Rabbi jailed for tax fraud used Jewish code words in text conversations with lawyer

'Challah' was code for cash and 'wrapping tefillin' was codeword for picking up gold


Rabbi Yisroel Goldstein, of the Chabad of Poway Synagogue, and Ivanka Trump arrive for an event to celebrate a national day of prayer, in the Rose Garden of the White House in Washington, DC on May 2, 2019. (Photo by Brendan Smialowski / AFP) (Photo credit should read BRENDAN SMIALOWSKI/AFP via Getty Images)

Texts exchanged between an Orthodox Californian rabbi and an attorney involved in an elaborate tax fraud have revealed the secret Jewish code words they used to disguise their wrongdoing.

The pair - Chabad of Poway Rabbi Yisroel Goldstein and lawyer Elliot Adler - used coded language replete with Jewish terms, referring to cash as “challah” and the source of the money as “the baker”.

Goldstein would also invite his co-conspirators to “wrap tefillin” when he was arranging for deliveries of cash and gold to those in on the scheme.

Eventually, the fraud was busted and Adler was jailed earlier last week for one year and one day. Goldstein, who was convicted in 2020, was sentenced to 14 months in prison in January this year.

The court heard that FBI agents discovered the Jewish code words when they investigated the pair’s tax fraud system, known as a “90/10” scheme, whereby Adler made tax-deductible donations to Chabad of Poway, of which Goldstein funnelled 90 per cent of the funds back to Adler, keeping the remaining ten per cent for himself.

They began cooking the books in 2010  with amounts in the tens of thousands of dollars, snowballing into larger sums over time. Adler  falsely claimed the fraudulent donations as tax-deductible on his tax returns, reducing the amount of personal income tax he would have to pay by a total of about $500,000 between 2011 and 2017.

Prosecutors told the court that gold coins worth more than $1m were passed between the two men in 2018 alone.

Adler, a San Diego attorney, pleaded guilty to the fraud and forfeited a substantial hoard of gold coins, has been suspended by the California state bar. A restitution hearing in October this year will determine what else he owes.

11 others have also been charged in connection with the scheme, including Goldstein's brother, Mendel Goldstein (not to be mistaken with Yisroel Goldstein’s son, the current Chabad of Poway rabbi who is also named Mendel Goldstein and was not implicated in the scheme).

The Chabad of Poway synagogue, which is at the heart of an influential Jewish community in southern California, was the scene of a fatal shooting during Passover 2019. A gunman, who had previously published an antisemitic manifesto online, stormed the synagogue and shot three people, including Rabbi Yisroel Goldstein.

In the moments after the attack, the 19-year-old gunman told a 911 operator that he opened fire on the synagogue in order to save white people from Jews. The murder and attempted murders were classified as a hate crime, to which he pleaded not guilty. He was sentenced to life in prison in September 2021.

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