Another Embezzler, Another Shul

 

Embezzlement is a serious offense in any instance, and embezzlement from a religious or charitable organization is all the more serious because the people who donate money to such organizations have certain high expectations, both of the organizations themselves and the people who run them.  Thus, not only are the organizations and their intended recipients of their beneficence victimized by the embezzlement.  The donors, who made their donation with no expectations of profit in exchange for the risk (other than a tax deduction, which Obama has significantly reduced), are victims in a way that investors in the securities market can never be.

It is, of course, a sad day for the Jewish people when the organization from which money is embezzled is a synagogue.  And we now have one of those sad days.

Ex-attorney Isaac Zucker, former Treasurer of Congregation Aish Kodesh in Woodmere, New York, has pleaded guilty to embezzling more than $600,000 from the shul.  I say "ex-attorney" because under New York Judiciary Law § 90(4)(a), an attorney who is convicted (and, a fortiori, who pleads guilty) to a felony offense automatically is disbarred upon the event.  He faces a maximum of 7 years in the slammer.

My comments, in no particular order:

1.   I know some people connected with Aish Kodesh, and have, over the past few months, been made privy to a small amount of inside details regarding this matter.

2.  Like so many other social groups, whether ethnicities or junior high athletic teams or anything in between, we Jewish people have a strong tendency to protect our own, and an aversion to involving outsiders in the process of righting wrongs within the group.  In this case, after the theft was discovered, the Aish Kodesh leadership had attempted to work out a deal with Zucker to get the money returned, and only went to the authorities after it became clear that such attempts would be futile. 

            I have mixed feelings about this.  On one hand, there needs to be a tough stance taken against embezzlers.  On the other hand, the District Attorney's office regularly engages in plea bargaining, which, in many respects, differs little in concept from trying to work out a private deal for restitution.

3.  It will be interesting to see what type of sentence is advocated by the membership and leadership of Aish Kodesh in the sentencing process.  What will their letters to the Judge say?  What will the victim impact statements say?  And what type of consonance or dissonance will there be between such statements, and the statements the same people made with respect to certain notorious cases involving various Jewish criminals convicted of crimes such as bank fraud, child molestation and cop-killing?

4.  In a similar synagogue embezzlement case a few years ago, "U.S. District Judge Anita B. Brody told Barry Wilf, former director of Temple Sinai in Dresher, that the maximum 57-month, no-parole sentence was too light considering that 'minor drug dealers get 60 months.'"

5.  A separate matter will be Mr. Zucker's tax affairs.  Now that Nassau County DA Kathleen Rice has gotten her conviction, the IRS, using the guilty plea, is sure to impute to Zucker some tax consequences from the income he received in the process.  Ditto for the New York State Department of Taxation and Finance.

Katz Chasing the Robins

Today's story in the New York tabloids: Robin Katz, a 25-year-old investment advisor at Chase Bank, now stands accused of tapping a client's private account to the` tune of $110 K through the medium of a duplicate ATM card, which was found on her person upon her arrest.

The New York Post story is here, (Front Page in print edition), an AP apparatchik's version is here, and Newsday's take is here.


My commentary, in no particular order:

1. Robin's MySpace self-description reportedly is "rocket scientist by day, party fool by night." If indeed she were a rocket scientist, she would have filched the money by some means less tracable than an ATM card. ATM machines commonly are monitored with video surveillance, which only corroborates the electronic money trail.

2. The New York Post, being the sensationalist tabloid it is, now presents Robin as a sexual commodity. All else being equal, this would bother me. All else is not equal, however, because Robin herself apparently accentuates her own sexual aspects on her public pages such as MySpace and Facebook. Which wouldn't be quite so bad if she were not facing criminal trial. She is definitely NOT a sympathy-evoking defendant.

3. Robin apparently left New York in May for a purported family emergency in California, yet the ATM withdrawals persisted from June 2008 through June 2009. If Robin really were apprehensive about being caught, maybe she should have ceased and desisted.

4. According to the Newsday story, "A [Chase] spokesman declined comment Tuesday, refusing to say whether Katz was still employed there, or how long she had worked for the company." I am not a public relations expert, but would think that if Robin no longer worked at Chase, then Chase should be most anxious to have the world know that fact. Methinks that some sort of employer-employee relationship persisted at least until Robin's arrest. This makes Chase look like a even more of a smacked toochas, at a time when the entire banking industry already has poop smeared all over its face. Moreover, the unnamed Chase customer was probably signed on with JP Morgan Chase Private Banking services. Not good for the bank's public image or public confidence!

5. Robin exhibits many hallmarks of a spoiled trust fund kid. Smith College, family in California, working in the banking industry, rich and riotous lifestyle, et cetera.


6. Once the Madoff case broke, Rocket Scientist Robin should have recognized it as a signal that society's patience for financial crimes is being sorely tested. She should have ceased and desisted immediately. What caused her to continue? Was it just plain arrogance, or was there some sort of substance abuse and dependency lurking in the background? How much of that money got sucked up her nose?


7. There will be tax consequences for Robin if she failed to report her filched income on her tax returns. My advice to Robin: File an Amended 2008 return NOW; that way you MAYBE can avoid at least some of the penalties.

8. As the father of a college student, and as one who interfaces with the business world, I cannot help but be concerned about my son's Internet persona. There are consequences for what one does or does not post on their Facebook or MySpace pages, and, if truth be told, my wife and I have had occasion to deliver an admonishment to our son in that regard (not terribly serious, but not totally with our zone of confort). Robin's case will, if anything, heighten public awareness regarding Facebook and MySpace and similar cyberscrapbooks. And if I were advising an employer (or, rather, when I advise employers, for one of my clients has been talking about launching a business venture that will require paid help over and above his wife, daughter and mother-in-law), I would have them take a look at Facebook and MySpace, et cetera, when checking out prospective employees. What you do on your own time is your private business -- until you make your private business public.

Ambulance Disservice

When the recent scandal regarding misuse of funds at various Long Island volunteer fire companies was breaking, I was ready to bet the mortgage money that there were more such instances in other localities, perhaps a bit more egregious. Unfortunately, nobody took me up on the wager.

Harvey S. Grossman, the ex-Treasurer of the Plymouth Community Ambulance Association has just been sentenced to 5 to 20 years for using over $2 Million in PCAA funds for personal expenses such as furniture, home improvements, travel, jet skis, his daughter's bat mitzvah party, racing his stock car, et cetera.

Co-defendants Jeff Cohen and George Gilliano, who didn't embezzle nearly as much as Grossman did and who apparently cooperated in making the case against Grossman, are slated for sentencing in a week and a half. The way I'm calling it: Jeff and George have good odds for seeing some amount of jail time, but not nearly as much as Harvey got.

And the way I'm calling it for Harvey: In 5 years, when he theoretically becomes eligible for release, the IRS crackdown against abuses by nonprofit organizations will have raised the public consciousness so as to make it politically unwise to spring Mr. Grossman the first time up. But he is likely to behave reasonably well in prison, so he is quite unlikely to stay in for the entire 20 years.

[Disclosure: A number of years ago, under circumstances having no relevance to the Blog and having no relevance to ambulances, I had several occasions to respectively meet both Harvey and Jeff. I do not recall ever meeting with George Gilliano.].

It is a maxim among tax enforcement personnel, in whose ranks I formerly served, that whenever money changes hands, information also changes hands. I have no particular personal ill will towards Harvey or Jeff (or, for that matter, George), but am taken aback by the crass stupidity respectively displayed by two individuals of above-average intelligence. The embezzled funds were, by and large, filched via credit card and check, two money transfer modes which tend to leave clear verifiable trails of information. If Harvey would have been content with less than two million bucks, he could have found some indirect ways to transfer assets without the tracking inherent in credit card postings and checking account drafts. Like syphoning a few gallons of gasoline from an ambulance every week, grabbing an occasional gallon of windshield washer fluid, et cetera.


This, by the way, is quite likely just the beginning of Harvey's and Jeff's and George's legal problems. Surely the IRS smells some tax potential in their cases. Embezzled funds count as gross income for taxation purposes, so Harvey, Jeff and George can expect to hear from the IRS (if they have not been contacted by the IRS already).

But never mind the income tax. The Internal Revenue Code also provides for what are euphemistically called "excise taxes" on improper transactions between tax-exempt organizations and the key personnel thereof. Without going into the complex convolutions of the Internal Revenue Code, there are instances, possibly applicable to at least some extent here, where the "excise tax" is equal to twice the benefit received! It is also worth noting that where there are more than one individuals involved in the scheme, they all can be jointly and severally liable for this "excise tax."

So, in addition to having to reimburse the PCAA, Harvey, Jeff and George most likely have some accounts to settle with the IRS (and, for that matter, the Pennsylvania Department of Revenue).

And if that were not problematic enough, I will note that the Form 990 which tax-exempt organizations are required to file with the IRS is, unlike other tax returns, open to public inspection. It takes a while for these forms to post on the Internet, but the PCAA 990s for 2003 and 2004 were each signed by Harvey. One need not be a tax lawyer with a MBA to know that Internal Revenue Code provides criminal penalties for filing false tax returns. Well, the IRS knows where to find Harvey for the next 5+ years.

I do feel bad for Jeff and Harvey (and George, too, even though I have never met him). But I feel even worse for the taxpayers of Plymouth Township.