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.
