Rabbi finance arrests may be 'down to ignorance'

By Ellen Tumposky, March 4, 2010

A string of arrests of Orthodox rabbis and leaders in the US, accused of financial crimes, has raised concerns in the community and sparked debate about whether a spirit of corruption or an other-worldy naivete about money underlies the apparent crime spree.

The arrests include that of Jewish school director Rabbi Milton Balkany, a prominent director of a Jewish school who is accused of trying to extort a hedge fund; the Spinka Grand Rebbe, who got two years for tax fraud; and five rabbis arrested in a New Jersey money-laundering scandal.

Other cases include the conviction of meat plant owner Sholom Rubashkin on 86 charges of fraud; the prosecution of money manager Ezra Merkin for allegedly helping Bernard Madoff; and the jailing of a New York synagogue gabbai, Chaim Regensberg, for his own $11 million Ponzi scheme.

"In some of these cases there is a level of misunderstanding, in others there is a level of corrupt intent. It's not fair to paint with a broad brush," says criminal lawyer Benjamin Brafman, who is defending Rabbi Balkany.

"There is a lack of sophistication and a degree of naivete as to how highly regulated the United States has become and how complicated criminal statutes are in the area of white-collar crime. It's not necessarily a legal defence - it's a reality I have to deal with."

Mr Brafman spoke in July at a seminar on business ethics in an Orthodox area of Brooklyn, where he joked of looking out at a sea of black hats and "trying to figure out who the FBI agents are".

The message, said Rabbi Avi Shafran of Agudath Israel, which organised the event, is that the law of the state in financial matters is the law: "One should not feel we're back in Europe dealing with a corrupt Russian czar." It was one of several seminars Agudath Israel organised involving lawyers and tax accountants.

He links a lot of the corruption to ignorance. But Shmarya Rosenberg - whose widely read blog, FailedMessiah, casts an unforgiving eye on the Orthodox community to which he once belonged - is more sceptical.

"There is a disregard for secular law. Jewish law is what takes precedence."

According to this mindset, he argues: "It's fine to steal from the government, from companies, from non-Jews, as long as you don't get caught."

The rise in corruption, he says, is tied to rising population and declining resources in the community, where secular higher education is discouraged. "There's not enough money coming in to support community institutions," Mr Rosenberg said.

Rabbi Shafran said: "Any corruption, or appearance of corruption, always has great potential of a negative impact."

But Abraham Foxman, national director of the Anti-Defamation League, says the arrests preoccupy Jews more than they encourage antisemites.

"We were more worried about Madoff's Jewishness than the non-Jewish world. To us even one Jewish criminal is too many."

Who's in court

● A Jewish school director accused of trying to extort a hedge fund
● The Spinka Grand Rebbe is jailed for tax fraud
● Five rabbis are arrested in a New Jersey money-laundering scandal
● A Jewish meat plant owner is convicted of 86 charges of fraud

Last updated: 4:58pm, March 4 2010