Union City, NJ – Gmach Trying to Recover $500,000 Seized By The FBI in Dwek Case

Union City, NJ – A charitable fund that surfaced in a massive federal money laundering and corruption sting, which led to the arrests of dozens of elected and religious officials and others last summer, is now trying to recover more than half a million dollars seized by the FBI.

But federal authorities are seeking permanent forfeiture of the money used — they say — to help fuel a long-running scheme.

The fund, Gmach Shefa Chaim, was one of several charities the government said figured in the lengthy criminal investigation.

A gmach, an acronym of Hebrew letters that translates to “acts of kindness,” is basically a fund in many Orthodox Jewish communities that may be formed for any number of charitable services — from interest-free loans for any need, to the lending of bride’s dresses.

According to the U.S. Attorney’s Office, the charitable fund was used to launder hundreds of thousands of dollars in checks into cash at the behest of Solomon Dwek, who had agreed to work as an undercover informant for the FBI after being charged in a $50 million bank fraud.

It all began, say the criminal complaints filed in the case, in the Union City office of Moshe Altman, a real estate developer from Monsey, N.Y., where Dwek talked of trying to take money out of his bankrupt holdings.

“Question is, if I bring in money, how many of these guys can convert it?” he asked Altman, according to transcripts of surveillance tapes attached to the criminal complaints.

During that March 2007 meeting, recorded by Dwek in Altman’s Union City office, Shimon Haber — another developer who had worked with Dwek in the past — said to talk to Altman. “He has washing machines,” he said, according to the transcript.

The washing machines, say federal authorities in their filings, referred to Gmach Shefa Chaim, a free-loan society that served the Hasidic Jewish community.

Within hours after Haber and Altman were arrested with more than 40 others last July, the FBI moved to seize the organization’s bank account as well. Some six months later, the organization says it wants the money back, arguing that the $508,985 taken by the agents was improperly seized. Attorney David Liston of Hughes Hubbard and Reed, who is representing the gmach, said Altman did not run the organization and did not have control over it.

“I don’t know what the basis was for seizing the money,” he said. “There is nothing in those complaints to suggest the gmach was knowingly involved or intentionally involved in the acts alleged by the government.”

In the complaint, Altman is quoted as assuring Dwek that he would conceal the transaction “from anyone at the organizational front and all others.” But the U.S. Attorney’s Office maintains in its filing that the society was used by Altman as a mechanism to launder hundreds of thousands of dollars over a two-year period.

“Altman’s “washing machines’ were accounts held by the Gmach,” stated Assistant U.S. Attorney Bradley Harsch in a recent filing on the case in federal court. He declined comment on the matter.

In his response brief, he said when Dwek wanted to launder checks from his business, Altman told him to write out “sizable checks” to Gmach Shefa Chaim. It says Dwek’s checks would subsequently be returned to him in cash, less a 15 percent fee for the transaction. According to Harsch’s brief, of 15 alleged money laundering transactions that Altman handled for Dwek, 10 went through the gmach fund, totalling $357,500. The remainder, he said, were made out to what he called “other purported charities.” Some of the checks were drawn on the account of BH Property Management, which the government revealed to be an FBI undercover company, according to the criminal complaints.

When Altman’s office in Union City was searched on July 23 after the arrests, the brief said FBI agents seized approximately eight bundles of blank checks from Gmach Shefa Chaim accounts, as well as four hard drives and a laptop computer that officials said contained the organization’s books and records.

Harsch said attorneys for the gmach have made no attempt “to explain or defend the use of its accounts.” At the same time, he said in his brief to the court that any property used to facilitate a crime — including “clean” money used to disguise dirty money and “businesses that are fronts for money laundering operations” is subject to outright forfeiture.

Liston said the gmach is an entity that values its privacy for religious reasons, providing help to those in need, and doing so anonymously.