Moshe Schwartz, a 33-year-old Sanz Hasid, who lives in Newark, New Jersey, pleaded guilty in federal court in the city to filing a false tax return to the authorities. According to his confession in court, Schwartz held a fund that was supposedly called the 'Shefa Chaim Fund', which operated as a bank for all intents and purposes.
The fund rolled over millions of dollars in loans and deposits in over 350 accounts, without any of the supervision and regulation required of bank management.
Schwartz also admitted that the fund was used to conceal income tax revenues and launder money.
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The sentence - to be handed down in April of this year - combined with his tax offenses and violations of the Banking Law, could result in up to eight years in prison and a fine of half a million dollars.
The 'bank's' activities were discovered in mid-2009, when about half a million dollars were seized and later confiscated by the authorities.
The accounts were registered in the names of Moshe Altman, Itzik Friedlander, and Shimon Haber, who were convicted in early 2011 and sent to 41, 24, and five months in prison, respectively.
