8-Month Prison Term for Defendant in Chabad of Poway Fraud Case

Randy Grossman
U.S. District Court Judge Cynthia Bashant

SAN DIEGO (Press Release) –Stuart Weinstock, an Escondido businessman and former owner of Salsa Market in Vista, was sentenced in federal court Monday to eight months in custody for evading over $180,000 in taxes as part of an eight-year tax-evasion scheme with former Chabad of Poway Rabbi Yisroel Goldstein.

At Mondays hearing, U.S. District Judge Cynthia Bashant told the defendant: “It’s important to send the message: ‘You commit tax fraud, you go to jail.’”

Until around 2018, Rabbi Goldstein was the director and head rabbi at Chabad of Poway, a tax-exempt religious organization. Weinstock pleaded guilty in February 2021, admitting that starting in approximately 2010, he met monthly with Goldstein to give him purported donation checks for the Chabad, generally about $8,000 a month.  Goldstein would then funnel back 75 percent of the funds, or generally about $6,000 to Weinstock, keeping the remaining 25 percent of the funds for himself.

Between 2010 and 2018, Weinstock gave over $870,000 in fraudulent donations to the Chabad, of which over $650,000 was funneled back to him in cash.  Although Weinstock knew that he had received back, in cash, the vast majority of his donations, he nonetheless falsely claimed on his tax returns that the checks to the Chabad were either tax-deductible charitable contributions or legitimate business expenses.

In July 2020, Rabbi Goldstein 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.  Rabbi Goldstein’s plea agreement outlined the tax evasion scheme with Weinstock.

“Stuart Weinstock has cheated the system and evaded paying his fair share of taxes,” said Acting U.S. Attorney Randy S. Grossman. “Those who cheat the system by exploiting the tax-exempt status of non-profits and religious organizations will be held to account for their conduct.” Grossman praised prosecutors Michelle Wasserman and Valerie Chu and FBI and IRS agents for their excellent work on this case.

“For nearly nine years, Mr. Weinstock, a successful business man, funneled hundreds-of-thousands of dollars, veiled as donations, through Chabad of Poway’s tax-exempt status to skirt paying his fair share,” said IRS Criminal Investigation Special Agent in Charge, Ryan L. Korner. “When you get an envelope of cash in exchange for your ‘donation’, it is neither charitable giving nor a legitimate business expense; it is fraud. Today’s sentencing of the 10th defendant to plead guilty in this widespread tax evasion scheme sends a clear message – the IRS will pursue and seek punishment for tax cheats who exploit religious organizations to enrich themselves.”

“The FBI and our law enforcement partners continue to pursue those who use fraudulent charitable contributions to shield their tax obligations,” said FBI Special Agent in Charge Suzanne Turner. “What Mr. Weinstock was doing was illegal – and he knew it – however he continued to do it for years to line his own pockets and avoid paying taxes. These crimes shake the confidence of potential donors and adversely affect legitimate charities who rely on those donations to survive and it will not be tolerated.”

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Preceding provided by the U.S. Attorney’s Office in San Diego