By Anna Pulley
By Erin Sherbert
By Chris Roberts
By Erin Sherbert
By Rachel Swan
By Joe Eskenazi
By Erin Sherbert
By Erin Sherbert
A few moments of comedy brightened Judge Martin Jenkins' courtroom on Jan. 4, when Bentzion Pil, the so-called "used-car rabbi," was sentenced to nine months in a halfway house for a minor sort of money laundering. One of his lawyers, Michael Stepanian, argued that home detention would be more appropriate for the rabbi than a halfway house. His reasons were pious: An Orthodox Jew has certain needs, like kosher meals or not riding in a car on the Sabbath; conducting shul, or prayers and study, would be more convenient for Pil if he lived at home; and as a resident of a halfway house, the rabbi would not be allowed to "solicit any funds for his ministry." Judge Jenkins reminded Stepanian that the idea behind sentencing a convicted felon was to punish him, and a chuckle drifted through the courtroom.
Soliciting funds -- about $25 million worth, most of which has disappeared -- is why Pil was in court to begin with.
Pil's sentencing was the final step in a long and drawn-out legal case that had charged the rabbi with fraud in collecting and distributing millions of dollars in charitable donations -- but which has left unanswered the question of whatever happened to the money (see "From Russia With Sleaze," Postscript, May 31, 2000).
Until the mid-1990s, Pil and his wife, Mattie, ran a small elementary school in the Richmond called the Beth Aharon Day School. They raised money for it through a parent charity, the Jewish Educational Center, which solicited car donations through a campaign of billboards and radio ads. "JEC provides transportation to needy immigrant families," ran one of the radio spots. "In many cases your donated car will save you more in taxes than what you might earn by selling it."
Donations flooded in. JEC sold the cars at auction -- which surprised some donors -- and for a while Pil was among the most successful used-car dealers in the country. Between 1993 and 1996 his outfit brought in (according to its own chaotic bookkeeping) about $15.6 million, or enough to endow a small university; but by April of 1996, when a Wall Street Journal reporter came to visit, all the worldly product the JEC had to show for its roaring success was still just a small elementary school in the Richmond that, as the paper said, was "badly in need of a paint job."
Almost none of the cars went to needy families, according to an IRS investigation, and less than 20 percent of the money after 1994 went to charitable purposes of any kind, including the day school. Where the rest went is open to debate. The Pils claim they gave it to various charities but can't show a clear paper trail.
A series of investigations by city, state, and federal authorities shut down the car operation, and in 1997 the JEC declared bankruptcy. Rabbi Pil entered a plea agreement with the U.S. Attorney's Office in December 1999, admitting to charges of "structuring" $1.7 million in 1995. That means he deposited cash in increments of less than $10,000 to avoid reporting its source to the U.S. Treasury Department. The assistant U.S. attorney, Ross Nadel, calls structuring "basically a form of money laundering"; Pil's lawyers claim the rabbi simply didn't want to be bothered filling out forms. A Jewish upbringing in the Soviet Union, they also told the judge, taught Pil to mistrust official scrutiny.
(That argument led to another moment of comedy in the courtroom. Along with nine months in a halfway house, and three years' probation, Judge Jenkins ordered a course in basic civics for the rabbi, to teach him about the American system. Pil has lived in the U.S. for 24 years, first in the New York area and then in San Francisco; although his Uzbekistani-Russian accent is thick, it's hard to believe he could be quite as innocent of the American system as his lawyers claim. The licensing of a day school -- as the judge himself pointed out, in a slightly different context -- involves some governmental red tape.)
Pil and his wife were investigated and brought to trial for lying to the public in radio spots and on billboards, and raising untaxed millions of dollars for purposes that seem to have extended beyond the Pils' limited charity. Through a plea bargain, Mattie Pil was exonerated; the rabbi pleaded guilty to "structuring," after the government dropped charges of wire and mail fraud as part of the agreement, and the case never went to jury. Pil has also, now, avoided prison.
Yet with millions of dollars in charitable donations unaccounted for, why did prosecutors settle for a plea bargain, without pursuing the case further?
Assistant U.S. Attorney Nadel says he entered a plea agreement to bring a quick end to the case, and to save taxpayers money. He entered an agreement on structuring, in particular, because fraud was tougher to prove. "Even if the investigation continued for a lengthy period of time, and [Pil] was charged with mail fraud or wire fraud -- there is a significant possibility that the guideline range [or the amount of jail time Pil would potentially face] would not have been greater."