A leader of the Chabad movement in the New Jersey was sentenced to 22 years in prison for his role in masterminding a $200 million fraud. By some estimates, the fraud may be as large as $430 million. In February, Eliyahu Weinstein of Lakewood, NJ was sentenced to 264 months in prison. Now just a couple months later he has been charged in yet another multimillion fraud scheme.
Growing up on the Jersey shore, I was somewhat familiar with the large and close knit Jewish community in Lakewood. Those involved in the Chabad movement are generally pillars of the community. They work hard, are very spiritual and are quite successful. Unfortunately, in every organization and in every religion there are a few folks who turn to a life of crime and fraud. We have found that affinity fraud – fraud that targets victims because of their membership in a group – is especially devastating when it occurs within a religious community.
Chabad – Lubovitch is an organization, movement and philosophy involving the Jewish way of life and God’s teachings as set forth in the Torah. Like many ultra orthodox or religious societies, it is very insular meaning there is limited interaction with society at large. It’s members tend to pray, live and work together. Because of those strong bonds, it is much easier for a member to take advantage of the trust reposed among members.
Eliyahu “Eli” Weinstein was accused of running a real estate Ponzi scheme for approximately 7 years. During that time, monies from new investors was used to pay off existing investors. Ponzi schemes can last for many years as long as there is enough new money coming in. As the number of participants grows, however, so does the need for new money. Inevitably, Ponzi schemes collapse under their own weight. Weinstein’s elaborate scheme was no exception.
Especially interesting in the case was the testimony of top Chabad Rabbi Sholom Ber Lipskar. While its common for religious leaders to advocate for compassion, according to published reports, Rabbi Lipskar testified that Jews should only be sent to prison if they are violent and pose an immediate danger to human life.
Although not Jewish, I have spoken with one person who tells me that scriptures say that imprisonment is warranted if a person is a danger to the community. According to court records, Eli Weinstein was found to have committed additional serious crimes while on bail for the original charges. In our opinion, that alone makes him huge threat to the safety of the community.
Character witnesses can often help at sentencing but only if the defendant shows remorse. After pleading guilty, court records reveal that Weinstein attempted to change his mind and at one point, accused the court of misconduct (obviously never a good method of impressing the court). More importantly, he expressed no remorse.
According to one press report, Weinstein’s chief character witness, Rabbi Sholom Ber Lipskar, failed to tell the court that his wife made large commissions selling real estate to Weinstein.
The story of Eliyahu Weinstein is far from over. Appeals, new charges and more are likely to follow. He remains in custody, however, after a sentencing judge called him a flight risk and took the unusual step of telling the Bureau of Prisons to house him in a secure facility.
One thing is for certain, many people in the Jewish community are out millions of dollars. Although sentenced to pay restitution, collection of additional monies is unlikely.
We do not represent any victims of Eli Weinstein. In our experience, however, recovery is often limited, comes only to those who move quickly and is often available from third parties that may have facilitated the fraud or Ponzi scheme.
The fraud recovery lawyers at Mahany Law help victims recover their hard earned money. Typically we represent people who lost money as a result of fraud, Ponzi schemes, stockbroker fraud, accounting malpractice and real estate scams. We typically look to third parties such as accountants, banks and others that knew or should have known of the fraud yet failed to act. For more information, contact attorney Brian Mahany online, by email at or by telephone at (202) 800-9791.
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