New York Jews Indicted for Massive Theft of Government Funds

N.Y. Times May 29th, 1997 (Metro section only):

6 Indicted in Fraud Over Use of Grants for Hasidic Groups

By Benjamin Weiser

NEW YORK -- Five members of a Hasidic community in Rockland County and one in Brooklyn were indicted Wednesday on charges that they systematically defrauded the federal and state governments of tens of millions of dollars in student loans, business assistance and housing subsidies.

In one scheme, according to federal prosecutors, a seminary in Brooklyn was financed almost entirely by federal Pell grants awarded to ineligible or nonexistent students. The defendants also looted state student aid programs, Small Business Administration programs and the federal Section 8 housing program, prosecutors said.

The plans, the authorities said, were used to enrich the defendants but also to benefit the community institutions of New Square, the Rockland County village, along with the yeshiva in New Square.

In a broad indictment unsealed Wednesday in Manhattan, the U.S. attorney's office depicted a vast scheme by which the six men and others enrolled thousands of New Square and Brooklyn residents in post-secondary education programs in Jewish seminaries and Rockland County Community College in order to fraudulently obtain money through federal Pell grants, which are awarded to needy post-secondary students.

The indictment said that most of the students were not eligible for the grants, did not get their degrees and, in some cases, enrolled after recruiters promised them hundreds of dollars a year. Prosecutors said that one Brooklyn seminary program fraudulently got $10.3 million in Pell grants "on behalf of its purported students."

The government's investigation has been no secret in the tightly knit community of about 6,000 in New Square, which consists almost entirely of Hasidim. News of the indictment drew sharp criticism there Wednesday. A statement by village representatives contended that the U.S. attorney in Manhattan, Mary Jo White, had a "vendetta" against New Square residents, and that federal agents had earlier scared small children there by serving subpoenas at 6 a.m. "in a manner remindful of the Holocaust that many in this community endured decades ago."

Rabbi Mayer Schiller, (1) who said he was a spokesman for the residents, said he was certain that the accusations would be proven false. "They have imposed a reign of terror on this entire community," he said, referring to the federal prosecutors."

Ms. White responded by citing an earlier phase of the investigation when, in 1995, a federal judge held the Yeshiva of New Square in contempt of court for failing to obey a grand jury subpoena for its bank records and other documents, which led to a $1 million fine paid by the yeshiva.

"Given the repeated efforts to obstruct the grand jury's investigation," she said, "the response and accusations of unfair treatment are disheartening, but not surprising."

The indictment was vague about just how the money was put to use, and just how much ended up back in the community.

Schiller said that New Square was founded in 1957 by four Holocaust survivors, including Chaim Berger, one of the defendants named in Wednesday's indictment.

The indictment said Berger had been a member of the village's board of trustees and the board of the Yeshiva of New Square, and was chairman of the board of the Brooklyn seminary, Toldos Yakov Yosef, where many of the New Square and Brooklyn students receiving Pell grants were enrolled.

The indictment asserted that Berger and two other of the seminary's administrators, Kalmen Stern and David Goldstein, created a false picture of the seminary's programs. The indictment said they falsified resumes, minutes of the board meetings and reviews of student progress to get federal money.

The seminary was financed "almost exclusively" by Pell grants awarded to the school on behalf of its "alleged" students from 1987 to 1993, the indictment said, but in reality, it added, the school enrolled students who did not meet the requirements, were not seeking a degree, and did not take tests or even take part in any actual program of study.

The indictment said that in the early 1980s, Berger and others helped create a program for "independent Judaic Studies" for New Square students at Rockland County Community College.

From 1982 to 1988, thousands of students were enrolled, and most got Pell grants and state tuition aid. The indictment said that many of these students were also not eligible for aid, and in some cases, did not even know they were enrolled.

"Some New Square and Brooklyn residents were enrolled in as many as five different educational institutions, and received Pell Grants for as many as 10 or more years, without ever receiving any degree or any certificate reflecting that they had completed a program of study," the indictment said.

Besides Berger and Stern, the indictment charged three other New Square residents, Jacob Elbaum; Berger's son, Benjamin, and Avrum D. Friesel who, according to Schiller, is the son of New Square's mayor. Goldstein, the sixth defendant, lives in Brooklyn.

None of the defendants or their lawyers could be reached for comment Wednesday. Gerald Shargel, a lawyer for the Yeshiva of New Square, said he could not comment on the specifics of the case.

Footnote added by Radio Islam:

(1) This is the same Rabbi Mayer Schiller who, a few years ago, made an alliance with Jared Taylor's white nationalist group, "American Renaissance."

Jews and Crime Index