Does disgraced rabbi owe $2m in property taxes?

By Sheryl Rowling and Donald H. Harrison

Sheryl Rowling
Donald H. Harrison

SAN DIEGO — The news of the tax fraud scheme perpetrated by Chabad of Poway’s Rabbi Yisroel Goldstein has shocked the country. Ancillary questions beyond the income tax fraud have arisen related to:

  • Why was Goldstein permitted to meet with the U.S. president even though the FBI was aware of his criminal activity?
  • Why was Goldstein allowed to appear before the United Nations even though the FBI was aware of his criminal activity?
  • Why hasn’t the County of San Diego gone after back property taxes, interest and penalties for the religious exemption claimed on Goldstein’s residence?

The latter question will be discussed in this article. First, some background. Rabbi Goldstein was the spiritual leader of Chabad of Poway. Over a period of years, he engaged in massive tax fraud, essentially laundering charitable contributions back to donors in exchange for a 10 percent fee. On November 24, 2019, Goldstein pleaded guilty to numerous counts of tax fraud and agreed to repay approximately $3.5 million to various organizations. He was also terminated from Chabad of Poway and Chabad-Lubavitch (the international “parent” organization).

As part of this scheme, Goldstein utilized a shell organization, Congregation B’Nei Yisroel. Since 2002, this organization was granted the status of a non-profit religious organization based on Goldstein’s representations. Accordingly, the real estate owned by Congregation B’Nei Yisroel was granted exemptions from property taxes. However, since the organization may not have qualified as a legitimae religious organization, property taxes may be past due.

The Trail

Congregation B’Nei Yisroel was classified as a non-profit religious organization since 2002. However, on July 14, 2020 (Case No. 20CR1916-BAS), US Attorney Robert S. Brewer Jr. identified the “congregation” as a shell organization set up solely to defraud taxpayers for Goldstein’s personal benefit. Since the organization was never a religious organization, the properties it owned were not utilized for religious purposes. The properties were Goldstein’s residence (claimed as “parsonage”) and adjacent land (claimed as a “parking lot” for the congregation).

The first filing for Welfare Exemption, Claim For Exemption From Property Taxes, was filed by Goldstein on May 8, 2003. He claimed that the property was utilized as part of a “Religious Institution – Synagogue & Religious School.” As support for that claim, Goldstein noted tax-exempt status granted by the Franchise Tax Board (California state income taxes) dated February 10, 2003 and the Internal Revenue Service (Federal income taxes) dated December 30, 2002.

Every year since 2003, Goldstein attested that the “congregation” continued its tax-exempt status, stating that the organization’s charitable purpose was “social services” and that the religious purpose was “housing of religious personnel.” The same attestation form was signed again for 2020, but this time, it was signed by Goldstein’s son, Rabbi Mendel Goldstein.

Current Status

On July 31, 2020, Linda Tartakoff, a private citizen, wrote to the Board of Equalization with concerns about the property tax-exempt status of Congregation B’Nei Yisroel. On August 8, 2020, the County Assessor’s Welfare or Veterans’ Organization Exemption Organizational Clearance Certificate Finding Sheet showed that Congregation B’Nei Yisroel’s exempt status was suspended. Based on its review of the organization, the organization’s exempt requirements were “incomplete”, “N.F.S” (no balance sheet) and “N.O.S.” (no operating statement).

Thus, it appears that the B’nei Yisroel property tax exemption was suspended as of August 2020. However, no mention is made as to prior years.

The case at hand is simply a matter of an individual claiming an exemption for a personal residence since 2003. According to public records, the home’s assessed value is over $2.1 million, and the land’s assessed value is over $430,000. Personal property subject to the exemption was valued at $36,500.

For the real property only, assuming an average 4.17 percent appreciation rate, 1.2 percent property tax rate, 10 percent late penalty and annual interest at 18 percent, the total delinquent property taxes are well over $2 million!

This is certainly worth pursuing and hopefully the County will do so.

 

Year Av Appr Est Value Tax Rate Est Taxes Penalty Interest Est Amt Owed
2003 4.17% 1263267 1.20% 15,159 10% 18% 278,012
2004 4.17% 1315945 1.20% 15,791 10% 18% 245,428
2005 4.17% 1370820 1.20% 16,450 10% 18% 216,663
2006 4.17% 1427984 1.20% 17,136 10% 18% 191,269
2007 4.17% 1487531 1.20% 17,850 10% 18% 168,852
2008 4.17% 1549561 1.20% 18,595 10% 18% 149,062
2009 4.17% 1614177 1.20% 19,370 10% 18% 131,591
2010 4.17% 1681488 1.20% 20,178 10% 18% 116,168
2011 4.17% 1751606 1.20% 21,019 10% 18% 102,553
2012 4.17% 1824648 1.20% 21,896 10% 18% 90,533
2013 4.17% 1900736 1.20% 22,809 10% 18% 79,923
2014 4.17% 1979997 1.20% 23,760 10% 18% 70,555
2015 4.17% 2062563 1.20% 24,751 10% 18% 62,286
2016 4.17% 2148572 1.20% 25,783 10% 18% 54,986
2017 4.17% 2238167 1.20% 26,858 10% 18% 48,541
2018 4.17% 2331499 1.20% 27,978 10% 18% 42,852
2019 4.17% 2428722 1.20% 29,145 10% 18% 37,830
2020 4.17% 2530000 1.20% 30,360 10% 18% 33,396
2,120,501

 

*
Sheryl Rowling is a certified public accountant (CPA), personal financial specialist (PFS), and former principal of Rowling & Associates, a progressive fee-only wealth management firm helping a diverse clientele with investments, taxes, and financial planning. Active in her field, Sheryl has been named one of the nation’s top 250 financial advisors by Worth magazine for three consecutive years and has been included as one of Accounting Today’s Top 100 Most Influential in Accounting.   Donald H. Harrison is editor of San Diego Jewish World.

3 thoughts on “Does disgraced rabbi owe $2m in property taxes?”

  1. The new 2020-2021 San Diego County property tax bills have been posted. And while the county assessor office is aware of the fraud, the property tax exemption continues on Rabbi Goldstein’s two Poway parcels on the current tax bills. The owner of the parcels is Congregation B’nei Yisroel, created by Rabbi Goldstein as a religious nonprofit, but B’nei Yisroel does not have a Web site, does not provide religious services to the community, is not listed as a congregation with the Jewish Federation of San Diego County, and appears to have no members, board of directors or spiritual leadership. Why is the county providing a property tax exemption for what appears to be a fraudulent nonprofit at the same time the state is endorsing a revision to Proposition 13 to increase property taxes for many legitimate property owners on the November ballot?

  2. Following letter received October 9th:

    Thank you for your article regarding the despicable XRabbi Goldstein. I am one of the original Poway members, that left years ago. I was the “Morah” of the community. My children grew up in the presence of this XRabbi. We were dedicated members. I always had a “feeling” that something was not kosher about the Rabbi. We are an orthodox jJewish family, and thankfully left the community for the betterment of our children. They are also affected by the horrible behavior of Goldstein. I am with you that prison is the way to go, and I hope justice is served for so many that he has hurt. I would personally like to be in touch with him, to let him know the devastation and deception that he has put upon so many.

    Thanks again,
    Morah Judy
    moramom@bellsouth.net

  3. Following letter also received October 9 from Jean Gaylis:

    Totally agree with your excellent opinion piece that SD County should go after Rabbi GOLDSTEIN delinquent property taxes

    Such a Shanda! 🤦🏼‍♀️

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