me Joshua Lockwood Seu Thurst ,June09 at-- Suhyect. RE. another potential en problem in BedrSluy Thanks Bev, yes, I know I've really searched my soul on this issue, as lots of other tolks continue to do Josh Lockwood Executive Director Habitat for HumaniterYC Ph: 212799174000 ext 303 Watch how Candace Geargema Single mom with 5 children whase apartment was overrun with rat: and black mold" wurked with Habitatelvrc ta trunxform her life: :/Ihit.ly/g01VWV Seur: Thursday, June 09. 2011 2:36 PM To: Joshua Lockwood Suhject: RE: another potential en problem in BedrSluy 0k. Don't want to be alarmist. Just want to make sure we don't get caught by surprise have a communications plan ready should this ever, ever come out. I'm very relieved to know that our attorneys are on it! BTW i I think the "retuming the homes to the neighborhood" was a position I came up with during the last round of K. discussion. And I believe it still holds, but we need to make sure we have a case for due diligence. And it sounds like we're safe in that arenal me: Joshua Lockwood Sent: Thursday, June 09,2011 1:45 PM To: Cc Suhject: RE: another potential en problem in BedrSluy At some point soon we should ChaL So you know, we definitely have all the information that is available about Katz and the Yeshiva and this issue has dominated the past week with the Committee, we've been paying our attorneys to do lots and lots of research on him, court filings, to fully understand his dealings. I don't think you need to do parallel research as well at this point. There's zero douht in my mind that he's a bad guy and did bad things. The hoard is now weighing whether huying property troni him (under the appraised value as per HUD guidelines so he's not being unduly enriched) is a dealrkl'ller, or whether we should be forwardrlooking and think of the tamilies that will benefit trotn taking additional units (which Isaac Katz would make marketrrate if we don't) and providing them to lowerrincome Habitat families. But to your point, given that we've already undertaking transactions with him, we need to be prepared with an answer. Agreed its unlikely that an investigative reporter would target us speritirally, but obviously we'd need to be prepared in the event s/he does. But for now, there's an intense effort to gain some consensus among the decisiunrmakers on the board about how to move torward with Katz, if at all, and people like him (who dominate the market in this the subprime crisis in BedrStuy). We have a call tomon'ow at 3:30 am and should know more then.. .. Josh Lockwood Executive Director Habitat for HumaniterYC Ph: 212799174000 ext 303 Watrh how Condaee Georgemo single mom with 5 ehilttren whose apartment was overrun rats and black mold" worked with to transform her life: Fm Sen Thursday, June 09, 2011 1:15 PM To: Joshua Lockwood Ce: Subject: another potential PR problem in Bed-Silly Josh, 1 fear that everyone drinks 1 am paranoid and overly roneemed about our Katz dealings in Bed- Stuy. And 1 know how challenging it has been to put these deals together and how hard everyone has worked on them. But I did want to give you a heads-up on an issue that has the potential to be a possible PR problem with the Madison Street buildings, in ease you weren't aware of this. It seems that the buildings were sold only about a year ago. Prior to that, they were owned by a group rail "Yeshiva Gedolah of Sea Gate." 1 was rurious why a religious srhool would buy Bed- Stuy residential properties, so I Googled their name and tound the Jewish Week story below. It seems that the "yeshiva" has served as a money laundering operation in a previous major real estate fraud case. Can we (you, me, Rachel, Bill and Erika) meet to talk about this and plan tor any PR implications that may arise for Habitat around the connection, should a reporter ever start questioning it? (That may sound farfetched, but a Daily News investigative reporter attended our Melody ribbon-cutting last week 7 where he was stalking Wambua. We're talking losts of federal dollars, and we have to be super careful). Thanks //Www ihe eWishweek com/news/iialiunal/orihudox seen lured affinity fraud totaling 200 million Orthodox Seen Lured Into 'Affinity Fraud' Totaling $200 Million Fnday, December 25, 2009 Hella Winston Special [0 The Jewish Week hi an alleged financial lraud shai has ensriared Onhodux Jewish invesrors lioui New ankm Flun'da ro London, a Lakewood NJ, businessniau is accused of hdkiugrheui our of more rhau $200 niilliou ihrough phony real esiare deals, acrordiugro rouiplainrs iriade ur lawsuirs across ihe counrry. in (mm papers oinaiued by The Jewish Week plainrills claiin shai real esiare invesror Eliyahil Weursiein, 35, "mthesualed a lraudulenr scheme" in which he inade raise supponed by rounrerieir and laise docunieurs ahour where and how iheir money would he invesred, and misappropriared ihe hiuds for his own use, AI leasr one orrhe coinplaiuis alleges ihai Weinsreiu, described by some who know him as charismaric, hieudly and chaririing and hailing hum a "yeshivisw lainily, may have laundered uioney shrough New Yurkrama Jewish sharisies. Some of ihe filings also asseir sharWeinsieur, a member of Lakewood's onhodox coinuiunuy, iargeied oiher onhodox Jews in whar is described as an "affinlly lraud." According ro one olrhe coniplainrs, Weinsieur is said ro have exploued she "hzllef shai ihe uarure orrhe ionhodoxi rouununiry assures ihai people wirhin she couirnuniry will deal wirh houesry and good each oiher." Thar olien resulrs according so she ioniplainr, in "business [olien heing] uansacied wishour or rhrough informal leuer prepared by ihe parties." The Jewish Week has oinained a copy ola New Jersey federal grand yury subpoena, eVideuce of an ougourg invesiigaiion daring hack ro lasi May. To dare, Weiusrein has noi been changed wirh any criines. alleged hand, which began amIIlId 2005, his invesrors in New York. New Jersey, Florida, Caliloruia and London, and involved pioperiies rhioughoui ihe Unired SlalESe One of ihe complaqu clahris ihai Weinsreiu and his rodereudanrs "engaged in a criniiual enierprise desigredro sreal sums of niouey offering knowiqu laise represeuiarions relaring io she of van'mis alleged invesiineur propenies, propeny values, ownership, dein, uiorigage posuions, and developnienr siarus of piopeiry." The same coinplaini noses rhar in many olrhe cases, allege rhar "Weinsreiu and his coconspirarors sranslerred she saiue piopeiiy ro viciirns, divened ihe paymeuis and leli ihe VlClilns ro lisigare ownership." in oshei cases, ihe codereudanrs allegedly propeny shai ihey did noi ur fan own and in which [ihey] had no ownership iureresis." in all, The Jewish Week has docuineurs penainurg io 14 cases agaiusi Weinsreiu, alrnosi all of iheui involving Dishodox Jews, According ro Gary Ginsburg an auoruey who is noi represenring in any orrhese inarrers hui ro whom The Jewish Week was referred by Weursiein's counsel of record, Weiusieur "denies all wrongdoing," Gurshurg also rold The Jewish Week shar "ihese were Dznsaclimls" and shai ihe losi money as a resulr oi rhe dowuiuni. When aslred for oi shis, Gurshurg said only shai "ihis lirigarion has produced rhousands of documenis" shar are for "a coun oi law and nor a newspaper." He argued ihai ihis is a "Classic case," ur which use "innuendos io iry creare pressure upon ihe delendanr lorce hirn inro a order io Among those allegedly defrauded out of the most money are Berish Berger, a prominent member of London's Orthodox community, and Harvey Wolinetz, a resident of Florida. Both men were wealthy, and one had suffered recent losses of close family members, making them particularly vulnerable in that they were "taken up with personal issues," according to an attorney involved. Berger, who alleges he was defrauded out of $36.5 million, claims that Weinstein and his co-defendants, business partners Ravinder Chawla and Mark Sahaya, specifically targeted him "as a wealthy member of the Orthodox community" who "was involved in the real estate industry and had access to capital through corporations closely associated with his family." Berger alleges that Weinstein and his co-defendants "fraudulently induced [him] to believe he was purchasing two parcels of Philadelphia real estate" but misappropriated his money for other uses. (Chawla submitted a motion to exclude Berger's allegations that he targeted Orthodox Jews, asserting that they are "entirely unsupported by any evidence" and calling them "so inflammatory and so prejudicial that the Court would be justified in excluding [them].") Wolinetz alleges that Weinstein and several co-conspirators conspired to defraud him "of at least $79 million by making false representations that Plaintiffs would be provided with an interest in at least 12 different properties located in New Jersey, Florida, New York, Tennessee, Georgia and Pennsylvania." According to Wolinetz's amended complaint, his funds were "improperly misappropriated, diverted, and converted for Defendants' own gain leaving Plaintiffs out more than $79 million without any meaningful interest in the properties." Other plaintiffs allege a similar pattern of fraud, with losses ranging from the mid-six figures to $40 million. The documents also allege that Weinstein counterfeited checks to further his scheme. In one example, court papers claim that Weinstein forged a bank check in the amount of $9,964,000 to represent that there were proceeds from a sale that the plaintiff claims never occurred. In support of the plaintiff's claim is a letter from the U.S. Secret Service, which states that Provident Bank confirmed that the check was a fake. Claims are also made that Weinstein diverted millions of dollars to corporations and religious charities. Indeed, despite providing records of the latter transactions, Weinstein, who worked as a used and new car salesman before getting into the real estate business about five years ago, has apparently been unable to account for the funds given to him to invest by the plaintiffs. In depositions and statements alluded to in the court papers, Weinstein has claimed only that the money was lost as a result of "market conditions." In a letter to the court, an attorney representing one of the plaintiffs claims that "there is substantial evidence that missing money was laundered through various 'charities' and ultimately ended up being used for Defendant's personal wealth." For example, a detailed summary of Weinstein's personal and corporate bank accounts attached to the letter indicates that, over the course of several days, payments of millions of dollars were made by Weinstein to Vaad Lehakomas Kollelim, an alleged religious charity with offices in Manhattan. Bank records show that equivalent sums were paid out to Weinstein, sometimes on the same day or within a few days. A similar pattern is evident in transactions between Weinstein and Yeshiva Gedolah of Seagate, in Brooklyn. Checks from both charities were signed by an individual who appears on Weinstein's payroll records. Neither organization could be reached for comment. Asked about the allegations of money laundering, Weinstein's spokesman, Gary Ginsburg, noted that the transactions documented in court papers "were loans or purchases," though he declined to elaborate. According to a source close to the case, Weinstein has recently claimed that the transfers were connected to loans between himself and the alleged charities, but he did not provide any loan records or other documents to support these claims. Sources familiar with Weinstein's background say he has rabbinic ordination from the Talmudical College in Jerusalem. After his time at the Talmudical College, he claims to have worked for a company called Mitnick Realty. He then launched a company of his own, Tower, in 2000, which was a used car business. He then opened a new car business before going into real estate. According to Heshy Friedman, a professor of business and director of business programs at Brooklyn College, "it is human nature to trust people from one's own religious community. ... Many Orthodox Jews are shocked when someone who studies Torah and is strict about rituals has no problem committing fraud." Further, Friedman notes that the cultural taboo against "mesira," or informing to the authorities, makes it "easy for a swindler to take advantage of his co-religionists. Some Orthodox Jews," continued Friedman, "are reluctant to go to authorities when cheated because they are under the mistaken belief that this constitutes mesira. So they go to a Jewish bet din [religious court], which has little power." suurcEs (losr the case haw me mm; mm mm hkely many mme vlzums who am .elumm mme lorwani (or jusx ms mason