San Diego, CA–The brother of former Chabad of Poway Rabbi Yisroel Goldstein, was sentenced in federal court Monday to 8 months custody and a $5,500 fine for his participation in a years-long scheme with his brother to evade taxes.
Mendel Goldstein, 64, of Brooklyn, New York was also ordered to pay restitution totaling $164,475.82. While imposing the sentence, District Court Judge Cynthia Bashant stated, “It’s important to send a message . . . people need to know, this is what happens when you commit tax fraud.”
According to his plea agreement, Goldstein concealed the entirety of his income for at least six years by funneling the income from his successful videography business through Chabad of Poway bank accounts that were controlled by his 58-year-old brother, Rabbi Goldstein. In return, Rabbi Goldstein took a ten percent cut of Mendel Goldstein’s income.
Mendel Goldstein was able to access his funds by writing checks to himself from the Chabad of Poway bank account that concealed the true recipient of the money, instead of addressing checks to fictitious people including “Mr. Green,” “Mr. Gold,” or “Mr. Fish,” or simply making the checks out to “CASH.” Between April 2012 and August 2018, Mendel Goldstein concealed over $700,000 in income from the IRS, evading over $150,000 in taxes.
Rabbi Goldstein alerted Mendel Goldstein to the investigation around December 2018 and encouraged Mendel Goldstein to conceal his tax evasion by filing delinquent tax returns.
In July 2020, Rabbi Goldstein pleaded guilty to fraud charges, admitting that he participated in a complex, years-long, multi-million-dollar tax-evasion scheme and other financial deceptions involving theft of public money. Rabbi Goldstein’s plea agreement outlined the fraud scheme with Mendel Goldstein.
“For years, Mendel Goldstein worked with his brother, Yisroel – then the director of the Chabad of Poway – to orchestrate a financial scheme to hide more than $700,000 of his own income from being taxed,” said FBI Special Agent in Charge Suzanne Turner. “The FBI has no tolerance for those who abuse the tax-exempt status of religious organizations for their own financial gain.”
“Instead of paying his fair share, Mr. Mendel Goldstein used his relationship and the exploitation of a religious organization’s special non-profit status to divert his income, conceal his earnings and evade paying his taxes,” said Special Agent in Charge Ryan Korner of IRS Criminal Investigation. “Today’s sentencing and this investigation demonstrate our commitment to hold accountable those who shirk their tax obligations by corrupting our nation’s tax laws for their own personal gain.”
