Brother of Rabbi Yisroel Goldstein admits to $700,000 tax evasion conspiracy


Date: September 14, 2020


San Diego – Mendel Goldstein, the owner of a videography business based in Brooklyn, New York, pleaded guilty in federal court today to tax evasion charges relating to a long-running conspiracy with his brother, Rabbi Yisroel Goldstein.

Until around 2018, Yisroel Goldstein was the director and head rabbi at Chabad of Poway, a tax-exempt organization that the brothers used to divert Mendel Goldstein's income and conceal more than $700,000 in earnings from the IRS. They hid the money by depositing it into Chabad accounts, then secretly funneling it back to Mendel Goldstein by writing checks to fictitious names like "Mr. Green," "Mr. Gold," or "Mr. Fish."

"The law clearly states that income is subject to tax and must be reported, from whatever source derived, including compensation for services," said Ryan L. Korner, Special Agent in Charge of IRS Criminal Investigation. "Mr. Mendel Goldstein admitted that he broke the law by hiding over $700,000 in income and willfully evading his taxes for over six years. His tax crime is made even more egregious because he exploited the tax-exempt status of Chabad of Poway to cheat the United States. Today's guilty plea demonstrates that the IRS will diligently continue our important enforcement efforts despite the ongoing challenges posed by Covid-19. We will work alongside our law enforcement partners in a collective effort to enforce the law and ensure the public trust."

According to his plea agreement, beginning in 2012, Mendel Goldstein agreed with his brother Yisroel Goldstein that Mendel Goldstein could deposit his freelance videography income directly into bank accounts owned by Chabad of Poway. This allowed Mendel Goldstein to avoid reporting his entire income to the IRS. In return, the brothers agreed that Yisroel Goldstein would keep 10 percent of Mendel Goldstein's income as his fee—amounting to about $70,000. Mendel Goldstein saved approximately $155,881 in taxes he should have paid to the IRS.

As Mendel Goldstein admitted today, the conspiracy operated for several years until December 2018. At that time, Yisroel Goldstein discovered that he was under investigation for tax evasion and other crimes. He warned Mendel Goldstein about the investigation and encouraged him to conceal his tax evasion by filing delinquent tax returns.

"People who cheat on their taxes are cheating all honest taxpayers," said U.S. Attorney Robert Brewer. "We will not tolerate the exploitation of non-profit and religious organizations to line the perpetrators' pockets at society's expense."

In July 2020, Yisroel Goldstein, along with five other associates, pleaded guilty to fraud charges, admitting that he participated in a complex, years-long, multi-million dollar tax-evasion scheme and other financial deceptions involving theft of public money. Among the schemes he admitted as part of his guilty plea, Yisroel Goldstein outlined the tax avoidance conspiracy he operated with Mendel Goldstein. Yisroel Goldstein has agreed to cooperate with the ongoing investigation. He is scheduled to be sentenced by U.S. District Judge Cynthia Bashant on April 26, 2021.