Chabad of Poway rabbi pleads guilty to federal tax, wire fraud charges

SAN DIEGO (CNS) - Rabbi Yisroel Goldstein, who was wounded during last year's deadly shooting at Chabad of Poway, pleaded guilty Tuesday to federal tax and wire fraud charges for a series of schemes from which he financially benefited, including one in which supposed charitable donations made to the synagogue were funneled back to donors.

U.S. Attorney Robert Brewer said Goldstein's plea came with admissions that he accepted the ``charitable donations,'' then would send about 90% of the funds back to the donors, while pocketing the remainder for himself.

Donors would then falsely claim on tax forms that 100% of their donations went to Chabad, Brewer said.

Five co-defendants involved in the scheme pleaded guilty this week, according to Brewer, who said other alleged co-conspirators remain under investigation.

Over the years, Goldstein accepted at least $6.2 million in purported donations on behalf of at least 18 taxpayers, according to the U.S. Attorney's Office.

Goldstein also defrauded corporations that donated to Chabad or charities controlled by the rabbi, federal prosecutors said. Corporate employees taking part in matching donation programs would give Goldstein money, which he secretly funneled back to them, while keeping the matching donation amounts provided by the corporations, according to Brewer, who said at least six employee co-conspirators took part in that scheme from 2010 to 2018.

Another scheme involved submitting fraudulent invoices to the Federal Emergency Management Agency, California Office of Emergency Services and other entities in order to obtain grant funding.

Brewer said on one occasion, fake invoices were created on behalf of a fictitious construction company, in order to complete repair work on properties supposedly damaged by the 2007 San Diego wildfires. However, Brewer said the damage was entirely fictional.

Other grants received by Goldstein were purportedly to go toward improvements or repairs to Chabad, but were instead kept for personal use, according to the criminal complaint.

Brewer said the investigation into Goldstein began in November 2016 and the rabbi became aware of the investigation in 2018, when federal agents served search warrants at his home and office.

``Sadly, the facts of this case show a willful effort to deceive on the part of a trusted community leader,'' Brewer said.

The U.S. Attorney said Goldstein has cooperated with authorities, leading to his co-defendants' guilty pleas, and will cooperate in the ongoing investigation into as-yet uncharged individuals.

Brewer said the U.S. Attorney's Office will recommend probation at Goldstein's sentencing, though the punishment ultimately rests with a judge. Goldstein has also agreed to pay $2.5 million in restitution.

``There is no doubt that Rabbi Goldstein was the victim of a horrific hate crime that terrorized him and the worshippers at the Chabad in April of 2019. That event was a significant, mitigating factor to the plea agreement, but it is no excuse,'' Brewer said.

``We cannot look the other way because a perpetrator of a crime becomes, suddenly, a victim of crime,'' he said. ``We commend Mr. Goldstein in his community leadership after the shooting, as well as his cooperation once this investigation came to light. But the illegal conduct had occurred for many years and it cannot be ignored.''

Chabad of Poway released a statement shortly after the U.S. Attorney's Office announced Goldstein's plea.

``This is a very painful time for our congregation,'' the statement reads. ``Following the attack on our synagogue last year, when we were frozen with shock and fear, Rabbi Yisroel Goldstein brought us together and inspired our community. That was the Rabbi Goldstein we knew. That was the Rabbi Goldstein the world came to know.

``Yet, we've since learned that Rabbi Goldstein violated the law, contradicted what our synagogue stands for, and transgressed the very moral and ethical rules of the Torah he taught.''

Upon learning of the allegations ``some months ago,'' the synagogue conducted an ``internal review,'' after which Goldstein was removed from his duties at the Chabad.

``We hope and pray that Rabbi Goldstein finds the professional help that he needs and makes amends to our country and to the people he has hurt. And we pray that the Goldstein family find the healing they so deserve.''

Goldstein was among three people injured in the April 27, 2019, shooting at the synagogue, which killed 60-year-old Lori Gilbert Kaye.

The alleged shooter, John T. Earnest, 21, remains in custody on state and federal charges, including allegations that the attack was a hate crime. State prosecutors are seeking the death penalty against Earnest, while the Department of Justice has not yet made a decision regarding capital punishment.