Lakewood rabbi, others arrested in alleged million-dollar welfare fraud

By Payton Guion And Alex N. Gecan
Asbury Park Press
June 26, 2017

http://www.app.com/story/news/investigations/watchdog/2017/06/26/lakewood-welfare-fraud/424127001/

Shimi and Yocheved Nussbaum were arrested Monday in connection with a public-assistance fraud scheme. Their arrest was part of a larger operation, led by federal and state authorities, that netted the arrests of six others.

LAKEWOOD -- A prominent rabbi and several others were arrested in simultaneous federal and state raids Monday morning on charges related to alleged public assistance fraud on a scale rarely seen before in New Jersey, according to law enforcement sources.

Rabbi Zalmen Sorotzkin, who runs the synagogue Congregation Lutzk and businesses linked to the synagogue, was taken into custody Monday and is en route to face a judge in Superior Court in Toms River.

Also arrested in the sting headed by the FBI, Ocean County Prosecutor’s Office and other agencies were Zalmen’s wife, Tzipporah Sorotzkin, and married couple Mordechai and Jocheved Breskin. The three also face state criminal charges, according to a source close to the case who spoke on the condition of anonymity because of the ongoing investigation. Their first appearance before a Superior Court judge is scheduled for Monday afternoon.

Four others were arrested Monday and are being taken to Trenton to face federal charges in U.S. District Court. They are Mordechai Sorotzkin, brother of Zalmen, and his wife, Rachel Sorotzkin, and Shimon and Yocheved Nussbaum. View the map below for the locations of the homes raided or attempted to be raided Monday.

Federal and state agents fanned out to the four Lakewood homes early Monday morning, mostly in black, unmarked cars. FBI agents repeatedly knocked on Rabbi Sorotzkin's door just before 6 a.m, to no immediate answer. But he was in custody, along with the seven others, by 7 a.m.

Around the same time on Hadassah Lane, agents waited with the Nussbaums in their townhouse while the couple found someone to watch their children, one of whom was seen packing suitcases and boxes into a van parked in front of the house. The couple was then placed in a black law enforcement van.

The Lakewood residents are accused of taking advantage of multiple public assistance programs to defraud the government of around $1.3 million over the past few years, according to law enforcement sources.

“The investigation to date has found that government benefits fraud and income tax evasion in the Lakewood community is widespread,” said the source.

The investigation found an alleged scheme that “rival the most sophisticated of financial frauds,” the source said.

The Nussbaums allegedly under-reported their incomes and failed to disclose money they received from a number of companies in order to collect Medicaid, Section 8 housing assistance and food stamps between 2011 and 2014, according to a federal complaint signed by FBI Special Agent Michael Farina.

In that time, the Nussbaums allegedly collected $178,762 in public assistance they weren't entitled to get. Read the full complaints at the bottom of the page.

The complaint against Mordechai and Rachel Sorotzkin accuses them of also under-reporting their incomes to collect Medicaid. Rachel Sorotzkin allegedly failed to report $1.5 million she received from a limited liability company when signing up for public assistance.

In the complaint, Farina wrote that Mordechai and Rachel Sorotzkin received more than $96,000 in Medicaid funds they shouldn't have claimed.

Complaints against the other two couples have not been released, but law enforcement sources said the state charges are expected to be similar to those laid out in the federal complaints. The public-assistance agencies involved are Medicaid, Section 8, food stamps, Social Security disability and Supplemental Security Income. It is alleged that the couples made tens of thousands dollars more per year than they reported to the public assistance programs, a law enforcement source said.Authorities were able to determine that the families allegedly misrepresented their incomes partly by tracking illegal money transfers made at a Lakewood beeper store, according to the source. The owner of Beepers Plus on Clifton Avenue pleaded guilty on Feb. 23 to transmitting millions of dollars without a license, an indictable offense in New Jersey. Watch the video below for an Asbury Park Press report on the beeper store.By looking at some of those transfers, along with private school tuition records and withdrawals from a state fund that pays medical fees for sick children whose parents can’t afford their care, investigators uncovered the alleged fraud, the source said.

The investigation into the alleged public-assistance fraud began around three years ago and now comprises a variety of federal and state law enforcement agencies. The FBI, the Social Security Administration, the New Jersey Treasury Department, the state comptroller’s Medicaid Fraud Division and the Ocean County Prosecutor’s Office all have been investigating.

Authorities said this is just the first wave of raids in Lakewood and that there would be more arrests in the days and weeks ahead. The scale of the alleged public assistance fraud may well top several millions of dollars.