Friday, April 25, 2014

Head of Jewish Free Loan Society Pleads Guilty To Operating An Unchartered Bank In Money Laundering Case

The New Jersey U.S. Attorney's Office announced that on Wednesday criminal defendant Moshe Schwartz pleaded guilty to charges of operating an unchartered bank and aiding in the filing of a false tax return. As reported by the Newark Star-Ledger, the case grows out of the arrest of 46 politicians and Jewish religious leaders in 2009 in an investigation of  money laundering and corruption. (See prior posting.) Schwartz, who was not among those initially arrested, headed a supposed charitable organization, Gemach Shefa Chaim. The organization was created to provide interest-free loans to needy members of the Sanz Hasidic community in Union City, New Jersey.  However it was also used to launder millions of dollars, free from oversight by banking regulators.  By 2009, the Gemach had 350 client accounts. It accepted deposits from the clients and then made wire transfers and wrote Genach checks at the direction account holders to disburse funds. Schwartz, who will be sentenced in July, could face up to 5 years in prison.