rule 8(b). The Indictment alleges
    an interwoven series of acts committed by defendants to achieve their
    overarching purpose of enriching themselves and their community’s
    institutions through the unlawful acquisition of federal program funds.
    Defendants allegedly achieved this purpose by submitting false and
    fraudulent documents to the various governmental agencies named in the
    Indictment and then diverting the received income through the use of
    various reoccurring alter-egos and bank accounts. While each of the
    defendants are not alleged to have participated in each charged
    transaction, the charges as a whole demonstrate a pattern of deception
    indicative of a common scheme and mutual dependence. As the government
    alleges, “each of the schemes, regardless of which defendants
    participated, employed means and methods that perfectly mirrored the means
    and methods used by
    West Page 155
    other defendants in furtherance of the other schemes.” Adding to the
    appearance of a common plan are the allegations related to the scheme to
    defraud the IRS, which allegedly served both to enrich defendants and to
    enable defendants to defraud the individual agencies. Based on these
    allegations, the government has demonstrated ample overlap of
    participants and acts to justify joinder under Rule 8(b).

    Nor does the Court find that severance is warranted under Rule 14.
    Under Rule 14, defendants bear a heavy burden of showing that joinder
    will result in substantial prejudice. See United States v. Amato,
    15 F.3d 230, 237 (2d Cir. 1994); Cervone, 907 F.2d at 341. This is due to
    the recognition that joint trials “promote efficiency and serve the
    interests of justice by avoiding the scandal and inequity of inconsistent
    verdicts.” Zafiro v. United States, 506 U.S. 534, 537, 113 S.Ct. 933,
    122 L.Ed.2d 317 (1993); see also United States v. Turoff 853 F.2d 1037, 1039
    (2d Cir. 1988) (“joint trials serve the public interest in economy,
    convenience, and the prompt trial of the accused”). Faced with the strong
    preference for joint trials, defendants are not entitled to a severance
    unless “there is a serious risk that, a joint trial would compromise a
    specific trial right of one of the defendants, or prevent the jury from
    making a reliable judgment about guilt or innocence.” Zafiro at 538,
    113 S.Ct. 933.

    Here, neither of the moving defendants have made such a showing. The
    fact that defendants may have different degrees of guilt or face varying
    amounts of evidence does not require separate trials. See United States
    v. Locascio, 6 F.3d 924, 947 (2d Cir. 1993) (“joint trials involving
    defendants who are only marginally involved alongside those heavily
    involved are constitutionally permissible”), cert. denied,
    511 U.S. 1070, 114 S.Ct. 1646, 128 L.Ed.2d 365 (1994); United States v.
    Hernandez, 85 F.3d 1023, 1029 (2d Cir. 1996) (“The fact that one of
    several codefendants is tried for a crime not committed by another
    codefendant does not, without more, create the sort of miscarriage of
    justice that would require a new trial.”); United States v. Carrozza,
    728 F. Supp. 266, 273 (S.D.N.Y. 1990), aff’d. 956 F.2d 1160 (2d Cir.
    1992). Moreover, based on the government’s representations, it seems
    likely that the evidence at trial against each of the defendants,
    including Benjamin Berger and Goldstein, necessarily will be
    interrelated. According to the government, proof of one scheme will be
    indispensable for a full understanding of the other charged schemes, as
    well as the charged criminal enterprise as a whole. Thus, severance would
    only result in a repetition of evidence that would have been admissible
    in any case against all of the defendants at a joint trial. See United
    States v. Rosa, 11 F.3d 315, 341 (2d Cir. 1993) (“Evidence at the joint
    trial of alleged coconspirators that, because of the alleged
    conspiratorial nature of the illegal activity, would have been admissible
    at a separate trial of the moving defendant is neither spillover nor
    prejudicial.”), cert. denied, 511 U.S. 1042, 114 S.Ct. 1565,
    128 L.Ed.2d 211 (1994). Finally, to the extent that some of the government’s evidence
    will not apply to one or more of the defendants, the Court will give
    appropriate limiting instructions to the jury, directing the jurors to
    consider the evidence as to each count of the Indictment and as to each
    defendant separately. The Court will further instruct the jury that a
    verdict of guilty as to any defendant on any count should not in any way
    control the jury’s verdict as to any other offenses charged.

    Accordingly, since joinder of defendants was proper and the Court does
    not find that a joint trial will expose the individual defendants to a
    risk of undue prejudice, the motions for a severance are denied.

    CONCLUSION

    Goldstein’s motion to dismiss Counts Fifty-One and Fifty-Two for
    improper venue is granted. The government is directed to comply with the
    Court’s oral ruling concerning a bill of particulars. In all other
    respects, defendants’ pretrial motions are denied.

    The parties are directed to submit their proposals with respect to jury
    selection, including any proposed questionnaires, by September 28, 1998.
    The parties are further
    West Page 156
    directed to submit any requests to charge by October 19, 1998.

    SO ORDERED.

    MEMORANDUM ORDER

    By letter brief dated Septemnber 29, 1998, defendant David Goldstein
    moves for reconsideration of that portion of the Court’s September 14,
    1998 Memorandum & Order which denied Goldstein’s motion to dismiss Counts
    Two, Four, Five, and Twenty-Two on statute of limitations grounds. Having
    considered Goldstein’s arguments, the Court adheres to its prior ruling.

    Each member of a conspiracy remains responsible for the known or
    reasonably foreseeable acts committed by his coconspirators in
    furtherance of a conspiracy, unless and until he takes an affirmative
    action to withdraw from the conspiracy. See Pinkerton v. United States,
    328 U.S. 640, 646, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946); United States v.
    Eisen, 974 F.2d 246, 268 (2d Cir. 1992), cert. denied, 507 U.S. 1029,
    113 S.Ct. 1840, 123 L.Ed.2d 467 (1993); United States v. Brasco, 516 F.2d 816,
    818 (2d Cir.), cert. denied, 423 U.S. 860, 96 S.Ct. 116, 46 L.Ed.2d 88
    (1975). Mere cessation of activity in furtherance of the conspiracy does
    not necessarily establish that a member has withdrawn. See United States
    v. Goldberg, 401 F.2d 644, 648 (2d Cir. 1968), cert. denied,
    393 U.S. 1099, 89 S.Ct. 895, 21 L.Ed.2d 790 (1969).

    Here, the Indictment properly charges that defendants, including
    Goldstein, committed substantive offenses within the statute of
    limitations period in furtherance of a conspiracy to defraud the federal
    government. Contrary to Goldstein’s characterization, nothing about the
    Government’s theory “revives” or “reincarnates” an offense that would
    otherwise be time-barred. While Goldstein may argue at trial that he
    withdrew from the conspiracy on September 1, 1991, the Government is
    entitled to argue that Goldstein remained in the conspiracy and therefore
    continued to bear responsibility for the criminal acts committed by his
    coconspirators.

    Accordingly, Goldstein’s motion for reconsideration is denied.

    SO ORDERED

    [fn1] Defendants Chaim Berger and Avrum David Friesel are
    fugitives.

    [fn2] Defendants also moved for a bill of particulars, seeking various
    disclosures from the government. The Court addressed this issue at oral
    argument on September 11, 1998, and the government is directed to comply
    with the Court’s oral ruling.

    [fn3] Pursuant to the Courts ruling at oral argument. Goldstein is
    granted leave to supplement his arguments on this issue. If Goldstein
    does submit additional papers, the Court will revisit its ruling once the
    government has had an opportunity to respond.

  8. Anonymous

    None of this is new.. what’s the news?

    The report is from 1993, many of us have seen this….

  9. The NEWS is NOTHING has changed! The Charedi establishment is infested with thieves and gangsters posing as men of G-d!

  10. ZG

    Good catch, what why does it surprise you ? government fraud is an integral part of the charedim culture.

    And they have excuses “I pay the government for public school which I do not use so I am just taking back what is mine”

  11. anon

    Do you mean to say that our highly respected gedolim who preach–“dina d’malchusa dina” speak falsely?
    Yes, this is old news and yes similar scams are at work today. I know of one company that can’t sell to most chasidic yeshivas as they won’t give them extra bills so that they can inflate their purchases and show that they have more studemts. The distributors and the schools make out like bandits.

  12. Anonymous

    quote

    “When a government expects Jewish (and other religious parents) to pay taxes for other children to be taught in public schools besides paying private schools tuition such behavior is a natural response of opressed population groups.”

    So then according to this logic the sexual abuse that we a hearing about is a “natural response of {sexually} opressed population group.” Now we know why no one did anything about it.

  13. formalyfrum

    When I was young, the yeshivas would bus us all over to different yeshivas and others to my yeshiva so it looked like all the yeshivas has a huge enrollment for lunch programs etc.

    What a scam this was okay. But if one got caught eating non cholov yesreol milk all hell
    broke lose.

    I think and know that the Haredim have their priorities mixed up, and do not follow Torah
    law and written in the Torah. It is almost a different religion.

  14. Anonymous

    During a termination hearing held by the Department in 1993,
    seminary officials claimed that the diplomas presented to the
    Department of Education were for a 4-year Hebrew high school
    program consisting exclusively of religious study for students
    between 12 and 16 years old. They further claimed that the
    ultraorthodox Jewish community considers this course of instruction
    to be the completion of high school; thus they claimed that the
    diplomas presented to the Department of Education were not false.

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