U.S. Magistrate Judge Mark Falk held that Gmach Shefa Chaim had an adequate remedy in a criminal case in which the government is seeking forfeiture of the $508,925 in the account.

Falk called his ruling in Gmach Shefa Chaim v. U.S., 09-cv-5426, one of first impression in the 3rd Circuit.

The Gmach has not been indicted or accused of a crime but the government alleges the account was used by Moshe Altman, a Hudson County, N.J., real estate developer, to launder money.

The account was seized last July 23, the same day that Altman was arrested along with three mayors, two state assemblymen, five rabbis and others. He was indicted on Jan. 28 for allegedly depositing checks received from FBI informant Solomon Dwek into Gmach accounts in return for a 15 percent cut.

When Dwek told people in conversations secretly recorded by the FBI that he had "washing machines" to launder money, he was referring to the Gmach's accounts, Falk noted in his opinion.

Dwek allegedly told Altman the checks were proceeds from bank fraud and counterfeit handbags, which he needed to conceal from the federal bankruptcy trustee so he could use at least some of it to bribe public officials.

Between February 2007 and July 2009, Altman allegedly took part in 15 separate laundering transactions, laundered $668,000 in checks, paying out $547,000 in cash and keeping $109,300.

The Gmach accounts at Valley National Bank in Union City, N.J., were allegedly used, as well as the accounts of another charity, Boyoner Gemilas Chesed, at JP Morgan Chase Bank in Newark, N.J., and Capital One Bank in Brooklyn.

The checks were made payable to one or the other charity and deposited into one of the accounts, from which cash was withdrawn and delivered to Dwek, according to the indictment in U.S. v. Altman, 10-cr-53. The 10 checks that were allegedly run through the Gmach's accounts totaled $357,500.

On July 23, the day the government seized the $508,925 from one of Gmach's accounts, a search of Altman's office allegedly uncovered bundles of blank Gmach checks, plus hard drives and a laptop computer with the Gmach's books and records.

On Oct. 23, the Gmach filed a district court action seeking return of the funds based on 18 U.S.C. 983, which gives the government 60 days to start a forfeiture action after it seizes property, and Federal Rule of Criminal Procedure 41(g), which allows a person aggrieved by the unlawful seizure of property to move for its return.

Falk ruled that the Gmach could not rely on the statute, which applies only to nonjudicial civil forfeitures of $500,000 or less and not to property seized pursuant to a search warrant.

By Feb. 19, when the motion was heard, Altman had been indicted, which the government argued mooted the Gmach's Rule 41(g) action.

The Gmach contended none of the supposed money-laundering checks from Dwek were deposited into the account from which the money was seized.

The government's response was that though the checks went into two other accounts, the money was then filtered into the seized account and commingled with the money there, subjecting all the funds to seizure and forfeiture.

Falk held the Gmach's motion was not "legally moot" because it was filed before the indictment but if he let the case go forward, the result would be "two courts in the same district addressing the same seized property."

The Gmach disputed that it had an adequate remedy in the criminal case, contending it would not be able to challenge forfeitability there, only ownership, and it would have to wait longer for the outcome.

Falk disagreed, finding no prejudice, because proof of ownership in the criminal case would get the Gmach's money back, and delay unlikely, with Altman's trial scheduled for April 5.

The Gmach's lawyer, Marc Weinstein, of Hughes Hubbard & Reed in Jersey City, N.J., says "not a single check they allege in their indictment went into the account they seized" and an appeal is possible. The parties consented to have Falk handle the matter rather than the district judge, Jose Linares, so an appeal would be directly to the 3rd Circuit.

Assistant U.S. Attorney Bradley Harsch declines comment. Altman's criminal defense lawyer, Jacob Laufer of New York, could not be reached.

Altman is also accused of arranging for the payment of a bribe to Jersey City housing inspector John Guarini, who was indicted as a co-conspirator. The money allegedly came from Dwek in exchange for help in securing zoning approval for planned development projects.

Shimon Haber of Brooklyn, also indicted as a co-conspirator, pleaded guilty Jan. 14.

The word "gmach" is derived from the Hebrew words gemilat chasadim, meaning "acts of kindness." Common in Jewish communities, gmachs use funds contributed by the community to assist members in time of need, typically by extending interest-free loans.

Judge Dismisses Charity's Suit Over Money Seized in FBI Corruption Sting

תוקן על ידי SatmarBum ב- 07/03/2010 02:45:54