A local attorney pleaded guilty Thursday to conspiring in a tax fraud scheme with former Chabad of Poway Rabbi Yisroel Goldstein.
Beginning at least as early as 2010 and continuing through 2018, Elliot Adler, 45, participated in a so-called “90/10” tax scheme, in which Goldstein accepted charitable donations, they would send about 90 percent of the funds back to the donors, while pocketing the remainder for himself, according to the plea agreement.
Donors would then falsely claim on tax forms that 100 percent of their donations went to the Chabad, with Goldstein providing the false donors with fake receipts. According to the U.S. Attorney’s office, Adler reduced his income liability tax by approximately $500,000 (cumulatively) for tax years 2011 through 2017.
To accomplish the scheme, Adler and Goldstein communicated using coded language. Goldstein would refer to cash as “challah,” the source of the cash as “the baker,” and would invite co-conspirators to “wrap tefillin” when he proposed a meeting to receive checks or deliver cash.
The U.S. Attorney’s office reported that on Jan. 7, 2016, Goldstein texted Adler, “Good morning I got the challah[.] What time?” That same day, Adler replied via text message, “Monday 8 am at shul or today before 12 pm if you can come to my office.” Goldstein then replied, “Monday @8 is fine.” On Monday, Jan. 11, 2016, Goldstein deposited a check from Adler for $30,000 payable to Chabad of Poway.
Adler claimed on his 2017 tax returns that he had donated over $1 million to charity according to the U.S Attorney’s office. By doing so, Adler reduced his 2017 tax liability by approximately $447,000.
Both defendants were found guilty of taking additional steps to conceal their scheme. In October 2018, Goldstein informed Adler that he was under investigation by the Internal Revenue Service and that he had been the subject of an undercover operation relating to tax evasion.
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 fraud scheme with Adler.
Adler is the eleventh individual to plead guilty to crimes discovered in this investigation. Two additional individuals agreed to deferred prosecution agreements due to the investigation.
“This defendant was part of an elaborate, years-long financial scheme to fraudulently claim charitable contributions to avoid paying taxes,” said FBI Special Agent in Charge Stacey Moy. “The FBI and our federal partners will continue to vigorously pursue those who abuse tax laws for their financial gain – which also diminishes the public’s trust in charitable giving and hurts the organizations who rely on such donations.”
According to Special Agent in Charge Ryan L. Korner of IRS Criminal Investigation’s Los Angeles Field Office, Tax revenue funds our critical infrastructure, and our national defense and pays for social programs like health care, education, and social security.
“ A one percent increase or decrease in tax compliance equates to approximately $35 billion in tax revenue used to serve the American public. IRS Criminal Investigation is committed to rooting out tax schemes and working with our law enforcement partners to bring financial fraudsters to justice,” Korner said.
Adler is scheduled to appear at a sentencing hearing on July 11, 2022, before Judge Cynthia Ann Bashant.