New Jersey criminal corruption sting largest in history

				simultaneously flip those sales to what turned out to
				be fictitious third parties at a higher price.
				In another part of the scheme described in a series
				of lawsuits filed by the trustee, Dwek allegedly paid
				off Eli Seruya, the comptroller of his uncle's business,
Solomon Dwek, the wire wearing FBI informant				to facilitate the fraudulent deals being made through
turned witness for the federal government in the				the company. The trustee described gifts to Seruya
largest New Jersey criminal corruption sting in its				of a new Lexus, partial payments on nine
history emerged recently from the federal protection				condominiums in Israel, and transfers through Dwek's
program long enough to plead guilty to a $50 million				American Express account in excess of $1.3 million to
bank fraud. Dwek, 37, pleaded guilty in federal court				a synagogue where the controller's brother was a
in Newark to one count each of money-laundering				rabbi and he had access to its accounts, and had the
and bank fraud, charges that can put him in prison				ability to write checks to himself, the court
for up to 11 years.				documents charge.
As Mr. Dwek stood before U.S. District Judge Jose L.
Linares in Newark in his less than 30-minute				The payments mostly came from people who were
appearance he entered pleas to separate counts of				set up by Dwek. And the money went straight to
bank fraud and money laundering in connection with				the feds, the documents show. The entries, in
two bogus checks totaling more than $50 million that				Dwek's own words, were included in the amended
he tried to deposit at the PNC Bank.				petition because by law all assets must be accounted
"I am guilty your honor," he declared, firmly and				for, even, it seems, if the money came from a sting
without hesitation. Later in Monmouth County, the				and was passed on to the feds.
scene was repeated before Superior Court Judge				Those payments were detailed on an amendment to
Thomas Scully in Freehold, where Dwek pled to				Dwek's original bankruptcy petition to correct the list
similar state charges.				of assets he held, and were described in startlingly
Many people are wondering about who Dwek really is				frank language. Included were checks coming out of
and want to know more about him and the explosive				several Florida and Israeli real estate deals, some
details about his private con schemes and his role as				involving partial payouts to Eliahu Ben Haim, principle
the cooperating witness in one of the biggest				rabbi at Congregation Ohel Yaacob in Deal. Ben Haim
ongoing federal corruption investigation where finally				was among those charged in July with money
some details are starting to come to light.				laundering. Another $15,300 came out of a $20,000
The 2006 scheme is how Dwek originally came to				cancelled deal that involved Ben Haim and Moshe
the attention of federal prosecutors, who then				"Michael Altman," a Hudson County developer who,
turned him into an informant. Following his arrest,				according to the criminal complaints, "washed" more
Dwek apparently spent 29 months as a cooperating				than $600,000 in dirty checks to cash for Dwek
witness, setting up rabbis and others in the religious				through charitable, non-profit entities.
community, as well as leaders which included sitting
mayors, current political candidates and public officials				The most curious -- and still unexplained -- payment
on charges ranging from political corruption to money				included on the new asset list filed with the court
laundering in an undercover sting operation that				was $75,100 in cash received from Barry Kantrowitz,
prosecutors have called unprecedented in its scope.				a Monmouth County real estate broker who
Allegedly, Dwek snared 45 people in the string, of				represented Dwek in many property deals. According
the 45, so far seven -- all from Hudson -- have				to the filing, the cash was left in a garbage bag
pleaded guilty. Those who have been arrested and				behind the broker's office.
say they are innocent include the former mayors of				Dwek's bankruptcy attorney, Timothy Neumann,
Hoboken and Secaucus.				would not elaborate on the filing.
The U.S. Attorney’s office issued an advisory				"I'm not at liberty to talk about it. The document
just before the hearing of which Dwek plead guilty				speaks for itself," he said.
saying only that "a central figure" in the July 23
arrests of 45 people on public corruption and money				In court Dwek admitted he schemed with mortgage
laundering charges would appear in federal court				broker Joseph Kohen, 39, of Deal, to defraud PNC
before U.S. District Judge Jose L. Linares in Newark. A				Bank of more than $50 million and launder $22.8 million
spokesman for the office declined to answer				of the proceeds through other banks.
questions. Dwek’s attorney did not return calls				Kohen pleaded guilty in the case in March 2007. His
to our office. Dwek is described in nearly every				sentencing is pending.
criminal complaint and every indictment as a				Court records describe his business enterprise as a
"cooperating witness who had been charged with				multimillion-dollar scam orchestrated by Dwek who
bank fraud" but his name never appears in the court				cheated friends and even his own uncle on fraudulent
records and he has not appeared publicly in any court				land deals.
as a witness since the sting started. The first trial for				His real estate properties were basically a shell game.
those accused in the corruption sting is scheduled for				He used money from investors to repay others,
January 2010, and Dwek is expected to be the main				cover shortfalls on so-called "bleeder" properties that
witness in the case.				did not generate the income needed to cover
In less than four years, Dwek has gone from a				carrying costs, taxes or mortgage payments, and
well-respected real estate mogul with a $300 million				also to make charitable donations, according to filings
empire in seven states to a FBI informant,				by Charles Stanziale, the court-named trustee in the
community outcast and admitted felon.				case.
The following was reported in “The				"Dwek was able to raise money from new investors
Daily Record”:				by delivering false profits to earlier investors and
... The subjects of the arrests also include religious				creating an illusion that he was a successful,
leaders from the Syrian Jewish enclaves in Brooklyn,				philanthropic real estate mogul who delivered
Deal and Elberon. Sources said the IRS and FBI this				incomparable investment returns," stated Stanziale in
morning seized documents from the Deal Yeshiva				court papers.
and the Ohel Yaacob synagogue on Ocean Avenue in				The Ponzi scheme ultimately collapsed like a house of
Deal.				cards after HSBC Bank, which provided Dwek with a
The Deal Yeshiva is a religious school which teaches				$25 million credit line, belatedly did a title search and
children in the Sephardic Jewish tradition, The Yeshiva				discovered that it did not own the mortgages on
has two separate divisions: a boys' school on Logan				properties it believed it was financing on behalf of
Road in Ocean Township and a girls' school on Wall				Dwek in Neptune. According to court documents,
Street in West Long Branch.				Dwek already owned the properties. When the bank
The school was founded more than 20 years ago by				finally began looking at the property records, red
Rabbi Isaac Dwek and Raizel Dwek, the parents of				flags went up, said Stanziale in court filings.
Solomon Dwek, of Ocean Township. Rabbi Dwek				Most of the defendants charged in the string
was the school's president, and Raizel was its				operation are claiming them and the government
treasurer, until 2006, when their son's real estate				where duped by Dwek and as a result federal
empire began to crumble after Dwek deposited a				authorities framed "innocent people" to avoid a long
bad $25.2 million check at a drive-through window at				jail term.
the PNC Bank in Eatontown. ...				Dwek posed as a developer, secretly recorded
Now the second wave of stories is suggesting that				conversations and so called payoffs to officials
Dwek may actually be the key witness in many				involving proposed projects, and he recorded several
other arrests.				rabbis in New York and New Jersey, along with
Here's a report from Bloomberg:				others in their religious community, regarding alleged
... The cooperating witness is Solomon Dwek, a real				money laundering schemes.
estate developer in Monmouth County, New Jersey,				The lawyers contend Dwek fabricated cases for the
who was charged May 11, 2006, with scheming to				FBI, all in hopes of avoiding a lengthy prison term.
defraud PNC Bank out of $50 million, according to a				"I think a jury will look at the tapes and at Dwek,
person familiar with the matter and court records.				and they will come to the conclusion that the only
Prosecutors alleged that Dwek deposited two $25				one guilty of criminal conduct is Dwek. He is one of
million checks from another account of his, which had				the most vilified criminal defendants we've had in the
a zero balance. Dwek then wired $22.8 million out of				last decade, and the government wants to erase all
PNC, falsely assuring bank officials that he would				of his bad conduct -- even things he has not been
forward funds to cover the overdraft, according to				charged with -- to make him their star witness," said
prosecutors.				Robert Fuggi, a lawyer for Assemblyman Daniel Van
Dwek posted a $10 million bond, secured by $3 million				Pelt.
in equity in the homes of his mother-in-law and				Other lawyers said Dwek's own misdeeds, which are
sister-in-law. Dwek was never indicted, instead				still being untangled by federal prosecutors, tower
receiving 17 extensions from a judge to continue the				over the alleged crimes of their clients and tapes in
period in which his case had to be presented to a				the corruption case show Dwek pushing money on
federal grand jury. ...				people -- not public officials asking him for payoffs.
An Asbury Park Press investigation indicated that				"When there is an undercover informant, he's
people who knew Dwek say he was wealthy,				supposed to be uncovering crime that is going on. In
private, quiet, easy going and a pillar of the				the case of Assemblyman Van Pelt and many others,
community. Business associates believed him to be a				that was not going on. Dwek fabricated the crime,
respected leader of a religious school, a successful				not uncovered the crime. He was the instigator of
real estate investor, a philanthropist and a devoted				the crime, and he tried to entrap Van Pelt and
father of five. But according to court documents				others," said Fuggi.
Dwek’s real estate empire may have been built				Prosecutors, however, regularly point out entrapment
on a foundation of crime which included				defenses seldom succeed in court.
money-laundering, bank fraud and lies.				Willis said federal prosecutors may attempt to try
How could his empire expand so fast and collapse				some clients without Dwek to avoid opening a
even faster? And how could major banks, lenders,				"Pandora's box." That would be difficult and unusual,
investors and even family members have been so				said several former federal prosecutors.
blind to provide millions of dollars to a man they now				"He almost has to testify," said John J. Fahy, former
say owes them more than $338 million?				political corruption chief at the U.S. Attorney's Office
Star Ledger:				in Newark.
Star Ledger reported that there examination of court				For jurors to hear the tapes of alleged bribes,
documents it showed before Dwek became an				someone must testify they are legitimate, and Dwek
informer for the FBI, he was running a wild Ponzi				is apt to be the best one to do it, said Mark Rufalo,
operation in which one investment was being used to				former head of the organized crime strike force at
pay off the debt mounting from the last one and on				the U.S. Attorney's Office.
into the millions in the same kind of geometry that				"The U.S. attorneys gave him his Chanukah gift early
eventually exposed financier Bernard Madoff. The				this year. He's looking realistically at getting only five
documents also seem to show that once Dwek				years (in prison) and that is pretty lenient," said
turned informant he was so good at his work --				attorney Peter Willis, who is representing
money launderer to religious leaders, bribe-taking				Assemblyman L. Harvey Smith and Jersey City
developer to politicians -- that some of his targets				Councilman Mariano Vega.
seemed to be virtually throwing money at him.				Sources:
In an amended bankruptcy petition, Dwek disclosed				U.S. District Court in Newark
almost $500,000 in 20 separate secret payments:				FBI
There was $75,100 from a former partner, "left in a				PNC Bank
garbage bag behind his office."				Monmouth County Superior Court
And another $28,400, labeled as "kickbacks for the				The Daily Record
sale of Florida properties."				Bloomberg
Some $9,000 in deposits returned on a cancelled deal				An Asbury Park Press
for two condominium units located in Miron, Israel.				Star Ledger
And $5,000 that were listed as "fictitious charitable				Robert Fuggi Lawyer
donations given through Solomon Dwek's American				John J. Fahy, former political corruption chief at the
Express card."				U.S. Attorney's Office in Newark.
According to other court filings, investors were led to				Mark Rufalo, former head of the organized crime
believe that Dwek would buy properties and				strike force at the U.S. Attorney's Office.

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New Jersey criminal corruption sting largest in history