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Two Orthodox Rabbis Arrested for Laundering Columbian Drug Money

N.Y. Times, June 17, 1997


NEW YORK -- A dozen men, including two identified as Orthodox Jewish rabbis, were charged by federal authorities Monday with conspiring to launder and hide $1.75 million in drug profits for Colombian narcotics dealers by routing the cash through the bank accounts of a synagogue and a yeshiva in Brooklyn.

The bizarre case, federal prosecutors in Brooklyn said, brought together a collection of strange bedfellows - five New York representatives of Colombian drug traffickers, three go-betweens who purportedly transported cash in suitcase quantities, and four men with ties to a close-knit Jewish community.

At one point, the officials charged, the rabbis ran tens of millions of dollars in drug profits through the bank accounts of a relatively modest Borough Park synagogue and provided nearly $3.5 million from American and Swiss accounts for the purchase of an aircraft for the Colombian drug lords.

"Money launderers are the indispensable partners of major drug traffickers, and the cynical act of using religious institutions to conceal drug proceeds is particularly reprehensible," said Zachary Carter, the U.S. attorney for the Eastern District of New York, in announcing the charges.

Seven defendants, including Rabbi Mahir Reiss, 47, of 3543 Bedford Ave., and Rabbi Bernard Grunfeld, 64, of 1417 46th St., both in Brooklyn, were arrested Monday and were arraigned late in the day before U.S. Magistrate Judge Roanne L. Mann, charged with conspiracy to launder money. Two suspects, Grunfeld and Israel Knobloch, 24, of 5200 15th Ave., Brooklyn, also were charged with conspiring to avoid federal cash-transaction reporting requirements.

Six defendants were held without bail, and one, Abraham Reiss, 48, of 320 Riverside Drive in Manhattan, a brother of Mahir Reiss, was released on $750,000 bail. Three other men named in the federal complaint were listed as fugitives, and two more were being held in custody elsewhere in New York in other cases, according to Lee Dunst, the assistant federal attorney prosecuting the case.

Unveiling a three-year undercover investigation that used court-authorized wiretaps and other surveillance, the federal complaint charged that the two rabbis and Abraham Reiss laundered $750,000 by taking cash from go-betweens, depositing it in the bank accounts of a synagogue-based organization and, after subtracting commissions, writing checks to drug traffickers.

Investigators said the bank accounts used in the scheme, held in the name of Chaim Shel Shulem, which shares quarters with Congregation Eitz Chaim at 1577 48th St. in Borough Park, held deposits of more than $19 million during the 10-month period when the laundering transactions occurred, between August 1995 and May 1996.

Grunfeld, listed as the president of Chaim Shel Shulem, was said to have written all the checks that went to the drug traffickers. He and Knobloch were also accused of concealing the movement of $1 million in drug money by making 95 deposits and withdrawals of just under $10,000 - the amount that triggers a government cash-transaction reporting requirement - through the bank accounts of Congregation Eitz Chaim and Bobover Yeshiva, at the same location.

The defendants made no statements in court Monday. While Grunfeld was listed by prosecutors as the head of Chaim Shel Shulem, dozens of people at Congregation Eitz Chaim late Monday declined to say anything about him or the case. Some seemed not to recognize the name Chaim Shel Shulem.

The synagogue and yeshiva are in a five-story building with a brick front and a small awning imprinted with the institution's name in Hebrew. The only words in English on the facade call it "the Katz Family of Mexico Building."

In a ground-floor, two-room school lined with books, about 100 people were studying at tables. A man who appeared to be in charge, but who would not give his name, said he knew nothing about the two rabbis named in the federal complaint.

The federal investigation - an undertaking of the U.S. Attorney's Office, the Drug Enforcement Agency and the Internal Revenue Service - began in 1994, when agents detected a pattern of cash deposits and withdrawals intended to circumvent the government's reporting rules in various bank accounts held in the name of the synagogue and yeshiva, officials said.

With court-authorized telephone wiretaps, surveillance and other techniques, the investigators said they uncovered a conspiracy in which Grunfeld and Knobloch eventually made more than $1 million in deposits and withdrawals - transactions, they said, that let the conspirators move large sums of illicit drug profits.

Later, in 1995 and 1996, investigators said, the 12 men named in Monday's complaint conducted a full money-laundering operation. Five of them - Lisandro Montes De Oca, 29; Francisco Gil, 30; Estenio Rodriguez, 30; Juan Suarez, 39, and Alvaro Duque, 36 - were said to have brought in large sums that Colombian drug dealers wanted to launder.

The money was given to three men described as intermediaries - Jack Pinski, 35, a Colombian who is a fugitive, and Roberto Buendia, 40, and Fabio Arana, both of Medford, N.Y. They were said to have counted and stashed the money at an apartment at 243 West 75th St.

There, prosecutors said, Abraham Reiss picked up the money. It was later deposited in various accounts held in the name of Chaim Shel Shulem. Grunfeld, the organization's president, signed checks that were made out to "entities in accordance with drug traffickers' instructions," the federal complaint said.

Those instructions were communicated through Rabbi Reiss, who had no formal connections to Chaim Shel Shulem, investigators said. Commissions of 13 percent to 15 percent were deducted from the laundered money and divided among the intermediaries.

Prosecutors said they did not know how members of a deeply religious community came into contact with professional money launderers and drug traffickers. But they charged that in 1994, Rabbis Reiss and Grunfeld, and Abraham Reiss arranged $3.4 million in financing to buy a Beech Super King aircraft, a type commonly used by drug smugglers.


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