July 24, 2008 | Read Time: 1 minute
A Tel Aviv banker, Joseph Roth, has pleaded guilty to a federal conspiracy charge, admitting that he was part of a charity scheme to defraud the U.S. government out of millions of dollars in tax revenue by establishing secret bank accounts in Israel involving the use of bogus trusts, federal officials say.
The purpose of the secret accounts was to promote a tax-evasion scheme involving charitable contributions to an orthodox Jewish group that refunded most of the money to contributors, and to conceal money for other illegal purposes, according to the U.S. Attorney’s Office for the Central District of California.
A second person charged in the case, Rabbi Moshe E. Zigelman, of Brooklyn, N.Y., also pleaded guilty to conspiracy, the government said. He acknowledged being part of a decade-long scheme to help people evade federal income taxes by having them make contributions to a variety of charities operating under the umbrella of Spinka, a religious group within Orthodox Judaism, federal officials said.
Mr. Roth and Rabbi Zigelman were among eight people and five charities indicted late last year. Mr. Zigelman and the grand rabbi of Spinka, Naftali Tzi Weisz, were accused of soliciting millions in dollars of contributions to several Spinka charities by promising to secretly refund up to 95 percent of the contributions, the government said. In this manner, the contributors could claim as tax deductions the full amounts of their contributions, while actually having donated as little as 5 percent of the amount they would declare on their federal income tax returns, the government said.
Rabbi Weisz has pleaded not guilty to the charges.
