Scam-Artist Tells Court Lubavitcher Rebbe Backed Him


A Brooklyn developer accused of fleecing dozens of Lubavitcher families in a massive subprime mortgage fraud scheme took cover behind a divine defense on Tuesday.

The developer’s lawyer told jurors his client received “a blessing” from the late Lubavitcher Rebbe to build affordable housing for the Lubavitcher community in Crown Heights.

“It was a mitzvah to him, a Hebrew word that means a good deed and an obligation,” defense lawyer Susan Necheles said in her opening statement in Brooklyn Federal Court.

Assistant U.S. Attorney William Schaeffer said the developer was nothing but a crook who scammed $2.6 million from condominium buyers and more than $10 million from banks.

Prosecutors built a criminal case against him after the Daily News revealed in 2008 how he allegedly conned buyers into purchasing condos, then refused to hand over the deeds when the construction was completed.

Instead, he allegedly gave the deeds to family members – including his wife, father and mother – who applied for mortgages on condos the victims thought they owned.

Although he had the grand rebbe’s blessing, he needed cash to build and that’s where the investors came in, Necheles argued.

She said the so-called victims are sore losers trying to use the criminal justice system to recoup their investment losses.

The government’s first witness appeared confused by the contracts and promissory notes.

(Source: NY Daily News)


  1. It was indeed a Mitzva to listen to the Lubavitcher Rebbe and build affordible housing – but he never told him to scam people by doing so…!

  2. Ditto # 3. Plus the fact that you post the Rebbe’s photo as a heading to this bizzare story is a case of ugly laitzanut of the revered Lubavitcher Rebbe ob”m. The hefkerut at YWN just gets worse from day to day!

  3. The case against the developer, sounds fishy.

    First the article sounds as if the people who lost money were buying condos, then it sounds like they were ‘investors’, playing the market for profit.

    So which was it?

    If they were buying for themselves, and put in cash before getting the deed to the property, they should at least, have gotten a paper proving they had paid the money and had a binding contract that at the end of construction, the Title Deed, would be theirs no question about it.

    And the property should have gone through escrow before any of the buyers, paid a dime.

    If they were investors, they have to understand the risks and that investing means possible gains and possible losses.

    Again they should have had a lawyer and asked a lot of questions to make sure this developer was on the level.

    In either case, it sounds like those who lost the money were not taking the proper precautions before giving this developer the money.

    If they thought they did not need to do their due dilligence, because of a blessing from the Rebbe
    then I think the Rebbe himself would have told them that such a blessing does not mean to throw away all proper precaution.
    Nor was it a hechsher on the persons honesty guaranteeing that he could never do an averia with other peoples’ money.

  4. #5, there is no question: they were buyers. They did sign contracts, and they do have papers proving their purchase. But what could they do when he simply didn’t transfer the deeds? Escrow was not an option, because the whole point was that they bought the apartments before they were built, instead of after; that way they were a lot cheaper, because he could use the money from the sales to fund the construction. There were several dinei torah, where he sued buyers for not paying their installments on time, and buyers sued him for not giving them the deeds. In all the case, the beis din ruled that the sales were valid and binding, that the buyers had to pay what they had agreed, and that he had to give them the deeds as soon as they did so. But in fact he kept the deeds, put them in his wife’s or mother’s names, and borrowed money against them, and the first the buyers knew about this was when the bank came to throw them out.