RFRA Does Not Protect FLDS Members' Food Stamp Fraud

As previously reported, in February the U.S. Attorney's Office for the District of Utah announced indictments against eleven leaders and members of the polygamous FLDS Church charging them with conspiracy to commit food stamp fraud and conspiracy to commit money laundering.  Under FLDS doctrine known as the Law of Consecration, faithful members who were food stamp recipients were required to donate their benefits to the FLDS church through a clearinghouse known as the Bishop’s Storehouse. Food and household items were then redistributed to all in the community, whether or not they were food-stamp eligible. Now, in United States v. Jeffs, (D UT, Nov. 15, 2016), a Utah federal district court rejected the argument that this practice is protected by RFRA and the 1st Amendment.

The court held that one of the defendants, FLDS leader Lyle Jeffs, did not have a sincerely held belief in the Law of Consecration; however other defendants did. Only one of those defendants-- the one who was actually eligible to receive SNAP (food stamp) benefits-- though showed a "substantial burden" on his religious beliefs. The court went on, however, to find that the government has shown a compelling interest in limiting SNAP benefits to the purchase of food to be used by the eligible recipient's household, and that the SNAP statutes and regulations are the least restrictive means of furthering that interest.  The court also rejected defendants' 1st Amendment claims. Fox 13 reports on the decision.

"Blessing" Scam Leads To Hate Crime Charges

Last week, the Kings County (Brooklyn), New York district attorney announced that a 44-year-old woman has been indicted on charges of grand larceny as a hate crime for taking $160,000 in cash and jewelry from two Chinese women in separate incidents involving the same type of scam. The victims were told that they or family members would die because of a curse that could only be removed by gathering large sums of cash and jewels to be blessed. The victims were told to place the cash and jewels in a bag for the blessing.  When the victims later opened the bag, they found the cash and jewels gone. According to NBC News, the hate crime charges were based on the theory that the victims were targeted because of their Chinese ethnicity and because of their religious spiritual beliefs.

Defrauded Church's Conversion Claim Against Bank Is Dismissed

In Mt. Hope Universal Baptist Church, Inc. v. Bowen, (NY Kings Cty. Sup. Ct., Oct. 14, 2016), a New York state trial court dismissed a conversion claim brought by a church that was defrauded out of the proceeds of a life insurance policy.  In 1976, Rosetta Goodridge was the founding member of Mt. Hope Baptist Church.  She died in 2009, leaving a life insurance policy that named the church as beneficiary.  Goodridge's daughters and granddaughters fraudulently opened a bank account at Citibank in the name of Mt. Hope.  They then filed a claim with the insurance company and received the proceeds of the policy.  Among other claims, the church sued Citibank for conversion.  The court dismissed the action, holding that because Mt. Hope never had actual or constructive possession of the check, it had no cause of action for conversion. The court also held that the insurance company does not have a valid claim against Citibank for contribution.

FLDS Fraud Defendant Says 1st Amendment Protects His Letters To Jailed Leader

As previously reported, in February eleven members of the polygamous FLDS Church were indicted on charges of conspiracy to commit food stamp fraud and conspiracy to commit money laundering.  Now, as reported by Fox13 News, one of those defendants, Preston Barlow, is objecting to a change in the conditions of his pretrial release.  Earlier this month after he was incorrectly charged with violating conditions of his release, the limits on his contacting co-defendants were expanded to include a ban on any contact with FLDS leader Warren Jeffs who is in prison on other charges. In a motion (full text) filed with the Utah federal district court yesterday, Barlow argued that there is no basis for the expansion, and that it violates his religious freedom rights, saying:

The tenets of Mr. Barlow's sincerely held religious beliefs require him to maintain a conduit of connection and communication with his prophet. He does so by writing to Warren Jeffs approximately one time per month. The writings do not generate a direct response from Warren Jeffs.... [R]estricting the communication would have a devastating impact on Mr. Barlow's religious practice, and on his ability to maintain such religious practice consistent with what  he believes are the necessary requirements for eternal salvation.

FLDS Leader Flees While On Bond Awaiting Trial

Lyle Jeffs, a leader of the polygamous FLDS Church, has fled while out on bond awaiting trial on charges of conspiracy to commit food stamp fraud and conspiracy to commit money laundering.  As reported by AP and KUTV News, after being denied bond several times as a potential flight risk, earlier this month Jeffs was finally released in home confinement on the condition he wear a GPS monitor and leave the Salt Lake City house where he was staying only for work, doctors' appointments and religious services.  A warrant for Jeffs arrest was issued Sunday.

Lawsuit Filed Against Mystic Rabbi By Woman Who Paid $214,000 For Matrimony and Torahs

The New York Post reported  yesterday on a lawsuit filed against Rabbi Chaim Sharabi, a controversial mystic in the Orthodox Borough Park community, by a woman who claims she paid Sharabi $214,000 after he promised to find her a husband and to purchase three Torah scrolls in her name to be placed in synagogues in Brooklyn and in Israel.  Plaintiff Cecilia Lifschitz says that Sharai never performed on his promises.  Sharabi says he did match Lifschitz with a man, but that things did not work out between them, and that he did purchase the Torah scrolls.

False Online Prayer Website Closed Down

This week Washington state's attorney general Bob Ferguson announced that his office had reached an agreement with Christian Prayer Center, a website that offered online viewers prayers in English or Spanish for amounts ranging from $9 to $35.  According to the AG office's release, the website featured non-existent clergy and false consumer testimonials:

The websites contained fictitious testimonials from consumers using stock photos that claimed they successfully prayed to avoid home foreclosure, deliver a healthy baby, win the lottery, obtain negative results on an HIV test and put cancer into remission....

Between 2011 and 2015, CPC collected more than $7 million from 125,000 consumers nationwide. Some of these consumers were charged repeatedly, resulting in a total of over 400,000 transactions.

The settlement requires the website operators, among other things, to end unfair and deceptive business practices, return funds to consumers and pay attorneys' fees of $500,000.

FLDS Leader Lyle Jeffs Denied Bond In Food Stamp Fraud Case

On Monday, a U.S. Magistrate Judge in Salt Lake City, Utah granted the prosecution's request to deny bond to FLDS Church bishop Lyle Steed Jeffs who is charged with conspiracy to commit food stamp fraud and conspiracy to commit money laundering. Jeffs and ten others are charged with diverting millions of dollars in food stamp benefits to church leaders who then reallocated the benefits. (See prior posting.) KSL News reports that prosecutors convinced the court that Jeffs poses an extreme flight risk, despite the absence of precedent for denying bond in a welfare fraud case. Seven of the other defendants have been released on bond, subject to GPS monitoring and other conditions.

RICO Lawsuit Filed Against Pastor and Elder of Defunct Megachurch

A civil RICO lawsuit was filed last week against Mark Driscoll, pastor of the now-closed Seattle, Washington, Mars Hill Church.  At its height, the Mars Hill had expanded to 5 states and drew 13,000 attendees on an average Sunday. Also named in the suit filed by 4 former church members was the church's chief elder, John Sutton Turner.  The complaint (full text) in Jacobsen v. Driscoll, (WD WA, filed 2/29/2016), alleges that defendants solicited contributions from thousands of members for specific charitable purposes and then diverted the funds to other purposes, including fraudulent promotion of Driscoll's book, Real Marriage, and for church expansion. Daily Beast reports on the lawsuit and its background:

Mars Hill closed its doors in 2014, following a number of scandals involving allegations of Driscoll’s bullying and spiritual abuse of members and church leaders, misogyny, and homophobia espoused on a church message board, plagiarism, and misuse of church funds—which this lawsuit seeks to redress. Since its closure, the details of the organization’s dissolution have been opaque, with little public accounting, and a group of remaining leaders who have refused to comment on who gets what from the failed enterprise 

Feds Indict FLDS Leaders On Food Stamp Fraud Charges

The U.S. Attorney's Office for the District of Utah announced on Tuesday the unsealing of an indictment against eleven leaders and members of the polygamous FLDS Church charging them with conspiracy to commit food stamp fraud and conspiracy to commit money laundering.  (Full text of indictment in United States v. Jeffs). According to the U.S. Attorney's Office:

The indictment alleges church leaders diverted SNAP proceeds from authorized beneficiaries to leaders of the FLDS Church for use by ineligible beneficiaries and for unapproved purposes. A large percentage of FLDS Church members living in the Hildale, Utah – Colorado City, Arizona, community known as Short Creek receive SNAP benefits, amounting to millions of dollars in benefits per year.

Essentially, FLDS leaders required food stamp recipients to donate their benefits to a central clearing house which then redistributed food and household items to all in the community, whether or not they were food-stamp eligible. The indictment includes counts seeking criminal forfeiture of assets.  Daily Beast  reports further on the indictments.

Madoff Bankruptcy Trustee Recovers Substantial Amounts For Fraud Victims

According to a filing in federal bankruptcy court in New York this week, many of the victims of the 2008 investment fraud carried out by Bernie Madoff will recover most or all of their losses. Among the victims were a number of Jewish philanthropic organizations. The Jewish Press reported yesterday that court-appointed bankruptcy trustee Irving Picard has recovered, or reached agreements to recover, some $10.9 billion on behalf of victims of the Ponzi scheme. If the court approves the latest distribution proposed by Picard, victims who invested up to $1.61 million with Madoff (1264 out of 2227 victims) will get all of their funds returned. Those who invested more will receive back 57% of their investment.  A number of the Jewish charitable foundations who were victimized each had well over $1.61 million invested. (See prior posting.) The Wall Street Journal reports that this latest payout has been delayed as litigation over how to calculate the losses of some investors has wound its way through the courts.

Guilty Pleas In Indictment For Exporting Meat Falsely Labeled As Halal

According to the Des Moines Register, yesterday Midamar Corp. and Islamic Services of America each pleaded guilty in federal court in Iowa to one count of conspiracy to make false statements on export certificates, sell misbranded meat and commit wire fraud in the export to Malaysia and Indonesia of beef products purporting to be Halal. Each company will forfeit $600,000 in profits and may face probation and additional fines at sentencing. The related companies and their principals were indicted last year. (See prior posting.) Midamar’s founder, Bill Aossey Jr., was convicted earlier this summer of falsifying documents, while Aossey’s two sons who are directors of Midamar will enter guilty pleas on Friday. (See prior related posting.)

Securities Fraud Defendant Gets Bail Because of Religious Affiliations

A major defendant in a massive securities fraud and money laundering case has been granted bail by a Brooklyn federal judge in large part because of the defendant's religious ties and credentials. The Wall Street Journal and Bloomberg News report details.  Vitaly Korchevsky is both a former Morgan Stanley Vice President and for decades has been a Baptist pastor.  He is charged with making more than $17 million in profits in an elaborate international scheme in which hackers broke into the computers of financial news disseminators and stole some 150,000 press releases.  They then passed information from the still confidential press releases to traders in the United States and Ukraine who realized $100 million profit in total from them. Korchevsky was born in Kazakhstan, and lived while young in the former Soviet Union, where he was beaten for keeping Bibles.  He is a prominent figure in the Slavic Baptist Church in the U.S. and elsewhere and serves as chairman of an association of 28 churches. 80 to 90 of his supporters showed up at his bail hearing.  In granting release on $2 million bond, Judge Raymond Dearie cited  "the faith that hundreds of people have put in [Korchevsky]."

No Establishment Clause Problem In Indictment of Halal Meat Exporter For False Statements

In United States v. Aossey, (ND IA, Aug. 25, 2015), an Iowa federal district court rejected Establishment Clause and Free Exercise challenges to a 92-count indictment against various affiliated companies and individuals charging them with making false statements on export certificates and on a website regarding Halal-slaughter of meat being exported. The court said in part:

[N]either the court nor the jury will be required to decide what Halal means. The government is not claiming merely that Defendants represented that they were selling Halal products that were not in fact Halal....  Rather, the government is alleging that Defendants made specific, false representations, including: (1) Defendants did not use penetrative captive bolt stunning; (2) all of Defendants’ beef products were hand-slaughtered; (3) a practicing Muslim recited a specific prayer while slaughtering; (4) Defendants did not sell leftover hindquarters from Kosher slaughters as Halal; (5) Defendants’ meat products complied with the laws and requirements of Malaysia, Indonesia, Kuwait and the United Arab Emirates; and (6) the animals slaughtered were vegetarian fed. The government believes that Defendants made these allegedly false representations to convince their customers that their meat products were Halal.

(See prior related posting.)

Jury Awards Consumer Fraud Damages In Conversion Therapy Lawsuit

The Southern Poverty Law Center reported that a New Jersey state trial court jury yesterday awarded treble damages of $72,400 to a total of five plaintiffs who sued a provider of "conversion therapy" under the state's consumer fraud law. The award against JONAH (Jews Offering New Alternatives for Healing), its founder and a counselor, compensated plaintiffs for fees paid and for mental health counseling needed by one of the plaintiffs. The jury found that claims JONAH could change clients from gay to straight were fraudulent and unconscionable. In coming weeks the judge will also decide whether to cancel JONAH's business license. (See prior related posting.) SPLC's case docket furnishes links to all the pleadings and orders in the case as it proceeded through the court since it was filed in 2012.

Church's Suit Against Chase and JPMorgan Dismissed In Part, With Leave To Replead

In Rector, Wardens, and Vestrymen of Christ Church Cathedral of Indianapolis v. JPMorgan Chase and Company, (SD IN, May 21, 2015), an Indiana federal district court dismissed with leave to replead constructive fraud claims against Chase Bank and its parent JPMorgan brought by Christ Church Cathedral that lost some $13.5 million from trusts that had been set up to benefit it under the will of Eli Lilly.  The church alleged that the trustee bought complex structured notes and proprietary hedge funds that lost money but resulted in increased fees for the trustee. The court held that the church had not stated its claims with sufficient particularity, lumping together various defendants and failing to indicate what decisions the church made in reliance on alleged misrepresentations. The court dismissed the state securities law claim without leave to replead it. It did not dismiss a breach of trust claim against Chase Bank. Indianapolis Star, reporting on the decision, quotes the church's attorney who says that amended pleadings will be filed.

Chicago Travel Agent Charged With Mail Fraud In Hajj Visa Misrepresentations

The U.S. Attorney's Office for the Northern District of Illinois yesterday announced the arrest on mail fraud charges of Chicago travel agent Rashid Minhas.  A criminal complaint charges that Minhas sold Hajj travel packages to some 50 customers for a total of $525,000, falsely representing to them that the package contained the required visa to enter Saudi Arabia. It is alleged that Minhas knew that his company, Light Star Hajj, was not authorized by Saudi Arabia to obtain visas.

Indictment Charges Fraud In Export of Supposed Halal Meat

On Dec. 5, the U.S. Attorney for the Northern District of Iowa announced the indictment of three related corporations and two corporate officials on charges of extensive fraud in the export sale of meat represented to be "halal." The indictment in United States v. Aossey, (ND IA, Dec. 5, 2014) (full text) charges defendants with conspiracy to make and use false statements on documents, sell misbranded meat, commit mail and wire fraud and sell misbranded meat.  This indictment expands on charges and individuals targeted in an earlier indictment in October.  (Background).  Export Law Blog summarizes the new charges against Midamar Corp., Islamic Services of America, ISA, Inc., Jalel Aossey and William Aossey:

The initial indictment charged William Aossey Jr. with falsely stating on export certificates that meat had been slaughtered in a Halal-certified slaughterhouse.

The new indictment adds Mr. Aossey’s sons and Midamar itself.... [A] central part of Midamar’s [defense] was that even if the meat was not slaughtered in Halal-certified slaughterhouses, the meat was still Halal meat as represented by the company.

The facts set forth in the new indictment seem to be directly aimed at this argument, going into the specific ways in which the slaughtered meat did not comport with the Halal standards that Midamar detailed on its own website.

Claims of Mislabeling of Dietary Supplements Did Not Infringe Free Exercise Rights

In State of Texas v. Valerie Saxion, Inc., (TX App., Dec. 4, 2014), a Texas state appellate court rejected arguments by defendant and her company that the state was infringing their free exercise rights by proceeding against them with charges that their mislabeling and misbranding of dietary supplements violated the Texas Food, Drug, and Cosmetic Act and the Deceptive Trade Practices Act. Defendant argued that her statements were based on sincerely held religious beliefs.  The court concluded, however:

The twenty-four “practices in pursuit and conduct of trade or commerce” listed by the State in its live pleading do not seek to restrain Saxion from practicing any religious beliefs or expressing any religious opinions..... Rather, the relief sought by the State attempts to regulate the advertising and sale of certain dietary supplements as a proper restraint on commercial speech necessary to protect the public..... Therefore [defendant] ... failed to allege a viable ultra vires claim with regard to her free-exercise-of-religion rights and the attorney general’s discretion and authority to enforce the TFDCA and DTPA.

Charges of Fraudulent Fundraising for Jewish Religious and Charitable Organizations Settled In Civil Judgment

As reported by Courthouse News Service, New York's attorney general yesterday anounced the entry of a civil judgment settling charges in a charity fraud case against Yaakov Weingarten and his wife Rivka who raised funds for some 19 Jewish religious organizations and Israeli medical charities.  Eight of the charities existed in name only.  Weingarten siphoned off large amounts of the funds raised and used them for personal purposes.  In May, Weingarten pleaded guilty to tax fraud and paid $90,685 in restitution to New York state tax authorities. He was also sentenced to 5 years probation during which he is barred from any fundraising activity. In yesterday's civil judgment,  Weingarten and his wife were ordered to pay over $522,000. Of that, $360,000 will go to two legitimate Israeli charities that carry out the kind of medical services that Weingarten  purported to be raising funds to support. The order also permanently shuts down Weingarten's charitable operations.