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Friday, September 19, 2008

The Gig Is Up!



23 comments:

"UOJ" - "The Un-Orthodox Jew" said...

Paulson outlines bold approach to end crisis

Friday September 19, 10:54 am ET

By Jeannine Aversa and Julie Hirschfeld Davis, Associated Press Writers

Paulson outlines expensive, multi-faceted approach in hopes of ending financial crisis


WASHINGTON (AP) -- Treasury Secretary Henry Paulson on Friday sketched out a multi-faceted effort to confront the worst U.S. financial crisis in decades, outlining a program that could cost taxpayers "hundreds of billions" of dollars to buy up bad mortgages and other toxic debt that has unhinged Wall Street.

"This needs to be big enough to make a real difference and get to the heart of the problem," he told reporters as the administration asked Congress to give it sweeping powers.

He gave few details but said he would work through the weekend with leaders of Congress from both parties to flesh out the program, the biggest proposed government intervention in financial markets since the Great Depression.

The government steps were clearly welcomed by financial markets. As Paulson spoke, the Dow Jones industrials were up over 300 points and at one point had soared by 450 points.

Before the markets opened, the government announced plans to temporarily insure money-market deposits and to block short-selling in financial securities. Short selling is a trading method that bets the stocks will go down.

Speaking to reporters at the Treasury Department, Paulson said that the new troubled-asset relief program that he wants Congress to enact must be large enough to have the necessary impact while protecting taxpayers as much as possible.

"I am convinced that this bold approach will cost American families far less than the alternative -- a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion," Paulson said in a prepared statement.

"The financial security of all Americans ... depends on our ability to restore our financial institutions to a sound footing," Paulson said.

Paulson said mortgage giants Fannie Mae and Freddie Mac will step up their purchases of mortgage-backed securities to help provide support to the crippled housing market.

He also said Friday that the Treasury Department will expand a program, announced earlier this month, to buy mortgage-backed securities, which have been badly hurt by the housing and credit crisis.

"As we all know, lax lending practices earlier this decade led to irresponsible lending and irresponsible borrowing. This simply put too many families into mortgages they could not afford," Paulson said.

At a news conference in which he only took three questions, Paulson was asked the approximate dollar size of the government intervention. "We're talking hundreds of billions," he said.

Paulson did not address specifics about the plan to buy back bad debt or whether the government would take a direct stake in troubled banks in exchange for its help.

"These illiquid assets are clogging up our financial system, and undermining the strength of our otherwise sound financial institutions. As a result, Americans' personal savings are threatened, and the ability of consumers and businesses to borrow and finance spending, investment, and job creation has been disrupted," Paulson said.

He said that the administration would present Congress with a proposed legislative package and then work with lawmakers "to flesh out the details through the weekend. And we're going to be asking them to take action on legislation next week."

"This is what we need to do. Because for some time we've been saying that the root cause of the problems in our economy and our financial system is housing, and until we get stability in the housing market we are not going to get stability in our financial markets," he said.

Earlier, President Bush authorized Treasury to tap up to $50 billion from a Depression-era fund to insure the holdings of eligible money market mutual funds. And the Federal Reserve announced it will expand its emergency lending program to help support the $2 trillion in assets of the funds.

Both moves are designed to bolster the huge money market mutual fund industry, which has come under stress in recent days.

The Fed said it is expanding its emergency lending efforts to allow commercial banks to finance purchases of asset-backed paper from money market funds. The central bank's move should help the funds meet demands for redemptions.

The Securities and Exchange Commission early Friday imposed a temporary emergency ban on short-selling of financial company stocks. As the financial crisis widened, entreaties had come from all quarters to stem a swarm of short-selling contributing to the collapse of stock values in investment and commercial banks.

Congressional leaders said they expected to get the rescue plan Friday and act on it before Congress recesses for the election.

The government's actions could help alleviate the uncertainty that has been sending the markets into tumult over the past week. Lending has grinded to a virtual standstill in the wake of the bankruptcy of Lehman Brothers Holdings Inc.

Global stock markets roared higher, too.

And European Central Bank, Swiss National Bank and Bank of England offered up more cash Friday. The three banks put a combined $90 billion into money markets in a lockstep move.

The chairman of the Senate Banking Committee, Chris Dodd, D-Conn., warned the United States could be "days away from a complete meltdown of our financial system" and said Congress is working quickly to prevent that.

Dodd told ABC's "Good Morning America" on Friday that the nation's credit is seizing up and people can't get loans.

The ranking Republican on the Banking Committee, Sen. Richard Shelby, said the U.S. has "been lurching from one crisis to another" and predicted the new bailout plan would cost at least half a trillion dollars.

"We hope to move very quickly. Time is of the essence," House Speaker Nancy Pelosi, D-Calif., said after Paulson and Bernanke briefed congressional leaders Thursday night.

The federal government already has pledged more than $600 billion in the past year to bail out, or help bail out, some of the biggest names in American finance.

WASHINGTON (AP) Treasury Secretary Paulson says 5 million homeowners are in mortgage delinquency or foreclosure.

Boruch said...

When the finger pointing subsides and the pretentious anger of politicos is no longer newsworthy. When the smoke clears there will be clarity in the following:

The rich don't get poorer.
Money talk is not loshon hara.
There is no such thing as a bailout unless you mean you're dropping out.
The world is a fragile balance of the subjective.
When in doubt, speak to Hashem (Country Yossi was right).

Pat Buchanan said...

The Party's Over
by Patrick J. Buchanan

09/19/2008

The Crash of 2008, which is now wiping out trillions of dollars of our people's wealth, is, like the Crash of 1929, likely to mark the end of one era and the onset of another.

The new era will see a more sober and much diminished America. The "Omnipower" and "Indispensable Nation" we heard about in all the hubris and braggadocio following our Cold War victory is history.

Seizing on the crisis, the left says we are witnessing the failure of market economics, a failure of conservatism.

This is nonsense. What we are witnessing is the collapse of Gordon Gecko ("Greed Is Good!") capitalism. What we are witnessing is what happens to a prodigal nation that ignores history, and forgets and abandons the philosophy and principles that made it great.

A true conservative cherishes prudence and believes in fiscal responsibility, balanced budgets and a self-reliant republic. He believes in saving for retirement and a rainy day, in deferred gratification, in not buying on credit what you cannot afford, in living within your means.

Is that really what got Wall Street and us into this mess -- that we followed too religiously the gospel of Robert Taft and Russell Kirk?

"Government must save us!" cries the left, as ever. Yet, who got us into this mess if not the government -- the Fed with its easy money, Bush with his profligate spending, and Congress and the SEC by liberating Wall Street and failing to step in and stop the drunken orgy?

For years, we Americans have spent more than we earned. We save nothing. Credit card debt, consumer debt, auto debt, mortgage debt, corporate debt -- all are at record levels. And with pensions and savings being wiped out, much of that debt will never be repaid.

Our standard of living is inevitably going to fall. For foreigners will not forever buy our bonds or lend us more money if they rightly fear that they will be paid back, if at all, in cheaper dollars.

We are going to have to learn to live again without our means.

The party's over

Up through World War II, we followed the Hamiltonian idea that America must remain economically independent of the world in order to remain politically independent.

But this generation decided that was yesterday's bromide and we must march bravely forward into a Global Economy, where we all depend on one another. American companies morphed into "global companies" and moved plants and factories to Mexico, Asia, China and India, and we began buying more cheaply from abroad what we used to make at home: shoes, clothes, bikes, cars, radios, TVs, planes, computers.

As the trade deficits began inexorably to rise to 6 percent of GDP, we began vast borrowing from abroad to continue buying from abroad.

At home, propelled by tax cuts, war in Iraq and an explosion in social spending, surpluses vanished and deficits reappeared and began to rise. The dollar began to sink, and gold began to soar.

Yet, still, the promises of the politicians come. Barack Obama will give us national health insurance and tax cuts for all but that 2 percent of the nation that already carries 50 percent of the federal income tax load.

John McCain is going to cut taxes, expand the military, move NATO into Georgia and Ukraine, confront Russia and force Iran to stop enriching uranium or "bomb, bomb, bomb," with Joe Lieberman as wartime consigliere.

Who are we kidding?

What we are witnessing today is how empires end.

The Last Superpower is unable to defend its borders, protect its currency, win its wars or balance its budget. Medicare and Social Security are headed for the cliff with unfunded liabilities in the tens of trillions of dollars.

What we are witnessing today is nothing less than a Katrina-like failure of government, of our political class, and of democracy itself, casting a cloud over the viability and longevity of the system.

Notice who is managing the crisis. Not our elected leaders. Nancy Pelosi says she had nothing to do with it. Congress is paralyzed and heading home. President Bush is nowhere to be seen.

Hank Paulson of Goldman Sachs and Ben Bernanke of the Fed chose to bail out Bear Sterns but let Lehman go under. They decided to nationalize Fannie and Freddie at a cost to taxpayers of hundreds of billions, putting the U.S. government behind $5 trillion in mortgages. They decided to buy AIG with $85 billion rather than see the insurance giant sink beneath the waves.

An unelected financial elite is now entrusted with the assignment of getting us out of a disaster into which an unelected financial elite plunged the nation. We are just spectators.

What the Greatest Generation handed down to us -- the richest, most powerful, most self-sufficient republic in history, with the highest standard of living any nation had ever achieved -- the baby boomers, oblivious and self-indulgent to the end, have frittered away.

Anonymous said...

Americans, Get Ready for an Enormous Tax Bill

Posted Sep 19, 2008

"America's economy is facing unprecedented challenges. We're responding with unprecedented measures," President Bush declared in a press conference Friday.

Bush, of course, was speaking of the government's coordinated efforts to tackle a financial crisis that has roiled global markets and brought down venerable financial institutions.

"These measures will require us to put a significant amount of taxpayer dollars on the line," the President added.

Ah, yes. There is no free lunch. Just how significant an amount of taxpayer dollars remains unknown, but it's going to be massive.

Estimates of the proposal to let the government buy bad assets from banks range from $500 billion to $1 trillion -- and that's in addition to costs already incurred for various government actions this year, including, but not limited to:

$29 billion to fund JPMorgan's takeover of Bear Stearns

Up to $200 billion each for nationalization of Fannie Mae/Freddie Mac

Up to $85 billion for AIG
$50 billion to insure money market funds

Approximately $300 billion of Fed liquidity measures this week alone.

"It's impossible to put any reasonable estimate on what it's going to cost us as taxpayers," says Tom Brown of Bankstocks.com and Second Curve Capital. "We know it's going to cost an awful lot [and] the more they borrow the more interest rates go up and the more taxes we'll have to pay."

As discussed in the accompanying video, it's no coincidence all this is happening in an election year. But are either John McCain or Barack Obama really prepared to handle the mess one of them is going to inherit?

"UOJ" - "The Un-Orthodox Jew" said...

The mental-midgets in the government! There are actually many of them that are not even Jewish!

-------------------------------

Congressional Leaders Were Stunned by Warnings

By DAVID M. HERSZENHORN

Published: September 19, 2008

WASHINGTON — It was a room full of people who rarely hold their tongues. But as the Fed chairman, Ben S. Bernanke, laid out the potentially devastating ramifications of the financial crisis before congressional leaders on Thursday night, there was a stunned silence at first.

Mr. Bernanke and Treasury Secretary Henry M. Paulson Jr. had made an urgent and unusual evening visit to Capitol Hill, and they were gathered around a conference table in the offices of House Speaker Nancy Pelosi.

“When you listened to him describe it you gulped," said Senator Charles E. Schumer, Democrat of New York.

As Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, put it Friday morning on the ABC program “Good Morning America,” the congressional leaders were told “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.”

Mr. Schumer added, “History was sort of hanging over it, like this was a moment.”

When Mr. Schumer described the meeting as “somber,” Mr. Dodd cut in. “Somber doesn’t begin to justify the words,” he said. “We have never heard language like this.”

“What you heard last evening,” he added, “is one of those rare moments, certainly rare in my experience here, is Democrats and Republicans deciding we need to work together quickly.”

Although Mr. Schumer, Mr. Dodd and other participants declined to repeat precisely what they were told by Mr. Bernanke and Mr. Paulson, they said the two men described the financial system as effectively bound in a knot that was being pulled tighter and tighter by the day.

“You have the credit lines in America, which are the lifeblood of the economy, frozen.” Mr. Schumer said. “That hasn’t happened before. It’s a brave new world. You are in uncharted territory, but the one thing you do know is you can’t leave them frozen or the economy will just head south at a rapid rate.”

As he spoke, Mr. Schumer swooped his hand, to make the gesture of a plummeting bird. “You know we’d be lucky ...” he said as his voice trailed off. “Well, I’ll leave it at that.”

As officials at the Treasury Department raced on Friday to draft legislative language for an ambitious plan for the government to buy billions of dollars of illiquid debt from ailing American financial institutions, legislators on Capitol Hill said they planned to work through the weekend reviewing the proposal and making efforts to bring a package of measures to the floor of the House and Senate by the end of next week.

Lawmakers in both parties described the meeting in Ms. Pelosi’s office on Thursday night with Mr. Paulson and Mr. Bernanke as collaborative, and that they were prepared to put politics aside to address the needs of the American people.

While Democrats initially said after the meeting that they planned to use the administration’s proposal of a huge rescue effort to win support for an economic stimulus package, they pulled back slightly on Friday morning, saying that their top priority was to help put together the bailout package and stabilize the economy.

But it was clear they continued to examine ways to make clear that the government was stepping up not just to help the major financial firms but also to protect the interests of American taxpayers and families by safeguarding their pensions and college savings, and by preventing any further drying up of consumer credit.

In addition to potential stimulus measures, which could include an extension of unemployment benefits and spending on public infrastructure projects, Democrats said they intended to consider measures to help stem home foreclosures and stabilize real estate values.

Among the potential steps Congress can take include approving legislation to allow bankruptcy judges to modify the terms of primary mortgages — authority that the bankruptcy laws do not currently allow and that the banking industry has strenuously opposed.

But the Democrats said it was too soon to discuss such details, and that they were awaiting a draft of the proposal from the Treasury Department.

“We have got to deal with the foreclosure issue,” Mr. Dodd said. “You have got to stop that hemorrhaging..If you don’t, the problem doesn’t go away. Ben Bernanke has said it over and over again. Hank Paulson recognizes it. This problem began with bad lending practices. Those are his words, not mine, and so this plan must address that or I’ll be back here in front of a bank of microphones at some point explaining the next failure.”

Even before the drafting of the plan was complete, the Bush administration and the Fed began efforts to sell the idea of a huge rescue to potentially skeptical rank-and-file members of Congress. Mr. Paulson and Mr. Bernanke held a conference call with House Republicans to explain their thinking.

Senator Richard C. Shelby of Alabama, the senior Republican on the Senate banking committee, said in a television interview that cost to the government of purchasing bad debt could run to $1 trillion — a potential warning sign since Mr. Shelby is a longtime skeptic of government intervention in the private market.

Until Mr. Shelby was interviewed on Friday morning, officials on Capitol Hill had been careful not to discuss specific figures, though the rescue envisioned by the Treasury Department clearly entails a government appropriation of hundreds of billions of dollars.

"UOJ" - "The Un-Orthodox Jew" said...

Pain Spreads as Credit Vise Grows Tighter

By LOUIS UCHITELLE - THE NEW YORK TIMES

Published: September 18, 2008

The latest outgrowth of the housing crisis, the breakdown on Wall Street, threatens to gradually corrode economic activity on Main Street, mainly by disabling the credit on which so many everyday transactions depend — but also by frightening people.

Lenders of all types had already been raising the bar for borrowers, turning away all but the best customers. This week, they became even less willing to part with their money, further crimping budgets and family spending.

An economy propelled by easy credit for more than a decade is fraying as credit disappears. American Express, to take one striking example, is reducing the maximum credit limit for half of its tens of millions of cardholders.

The credit shock is in some ways reminiscent of the 1973 oil embargo, which “came into people’s lives right away,” said Andrew Kohut, director of the Pew Research Center, the public opinion pollster. Then, Americans were forced to line up for gasoline and turn down their thermostats in winter. Though less visible, the credit squeeze, if it persists, will force businesses and consumers to cut spending more than they already have.

“We have moved into a decline in consumer spending, which normally happens only in a major recession,” said Ethan Harris, chief domestic economist at Lehman Brothers. He calls the experience “a slow-motion recession in which economic growth will be near zero for an extended period of time.”

Consumer spending accounts for two-thirds of American economic activity and has been slowing as the value of homes falls. Although the economy is not yet in a formal recession, consumer spending in June and July grew only because consumers paid more for the same goods. After factoring in higher prices, they actually bought less.

Borrowers are finding that the nation’s lenders are tightening up in numerous ways. American Express is hardly alone. After several banks said they would not lend the asking price, a tractor-trailer dealer in North Carolina had to cut the $20,000 he was seeking for a second-hand tractor to $14,000. And a commercial real estate agent, trying to raise $4 million by refinancing an apartment building, got only half that amount from the Bank of Smithtown on Long Island, even though the building was appraised for $10 million.

“With marginal lenders in trouble, we have more people than ever coming to us for loans,” said Brad Rock, chairman of the Smithtown bank. “So all of a sudden, we can be much pickier in deciding what loans to make and how much to lend.”

Being pickier means that an American Express cardholder whose maximum has been reduced to $1,000 from $1,200 has that much less to spend on clothing or meals out, purchases that lift the economy....

"UOJ" - "The Un-Orthodox Jew" said...

Headline should read - Jews give German bankers gas!

-----------------------

Uproar Over German Bank’s Payout to Lehman

By NICHOLAS KULISH

Published: September 18, 2008

BERLIN — As the rest of the financial community was scrambling to get its money out, a government-owned German lender gave Lehman Brothers what might be called a parting shot in the arm, transferring 300 million euros to the investment bank on the same day it filed for bankruptcy.

“Germany’s Dumbest Bank,” shouted Thursday’s headline in the large newspaper Bild after the government-owned KfW bank sent funds to Lehman on the same day it filed for bankruptcy.

Germany’s finance minister, Peer Steinbrück, declared that resignations and dismissals would not be “the final word” in the investigation of the transfer of 300 million euros.

The $426 million payment, described by the bank, KfW Bankengruppe, as an “automated transfer,” provoked an outcry across the political spectrum. The largest-circulation German newspaper, Bild, splashed a headline across its front page Thursday calling KfW “Germany’s dumbest bank.”

The bank’s administrative board, made up of politicians and business leaders, met in Berlin amid calls for dismissals and resignations.

Two of the bank’s managing directors and the head of the risk-control department were suspended, the economy minister, Michael Glos, who heads the board, announced after the meeting.

The German finance minister, Peer Steinbrück, said of the suspensions, “That’s not the final word.”

KfW is 80 percent owned by the national government and 20 percent by German states. It was established in 1948 to finance reconstruction projects.

It makes loans to small and medium-size businesses, as well as individuals, to encourage needed investment in areas neglected by private sector banks.

Failing American investment banks, however, were not part of its mission. A bank spokesman, Wolfram Schweickhardt, said the transaction was part of a regular currency swap.

“It’s a complex process,” Mr. Schweickhardt said. “It has to be approved by several parts of the bank.”

With Lehman seeking bankruptcy protection, the swap became a one-sided deal, with euros going to Lehman but no dollars coming back to KfW, he said.

This, according to the Frankfurter Allgemeine newspaper, even though capital markets experts at the bank met through the weekend to discuss the fallout of a potential Lehman bankruptcy. The transfer went through on Monday.

KfW hopes to get some of the money back, though it did not say how much.

Its total exposure to Lehman Brothers was in the neighborhood of 500 million euros, according to internal estimates.

Calling the accidental transfer scandalous, the German Taxpayers Association demanded an investigation and recommended paring back the unwieldy, 37-member administrative board to encourage better oversight.

“It is not sufficient to downplay financial transactions as technical errors,” it said. Money transfers “belong to the basics of the bank business.”

It was not KfW’s first brush with the financial crisis. In August, it sold IKB Deutsche Industriebank, which had lost billions speculating on mortgage-backed securities, to the private equity firm Lone Star for a price well below government expectations.

KfW began as a minority shareholder in IKB but ended up with a share of 90.8 percent after a series of bailouts.

Urgent said...

Anyone who disagrees with the awful decision of the Conference of Presidents to disinvite Sara Palin should call the Conference to convey your dismay. The number is 212-318-6111. Calls to the OU and National Council of Young Israel urging them to protest publicly also would help. Perhaps it's not too late to reverse this digraceful act.

OU insider who will not be silenced said...

Your friendly neighborhood Orthodox Union is hoping for a meeting between Bernard Feldman, Temple Grandin & Cornell University's Joe Regenstein so that criminal defense attorney Feldman can impress them into issuing positive statements on Rubashkin's behalf.

Get ready for the spin to hit Yeshiva World News and the mainstream media.

State of the Jews said...

Agri has brought drugs and drunks to town in unprecedented numbers. No Postville is not immune to drug problems and drunks. Its just that last weekend they had 13 drunk arrests - more then the town had all of last year in total.
And don't give me that nonsense that Agri has nothing to do with this - the recruiting companies WORK for Agri. Agri can tell them what to do - like perform drug and record screenings on prospective employees BEFORE they arrive in Postville.

Of course they could do something really radical, like pay a competitive wage that would attract a higher level employee.

Feldman may run a plant and the Rubashkin's may own Penrod. But they don't own the people of Postville.

When you move into a town you have a responsibility to respect the mores of that community. You have a responsibility to be a good neighbor.

Can I get some input please? said...

There is a boy in a yeshiva pre-school who has been bullying some of the girls in the class, stalking and shoving them. This morning he grabbed one girl and bit her very hard next to her eye, leaving welts. The yeshiva did nothing and after someone complained, the morah tried calling the parents 5 hours after the incident.

What is a yeshiva's responsibilty here and are they required to remove the boy?

Thanks

Charlie Hynes fingerprints said...

http://voices.washingtonpost.com/washingtonpostinvestigations/2008/09/after_an_exhaustive_two-year_i.html

Foley Probe Ends With No Charges

After a two-year investigation that began with the discovery of graphic messages between former U.S. Rep. Mark Foley (R-Fla.) and underage Capitol Hill aides, federal and state investigators have decided not to pursue criminal charges against the ex-congressman, The Associated Press and ABC News report.

The decision not to charge Foley, a former six-term GOP congressman, appears to end a saga that began when ABC News reported in September 2006 that aides had received explicit messages from Foley containing references to sexual acts and body parts.

Foley resigned a day after ABC went public with the story and checked himself into an alcohol-treatment facility in Arizona, saying he was an alcoholic and the victim of childhood molestation by a clergyman. (A priest now living in Malta admitted to sexual encounters with Foley).

Anonymous said...

Why isn't the Jewish media covering the recent address of a janitor of a shteibel in Far Rockaway for alleged sexual molestation of a Jewish boy over a period of nearly two years? It's being reported in the local Jewish newspaper.

That shul has a mikvah and often boys are in the mikvah, unattended by their fathers while that janitor was around.

Anonymous said...

Can I get some input....

The yeshivah has no legal or moral right to discipline the child. There are no bad children. This child is obviously crying out and in pain trying to forge his way to getting his way. He is exposed, obviously, to violence on TV and the internet where he learned how to demean women and hurt them. His shiksha nanny cannot communicate with him and since she is not there to placate him he runs amok. Calling the parents will result in angry threats and denials as well as withholding of necessary funds for the yeshivah. The only plausible solution is to get your daughter a 44 magnum and blow out the kids brains the next time he goes near her.

Rabbi Edery said...

http://www.canlii.org/en/ca/tcc/doc/2003/2003tcc24/2003tcc24.html

Appeals heard on common evidence with the appeals of Marc Kadoch (2002-730(IT)I) on January 14, 2003, at Toronto, Ontario.

Before: The Honourable Judge Gerald J. Rip

Agent for the Appellant:
Marc Kadoch

The Minister of National Revenue ("Minister") denied the tax credits on the basis that the appellants did not make donations to the registered charities and filed fraudulent receipts in support of their claims for charitable donations.

These appeals have their genesis in the activities of a Rabbi Leon Edery. Rabbi Edery arrived in Toronto in 1967 and soon led a small Sephardic Congregation on Bathurst Avenue. In 1971 he received a provincial charter for Or Hamaarav Sephardic Congregation ("Or Hamaarav"). Rabbi Edery testified that at the time he was also teaching and raising funds for Morrocan Jewish families immigrating to Toronto and for the education of their children. He also arranged to distribute clothing, books and other items to recent immigrants.

Rabbi Edery started a day-care centre in 1983 under the name Abarbanel Sephardic Learning Centre ("Abarbanel"). He raised money for Abarbanel as well. The day-care was in the building owned and occupied by Or Hamaarav. Or Hamaarav defaulted on its mortgage in 1985 and lost the building.

Rabbi Edery continued to raise money for his various works. Or Hamaarav and Abarbanel continued to exist but Rabbi Edery discovered it was getting difficult to get donations. As he said, "People don't want to give money to a loser".

Rabbi Edery or a business associate − the evidence is not clear − then presented a marketing scheme to potential donors that they would get a charitable receipt for (generally) ten times the amount of the actual donation, that is, the amount actually donated would represent 10 per cent of the face amount of the receipt. Rabbi Edery testified this was the "only way to raise money". In some cases the donor would write a cheque and Rabbi Edery would return to them 90 per cent of the amount of the cheque in cash and a receipt for the full amount. Thus a cheque for $1,000 would get the donor "cash back" of $900 plus a receipt for $1,000, which he would claim in his tax return. Sometimes the donor got back more or less than 90 per cent of the receipt amount. In other cases a donor would give cash equal to 10 per cent of the receipt. Rabbi Edery did acknowledge that "two or three" people did give donations and did not ask for "cash back". Mr. and Mrs. Kaboch were not the "two or three" people, according to Rabbi Edery.

In 1996 or 1997 Rabbi Edery, formed another charity, Mincha Gedolah Synagogue ("Gedolah"), to assist immigrants from Russia.

In his income tax returns Mr. Kadoch claimed to have made donations in the amounts of $7,500 and $1,500 to Or Hamaarav in 1994 and 1996, respectively, $7,500 to Gedolah in 1997 and $5,000 to Abarbanel in 1998. Mrs. Kadoch claims to have donated $2,300 and $2,500 in 1994 and 1996, respectively, to Or Hamaarav.

During the time he operated the charities and sought contributions, Rabbi Edery stated, he gave a commission, usually 5 to 10 per cent of the actual amount donated, to persons who referred donors to him or who brought him money from donors. The names of Rabbi Edery's agents are on lists seized by officials of Revenue Canada at the time. Mr. Kadoch's name appears on such a list. Mr. Kadoch denied ever receiving a commission. Rabbi Edery declared "the whole community" knew about the commissions.

The three charitable organizations ceased operation in 2001. Rabbi Edery acknowledged he was found guilty of tax evasion and other offences under the Act and was sentenced to 12 months house arrest, community service and a "penalty" of $32,229.

Or Hamaarav was situated across the street from Mr. Kadoch's residence and Mr. Kadoch attended services there. He even served as cantor. Mr. Kadoch has known Rabbi Edery for over 30 years. He was aware of Rabbi Edery's organizations. Mr. Kadoch recalled he had relatives who were helped by Rabbi Edery. He described Rabbi Edery as a "person of integrity" who helped "lots of families in Toronto". Mr. Kadoch contributed to Rabbi Edery's charities because the rabbi was "beneficial to the community" and was active in "good causes". He did not suspect Rabbi Edery may have been involved in fraud, although in 1996 or 1997 Rabbi Edery told him fraudulent receipts were being issued in the name of his organizations.

An investigator for the Canada Customs and Revenue Agency ("CCRA"), Mr. Frank Menniti, testified that the scheme practiced by Rabbi Edery was concocted by a tax preparer named Jacob Abacassis. Revenue Canada, the predecessor to the CCRA, was attracted to Mr. Abacassis' clients because they claimed large business losses and receipts for substantial donations from charities under the control of Rabbi Edery. Search warrants were executed against Or Hamaarav and Abarbanel. Many contributors informed the CCRA they obtained receipts for payments equal to 10 to 20 per cent of the amount of the receipt. The CCRA seized carbon copies of donation receipts, donor lists and bank records of the charities.

Mr. Menniti was able to trace large amounts of money deposited into the relevant bank accounts and large withdrawals by way of cash or draft. He concluded that money did go to the charities but about 90 per cent of the donations were withdrawn and given back to the donors.

Mr. Menniti testified that there was a great disparity between what the organization reported to Revenue Canada and what they received. For example, Abarbanel reported on its tax return for 1994 that it received $285,967 but the total amount of the receipts issued for the year, as taken from the carbon copies seized, was $758,807. The $285,967 was "close to the amount that actually went into the bank", according to Mr. Menniti. But the CCRA today has no idea how much money was actually collected. According to Mr. Menniti records of the charities do not indicate where the funds withdrawn from the bank accounts were going, that is, to help needy families or for some other purpose.

Mr. Menniti also went through other lists of names and found Mr. Kadoch's name was in the margin opposite eight donors' names. Most of these contributors resided on the island of Montreal. Mr. Kadoch stated these people were related to him.

Morris Rosenberg

Deputy Attorney General of Canada

Ottawa, Canada

Far Rot-Away said...

Where's the newspaper article on the mikva abuse?

Rabbi Edery Part 2 said...

http://www.canlii.org/en/ca/tcc/doc/2003/2003tcc9/2003tcc9.html

Citation: 2003TCC9

Date: 20030203

Docket: 2001-4498(IT)I

AMI BENARROCH

Counsel for the Appellant:
Moses Muyal, Esq.

The appeals are from reassessments for the taxation years 1992, 1993, 1994, 1995, 1996, 1997 and 1998. They involve the denial of tax credits in respect of charitable donations allegedly made to the Or Hamaarav Sephardic Congregation in the amounts of $9,750, $9,750, $19,000, $14,000 and $18,000 in the years 1992 to 1996 respectively. For 1997 the appellant claimed credits for donations of $15,000 and $1,000 made to the Mincha Gedolah Synagogue and the Abarbanel S. Learning Centre respectively. For 1998 the appellant claimed to have made charitable donations of $13,000 to the Mincha Gedolah Synagogue. The tax credits in respect of these alleged charitable donations were denied by the Minister of National Revenue.

Rabbi Edery's practice of issuing inflated charitable receipts came to light when the CCRA (or Revenue Canada) began examining the returns of the clients of a tax preparer, one Jacob Abacassis. The unusually large charitable donations and business losses claimed by his clients caught the attention of the tax authorities. Both Mr. Abacassis and Rabbi Edery were charged criminally under section 239 of the Income Tax Act. Mr. Abacassis pleaded guilty. Rabbi Edery fought the charges but he was convicted by Judge Rebecca Chamail and sentenced to pay a fine of $32,000, a year of house arrest and 240 hours of community service. The charters of the charities were also revoked.

http://www.canlii.org/en/ca/tcc/doc/2002/2002canlii46783/2002canlii46783.html

The appeals of Andre Bentolila and Lise Bentolila, by way of the informal procedure, from the Minister of National Revenue's (the Minister) reassessment of their 1996 and 1997 taxation years, Mr. Bentolila's 1993 taxation year and Mrs. Bentolila's 1998 taxation year were heard on common evidence. The Bentolilas claimed non-refundable tax credits for charitable donations to the Or Hamaarav Sephardic Congregation, and in Mrs. Bentolila's case, also to the Arabenel S. Learning Centre. The Minister disallowed these claims and imposed penalties pursuant to subsection 163(2) of the Income Tax Act (the Act).

Mr. Jacob Abecassis was a broker in Toronto who offered a tax preparation service during the 1990s. In 1995, he was made aware of a so-called donation program through Mr. Meyer Cohen. The gist of Mr. Cohen's explanation to Mr. Abecassis was that wealthy clients made donations without disclosing their name, and for an administration fee of 20% of the face value of the donation, Mr. Abecassis' clients could have their names put on the charitable receipts. The charities in question were registered charities run by Rabbi Edery: the Or Hamaarav Sephardic Congregation and the Arabenel S. Learning Centre. At some point late in 1995, Mr. Abecassis was advised by Rabbi Edery to no longer deal with Mr. Cohen. Mr. Abecassis would provide Rabbi Edery with the names and addresses of his clients and the amount of tax receipts needed. The Rabbi would deliver the requested receipts and collect the administration fee, which was split with Mr. Abecassis. Rabbi Edery testified that he understood the payment collected from Mr. Abecassis' clients was only a down payment with the balance to be forthcoming. No balance was ever forthcoming and I do not accept the Rabbi's explanation. Mr. Abecassis indicated that he never had any dealings with the Appellants.

In 1996, Mr. Abecassis became concerned that clients were going directly to Rabbi Edery, so he started printing and issuing his own receipts. Apparently, feeling some remorse at cutting out Rabbi Edery, he stopped this practice and indeed paid over to Rabbi Edery what he believed to be the Rabbi's share of the administration fees garnered from his solo fraudulent scheme.

Both Rabbi Edery and Jacob Abecassis were convicted of offences under the Act. The Special Investigator, Mr. Frank Manetti, confirmed that his investigation determined the accuracy of the numbers set forth earlier (see paragraph 2), as found in Justice Shamai's decision in the Edery criminal trial. Mr. Manetti also testified that his investigation turned up approximately 4,000 receipts, and as they needed to lay charges expediently, they went through the receipts alphabetically and proceeded with those taxpayers who were prepared to admit the use of grossly inflated charitable receipts.

Spinka Rebbe said...

How come when they do that tax scam in Canada they only get house arrest & a few hours of community service?

Brothers Chaim Shlomo and Dovid Bisk said...

http://www.canlii.org/en/on/onsc/doc/2004/2004canlii23883/2004canlii23883.html

SUPERIOR COURT OF JUSTICE - ONTARIO

RE:
David Finkelstein, Plaintiff

A N D:
Chaim Shlomo Bisk, also known as Solomon Bisk, David Bisk and Tsui Yosel Rabitzki, Defendants

This claim arises out of a contract in which the plaintiff, an 84 year old man, invested his life savings of $60,000 with the defendants. Under the written terms of the agreement the plaintiff deposited his money to be invested by David Bisk. All three brothers [the defendants] would receive 40% of any increase of the investment. If there were no increase, the brothers would receive nothing for their services.

All but $6,000 of the investment was subsequently lost. Mr Finkelstein went to a Rabbi who is the secretary of Beis Din for assistance to obtain the return of his money. A Hazmanot or summons was issued against only one of the brothers, David Bisk. At the return of the summons David Bisk attended but David Finkelstein did not. Finkelstein subsequently commenced proceedings in the Superior Court of Justice for fraudulent misrepresentation. Finkelstein has asked that the Beis Din not proceed with any claim.

Mendel Moskovitz said...

http://www.canlii.org/en/on/onsc/doc/2008/2008canlii21903/2008canlii21903.html

COURT FILE NO.: 06-CV-324619PD2 DATE HEARD: May 8, 2008

ENDORSEMENT RELEASED: May 12, 2008
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: BANK OF MONTREAL v. COMBRA FURNITURE LTD., MENDEL DAVID MOSZKOWICZ also known as MENDEL MOSKOVITZ and as MIKE MOSKOVITZ, PAULA MOSKOVITZ, SIDNEY LUGASSY, YAELLE LUGASSY, S & Y MANAGEMENT, ADCO MARKETING LTD. also known as ADCO LTD., KEVIN HOFFMAN and STANDARD FURNITURE DIRECT INC.

In accordance with the statement of claim, in early 2006 the defendant Mendel Moskovitz (“Moskovitz”) applied to the plaintiff for a loan to be made to the defendant Combra Furniture Ltd. (“Combra”), a company controlled by him, for $250,000, representing that the loan proceeds would be applied only for leasehold improvements and equipment and undertaking not to dispose of the equipment without consent. Moskovitz and his wife Paula Moskovitz signed guarantees of the loan limited jointly and severally to $62,500. The loan has been in default since November 2006. The plaintiff claimed for the full amount of the loan against Moskovitz on the basis that he fraudulently altered the lease document to indicate Combra was the lessee of premises in order to induce the plaintiff to make the loan, when no tenancy had ever been granted to Combra and that he improperly transferred the assets of the company. The statement of claim was later amended to claim as against all of the defendants based on a conspiracy to defraud. The essence of the claim is that the defendants conspired to induce the plaintiff and another bank by means of false representations and altered documents to loan money to the defendants in excess of personal guarantees with the intention of defaulting on the loans and sharing the proceeds. It is pled that the defendant Sidney Lugassy (“Lugassy”) was authorized by Moskovitz to act as his agent in dealing with the bank to arrange the loans and that Lugassy created the false documents.

Moskovitz admitted that when he applied for a loan five to six weeks earlier from the Bank of Nova Scotia for the same sum, purpose and guarantee (question 185) he took the papers to a lawyer, David Maizel, his nephew to “have a look at” and advise him with respect to the loan and this was the same lawyer his wife went to for ILA respecting the Bank of Montreal loan.

Montreal said...

http://www.canlii.org/en/ca/fct/doc/2003/2003fct52/2003fct52.html

Sam Kligman (Applicant)

v.

Minister of National Revenue (Respondent)

T-204-01

Allan Sandler (Applicant)

v.

Minister of National Revenue (Respondent)

T-205-01

CCRA stated that it required information from the applicants with respect to donations that they had made to four charitable organizations: Rabbinical College of Montréal, Yeshiva Oir Hochaim, L'Association Gimilis Chasodim Keren Chava B'Nei Levi, and Les Amis Canadiens des Institutions de la Terre Sainte.

The respondent did have reasonable and probable grounds at the time at which the requirements were issued to obtain a warrant. He knew that two registered charities had been investigated for falsely issuing tax receipts; one of these charities pleaded guilty; the other, Collège Rabbinique de Montréal (Montreal Rabbinical College), was cleared of the charges. He also knew that the applicants did not claim donations in respect of the charity against whom a conviction under section 239 was registered, namely "Construit toujours avec Bonté", but did claim such deductions in respect of donations to the Montreal Rabbinical College. It is in this framework of facts that Faribault knew or did not know that the reasonable and probable grounds existed.

The other line of cases holds that search warrants must be obtained when reasonable and probable grounds to believe that a tax evasion offence has been committed are present.

Torontonian said...

I didn't want to say anything until I saw proof that the thief had his day in court but Sidney Lugassy is the "mastermind" of the fraud that Claude Bitton was arrested for and that so many others will soon be facing the music for. It's Lugassy along with one of his brother in laws.

Anonymous said...

Oh the good ole sheep mentality we inhereted from the christians. Much of klal yisroel acts as if they are brain dead. The torah way is to pursue da'as torah and accept it if it is PROVEN to be daas torah and to REJECT it if it is an opinion of a godol who so happens to be a phenominal IGNORAMUS in the particular sad mesechte. Would you ask your rosh yeshiva, who knows the 5 yeshiva mesechtes and every Ktzois by heart, a difficult Shailo in Hilchos Ishis? Even if he answered you, the responsibility lies on you to determine if he is well versed in the halachos you asked about. One can be a gaon in chassidus or lomdus and an AM HAARETZ M'Deoraiso in other halachos. Likewise, one can be the rosh yeshiva of Lakewood or the Rebbe of Both satmar factions. That would not indicate in any way that he is qualified to paskin hilchos molestation. I suspect that the rabbonim are mute in this subject because they feel they have no answers. However, my daas torah (I too am a career learner) tells me that such a position is in itself criminal. Simple aleph bais logic dictates one to amass huge gatherings of parents in our community, decrie the situation of our children and forbid anyone who has been accused 2 or 3 times from having access to children. Repeat offenders (those caught after a warning) must be handled by the civil authorities, and those who don't meet the above guidlines must be dealt with firmly in a manner to be detirmined. But to sit silently and watch yiddishe kinderlach being passed between the fires of Moilech R"L is murder at the hands of the current controlling rabbonim and askonim. If the Nazis were to invade today I would understand why the rabbonim would be the first ones to be carried away to the execution. The leadership has run up a large bill with Hakodosh Baruch Hu.