Man to plead guilty in tax fraud scheme involving Orthodox Jewish group

Uri Mandelbaum admitted avoiding nearly $300,000 in federal taxes because of donations he made to the Spinka sect that were mostly refunded to him. He could face 10 years in prison.

Los Angeles Times/July 19, 2008

A Hancock Park man agreed to plead guilty to federal tax evasion charges for making donations to an Orthodox Jewish group that were mostly refunded and then deducting them on his tax returns, federal prosecutors said today.

Uri Mandelbaum, 70, agreed to plead guilty to two felony tax charges and to pay more than $1.5 million in back taxes, according to his plea agreement with the U.S. Attorney's office in Los Angeles.

Mandelbaum's plea agreement is the first involving a "donor" to a charity associated with Spinka - a Hasidic sect within Orthodox Judaism that is at the center of a pending federal tax fraud case. The group is based in New York.

"Mr. Mandelbaum deeply regrets what he did," his attorney John Vandevelde said in a statement today. "Prior to any contact by the government, he decided to do what was right by voluntarily coming forward, not to provide information about others, but to take full responsibility for his own conduct and his own personal tax obligations."

The Grand Rabbi of Spinka, Naftali Tzi Weisz, several other defendants and five Spinka charities were indicted last year by a federal grand jury in Los Angeles on tax fraud and money laundering charges.

Two other defendants in the case - Israeli banker Joseph Roth and Weisz's assistant Moshe Zigelman - have pleaded guilty to conspiracy to commit tax fraud and are to be sentenced later this year.

The U.S. government is now targeting more than 100 people who contributed to Spinka organizations, said U.S. Attorney's Office Spokesman Thom Mrozek.

Mandelbaum admitted to not paying nearly $300,000 in federal income taxes in 2005 and 2006. During those two years, he donated nearly $900,000 to Spinka organizations, 95 percent of which was returned to him, court papers state.

Mandelbaum admitted that he claimed the entire amount as charitable contributions on his federal income tax returns for 2005 and 2006, according to court documents.

Mandelbaum is set to appear July 28 for his arraignment in U.S. District Court in Los Angeles. The charges carry a statutory maximum penalty of 10 years in federal prison and $500,000 in fines.

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