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Attorney Sentenced For Wild $500,000 Tax Fraud Scheme Involving Rabbi

Attorney Sentenced For Wild $500,000 Tax Fraud Scheme Involving Rabbi

San Diego attorney Elliot Adler has been sentenced for a $500,000 tax fraud scheme that involved former Former Chabad of Poway Rabbi Yisroel Goldstein.

Adler, a founding partner of a boutique law firm in Southern California, will serve one year and one day for engaging in conspiracy to commit tax fraud with Rabbi Goldstein. 

In an official release, the Department of Justice noted:

Beginning at least as early as 2010 and continuing through October 2018, Adler participated in a so-called "90/10" tax scheme with Rabbi Goldstein. Specifically, Adler gave money to Rabbi Goldstein that purported to be a donation to Chabad of Poway. Goldstein then secretly funneled ninety percent of the funds back to Adler, keeping ten percent of the funds as his fee.

None of the donated funds was actually given to the Chabad as a charitable donation. Adler then falsely claimed that the fraudulent donations were tax-deductible on his tax returns, allowing him to reduce his personal income tax liability by approximately $500,000 (cumulatively) for tax years 2011 through 2017.

The government agency shared that Adler and Goldstein used coded messages to communicate throughout their wild tax fraud scheme. Specifically, the duo used language related to traditional Jewish culture.

The Rabbi would refer to the cash itself as "challah," the source of the money as "the baker," and would ask various co-conspirators to "wrap tefillin." Challah is a traditional bread of Ashkenazi Jewish origin and tefillin are small leather boxes with leather straps that contain Torah parchment. 

In one specific December 2017 incident outlined by the Department of Justice, Goldstein deposited two sequentially-numbered checks from Adler, for $180,000 and $980,000 respectively.

Within a few days, on January 5, 2018, Goldstein sent Adler a coded text message asking to "get together and wrap teffilin." Then, on January 10, 2018, Goldstein wired approximately $1 million to a wholesale jewelry company for the purchase of 246 Suisse Fortuna 1 oz. rectangular gold ingots, 246 Canadian Maple Leaf 1 oz. gold coins, and 246 American Eagle 1 oz. gold coins.

The funds were transferred to Adler later in January 2018. The lawyer then claimed on his 2017 tax return that he had donated $1 million to charity, fraudulently lowering his tax liability by about $447,000. 

As part of his sentence, Adler is required to remit the gold to the United States government. 

Earlier this year, Rabbi Goldsten was sentenced to prison for his part in the elaborate, multi-year tax scheme. Adler is the eleventh, and final, co-conspirator to face sentencing in this case. 

In a statement shared by the Department of Justice, U.S. Attorney Randy S. Grossman said:

"For several years, Elliot Adler defrauded the United States while giving the false appearance of making charitable donations. This investigation and the resulting prosecutions should leave no doubt that the United States takes tax fraud seriously and those who perpetrate these schemes will be brought to justice." 

Grossman thanked both the Federal Bureau of Investigation (FBI) and the IRS-Criminal Investigation division for their work. 

This sentencing comes as the IRS prepares for a major revamp -- thanks to an additional $80 billion in funding -- that will see the agency target white collar tax evaders, like late billionaire Robert Brockman who passed away before his trial could begin.

What do you think about this wild tax fraud scheme?

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Rebekah Barton

Rebekah Barton

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