Jersey's Corruption Scandal: The Israeli Connection

Two men are taken into custody in New Jersey on July 23 during a federal probe of public corruption and international money-laundering
Amy Newman / The Record / MCT / Landov

By Matthew Kalman / Jerusalem
TIME.com Tuesday, Jul. 28, 2009

The mass arrests in the New Jersey corruption scandal last week were big news — in Israel. Images of prominent rabbis and Jewish businessmen being cuffed and arrested after morning prayers filled the front pages under headlines trumpeting the discovery of the "Jewish laundry" used to bribe prominent New Jersey officials allegedly using Israeli charities. In particular, Israeli commentators seized on the connection between several of those arrested and prominent figures in Shas, the ultra-orthodox Sephardi Torah Guardians Party, founded by the octogenarian Rabbi Ovadia Yosef, who remains its spiritual leader.

Among those arrested on July 23 were Rabbi Eliahu Ben Haim and Rabbi Edmund Nahum, who are reportedly close to Rabbi Ovadia Yosef and his son, Rabbi David Yosef. Ben Haim and Nahum were allegedly major fundraisers for Shas and Yosef family networks of educational institutions. According to a report on Israeli television, Rabbi David Yosef was also said to have been the target of Solomon Dwek, the FBI's chief informant, who asked the rabbi to help him launder a check for $25,000. David Yosef reportedly declined.

Leaders of Shas, which won 11 seats in the Knesset and is the fourth largest member of Prime Minister Benjamin Netanyahu's coalition government, told TIME the party has no connection to the scandal. Roei Lachmanovich, spokesman for Shas Party leader Eli Yishai, told TIME that fundraising by the American rabbis for Sephardi institutions in Israel did not mean they were connected to Shas. He said that Shas institutions — including the rabbinical schools, or yeshivas — received their budget directly from the Israeli government and denied that Shas had been involved in any money-laundering or illegal activity. Furthermore, he said that Rabbi David Yosef was not a member of Shas and did not represent the party. "Besides the fact that he is Rabbi Ovadia Yosef's son, he has no formal connection to the Shas organization," said Lachmanovich.

One of those arrested was a Brooklyn man, Levy Izhak Rosenbaum, who was charged with trading in human organs. In Jerusalem's ultra-orthodox community this week, Rosenbaum, who claimed to be a real estate dealer, was described as a macher (fixer) who assisted renal patients in finding appropriate medical treatment in the United States. According to the official complaint, however, Rosenbaum planned to give an Israeli donor $10,000 and then charge the client who requested the kidney $160,000. The payment would be laundered through what Rosenbaum described first as a "congregation," then as a charity. According to published reports, Rosenbaum ran the Brooklyn branch of Kav Lachayim, a charity for sick children that was once supported by convicted financier Bernie Madoff.

The Shas media reacted to the entire scandal with countercharges of anti-Semitism. Yitzhak Kakun, editor of the Shas newspaper Yom Le'Yom told the Jerusalem Post: "The FBI purposely attempted to arrest as many rabbis as possible at once in an attempt to humiliate them." Meanwhile, Nissim Ze'ev, a Shas Knesset member, said, "The U.S. police are trying to make it seem as though there is some kind of Jewish mafia."

This is not the first time, however, that the Shas party has been embroiled in a corruption controversy. Two Shas ministers have been convicted on corruption charges in recent years. Yossi Klein Halevi, a senior fellow at the Adelson Institute for Strategic Studies in Jerusalem, explains that some parts of the ultra-orthodox community tend to disregard secular law, despite a tenacious adherence to the minutest detail of Jewish religious ritual. Says Halevi: "You have a kind of borderless community that in its best expressions maintains international charity efforts that are second to none. But the dark side of this is a mentality that often too easily slides into rationalizations for acts that cannot be rationalized, with the idea that the end justifies the means. Here we are raising money for charitable institutions, and therefore we're allowed to cut corners." Halevi adds: "There have been other examples in the past of drug-running happening under cover of certain religious institutions here. There have been too many examples of abuse in the past."