Massive N.J. welfare fraud scheme

[GMDino]

https://www.usatoday.com/story/news/nation-now/2017/06/30/how-did-massive-n-j-welfare-fraud-scheme-work/441804001/

Quote:Seven Lakewood, N.J., couples were arrested this week on charges related to a multimillion-dollar welfare fraud scheme.


The families are accused of scamming the government into doling out nearly $2 million in aid reserved for the poorest citizens.

The basics:

• A prominent rabbi and his wife, as well as three others were arrested in simultaneous federal and state raids Monday morning on charges related to alleged public assistance fraud on a scale rarely seen before in New Jersey.
  Rabbi Zalmen Sorotzkin, who runs the synagogue Congregation Lutzk and businesses linked to the synagogue, was taken into custody Monday and is facing charges of theft by deception in Ocean County Superior Court. Read more here. 
• Three couples were arrested Tuesday night in federal and state raids in connection with an ongoing investigation that has so far exposed about $2 million in alleged public-assistance fraud in the town. 
  Each of the six people arrested Tuesday is facing a charge of second-degree theft by deception, a state crime, according to a prepared statement from the Ocean County Prosecutor's Office. Read more here.
  

Related:
[/url]

14 arrested in New Jersey welfare fraud investigation

Raid targets millionaire on food stamps

Arrests leave residents scrambling

In the last week, hundreds of Lakewood residents called township leaders asking how they can avoid arrest or get amnesty related to an alleged public-assistance fraud scheme that could stretch into the millions of dollars, according to one law enforcement with knowledge of the ongoing probes.

• That source, who was not authorized to speak publicly, said that dozens have also called Ocean County Social Services in Toms River to cancel their public assistance or update their income information. [url=https://www.usatoday.com/story/news/investigations/watchdog/2017/06/27/lakewood-raids-send-some-residents-scrambling/432655001/]Read more here. 
  

How did the money flow?

Hidden income, fake applications, and phony company owners were integral parts of a complex scheme several wealthy Lakewood families used for years to fool the government into doling out nearly $2 million in aid reserved for the poorest citizens, federal and state investigators say.

A child daycare center was also used to help hide one couple's true income, according to the charges. Read more here. 

Using public records, federal complaints and interviews with law enforcement officials, the Asbury Park Press examined the puzzle works of the government assistance fraud charges.

Clockwise from top left, Yitzchok Kanarek, William Friedman, Sora Kanarek, Chaim Ehrman, Faigy Friedman and Liatt Ehrman were arrested Tuesday, June 27, 2017, in an ongoing investigation into alleged public-assistance fraud in Lakewood, N.J. (Photo: Provided by Ocean County (N.J.) Prosecutor's Office via Asbury Park (N.J.) Press)

More than $1 million flowed through limited-liability companies — legitimate corporations set up to hide ownership — that enlisted relatives as straw owners and used corporate bank accounts to hide money, according to the charges.

At the center of most transactions was a local beeper store that helped transfer money across the globe, the charges state. As the 14 suspects were claiming poverty on government documents, they took in hundreds of thousands of dollars in undeclared income from the front companies. 

The paper trail shows the relative ease the families had in allegedly defrauding the government. In one case, authorities say a woman was able to withdraw $1.5 million from a company and deposit the money into her personal bank account while still collecting public assistance.

Federal criminal complaints against Shimon and Yocheved Nussbaum, of Hadassah Lane, and Mordechai and Rachel Sorotzkin, of Albert Avenue, detail how one couple — the Nussbaums — is accused of moving money between companies they controlled and the other — the Sorotzkins — simply failed to report their full income.

Lakewood Vaad reacts

In a statement issued late Wednesday and signed by Rabbi Mose Zev Weisberg, the Lakewood Vaad said it was "saddened beyond words" by the arrests, but added "As firm believers in the principle of ‘innocent until proven guilty,’ we suspend judgment until the disposition of these charges, and are comforted knowing that our judicial system is an able arbiter of justice."

Still, the Vaad — the influential council of local Orthodox Jewish religious and business leaders — said it viewed the arrests as a "valuable teaching moment that cannot be wasted."

"There is no such a thing as 'justified' theft," a statement continued. "Federal and State social safety-net programs are meant for those in need, even those in need have rules and criteria that must be strictly followed. To deliberately bend a safety-net eligibility rule is stealing, no different than stealing from your friend or neighbor. 


Shimon and Yocheved Nussbaum were arrested Monday, June 26, 2017, in Lakewood, N.J., in connection with a public-assistance fraud scheme. Their arrest was part of a larger operation, led by federal and New Jersey authorities, that netted the arrests of six others that day. (Photo: Peter Ackerman, Asbury Park (N.J.) Press)

"We would all do well to redouble and triple our efforts in our communities, reminding each and every one of us that there is never any excuse for dishonesty in any form."

The Vaad ended its statement by vowing to "launch a set of intensive educational programs that can ensure that such does not happen again," and said the public would be invited to participate. 

Clearly this means we should eliminate the program, right?  Because if someone committed fraud then we must punish all the people who didn't.  Right?