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May 20, 2015

N.J. Man Jailed for Running Illicit Bank Disguised as Charity

A Union City, N.J., man who admitted last year to running a bogus charity as an illicit bank used by clients to evade taxes and launder money was sentenced Tuesday to 27 months in prison, NJ Advance Media reports. Moshe "David" Schwartz, 34, pleaded guilty in April 2014 to multiple charges arising from his operation of Gemach Shefa Chaim, ostensibly a nonprofit that made interest-free loans to needy members of Union City's Hasidic community.

Instead, prosecutors said, Gemach Shefa Chaim accepted millions of dollars in deposits from more than 350 clients to hide the assets from federal and state authorities. Mr. Schwartz and the sham charity were ensnared in a 2009 federal corruption sting that led to the arrests of more than 40 public officials and area Jewish leaders. He was also ordered to pay $74,889 to the Internal Revenue Service for unpaid back taxes.