Home Courts UPDATE: Feds sting two Hudson Valley men in money laundering via charity...

UPDATE: Feds sting two Hudson Valley men in money laundering via charity fraud

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Two Hudson Valley men who were arrested Wednesday believed they had been handling money from a health insurance fraud, according to a grand jury indictment filed this week.

Arnold Klein and Leon Klein, both of Monroe, were charged in White Plains federal court with money laundering and conspiracy to commit money laundering.

“In truth,” the indictment states, “the party from whom they agreed to launder these funds was a confidential source, who approached Arnold Klein and Leon Klein at the direction of law enforcement, seeking their assistance in laundering the proceeds of a purported health care fraud scheme.”

hudson valley monroe money laundering charity fraudBoth men pleaded not guilty in their initial appearances Dec. 11 before U.S. Magistrate Judge Paul E. Davison. They were released from custody on $250,000 personal recognizance bonds.

Their attorneys, Susan Rose Necheles and Steven Y. Yurowitz, did not respond to an email message asking for their clients’ side of the story.

From July 2016 to August 2017, according to the indictment, the confidential source gave four checks to Arnold Klein, ranging from $50,000 to $130,000, and described as proceeds of a health care fraud.

Arnold Klein had allegedly directed the source to write the checks on the source’s business account and make them payable to a nonprofit organization whose bank account Klein controlled.

The indictment does not identify the nonprofit organization but U.S. District Judge Cathy Seibel ordered the Kleins not to move or dispose of funds in bank accounts under the name of Gemach Keren Hillel, a religious organization registered to an address in Kiryas Joel, Monroe.

Arnold and Leon Klein allegedly agreed to launder $255,000 and then deposited the checks in the nonprofit’s account.

The Hudson Valley residents returned the money in a series of installment payments, in cash or checks from the nonprofit’s account, the indictment states, minus a commission fee.  In some instances, Arnold Klein gave the source charitable donation receipts on behalf of the nonprofit organization.

The government contends that the Kleins acted “with the intent to conceal and disguise the nature, the location, the source, the ownership and the control of property believed to be the proceeds of … unlawful activity.”

The indictment includes a forfeiture clause, seeking return of $255,000 or any property traceable to the money.

Assistant prosecutor Shiva H. Logarajah is handling the case.

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