Lakewood – Rabbi Stole $630G From Special Needs Tuition Fund

TRENTON, NJ — The founder of a Lakewood school for children with special needs has been indicted on charges he misappropriated more than $630,000 in public tuition funds, using a purported fundraising foundation for the school in his alleged schemes to steal and launder money, Attorney General Christopher S. Porrino announced.

Rabbi Osher Eisemann, 60, of Lakewood, the school’s founder and director, was indicted along with the purported fundraising foundation for the school, Services for Hidden Intelligence LLC, on second-degree charges of theft by unlawful taking, misapplication of entrusted property and property of government, and money laundering, according to Porrino’s office.

The state grand jury indictment also charges Eisemann with second-degree misconduct by a corporate official, the news release said.

The investigation, which authorities said began with a referral from the state Department of Education, is continuing, officials said. Records were seized at the school in June 2016.

The School for Children with Hidden Intelligence receives approximately $1.8 million per month in tuition from the Lakewood School District and other public school districts that send special needs students to the school, the release said. The tuition rate is set using a state formula that is based on the “reasonable, ordinary and necessary” costs to educate the students, and all tuition funds must be used strictly for operating expenses of the school.

Porrino’s office alleges Eisemann used the fundraising foundation, Services for Hidden Intelligence, to steal approximately $430,000 in public tuition monies for a personal business venture and to misappropriate an additional $200,000 in a money laundering scheme intended to make it appear that he was repaying debts he owed to the school using personal funds, the release said.

“By allegedly stealing public funds that were strictly earmarked for the education of special needs students, Rabbi Eisemann broke the law, violated the public’s trust, and betrayed the vulnerable population of children served by SCHI,” said Attorney General Porrino.

“He had a duty to use every tuition dollar for the benefit of the children at the school, but instead he allegedly diverted hundreds of thousands of tuition dollars to gamble on a personal business venture.”

“We’re actively continuing our investigation of Rabbi Eisemann and his alleged use of the school’s fundraising foundation in schemes to siphon money away from the school for his personal use,” said Elie Honig, director of the Division of Criminal Justice. “We urge anyone with information relevant to this case to contact us confidentially so that we can thoroughly investigate all leads.”

The investigation by the Division of Criminal Justice revealed that the fundraising foundation was actually receiving money from the School for Children with Hidden Intelligence rather than providing money to the school, officials said.

Eisemann used accounts of the foundation to fund a number of enterprises with which he was associated that had no relationship to the school, officials allege. The investigation into alleged misappropriation of public tuition funds from SCHI is continuing.

Porrino’s office said the indictment returned Wednesday alleges Eisemann stole approximately $430,000 in operating funds from the school – specifically, public tuition funds entrusted to the school to educate special needs children – and invested them in a now-defunct clothing business, TAZ Apparel LLC.

TAZ was operated by a business associate, and the investment was a personal one by Eisemann, authorities said.

Neither the school nor the fundraising foundation had any ownership interest in TAZ, authorities said.

The investigation uncovered contracts between Eisemann and the business associate in which Eisemann agreed to finance the business up to $550,000, while the partner would manage its daily operations, authorities said.

Eisemann allegedly transferred the funds he stole for the private investment from the school’s operating account into accounts of the fundraising foundation, they said, then allegedly used funds in the foundation accounts to transfer approximately $277,000 to TAZ via checks and wire transfers. Eisemann also is accused of using foundation funds to pay about $153,000 in AMEX expenses accrued by TAZ, authorities said.

In the money laundering scheme, Eisemann allegedly transferred an additional $200,000 in public tuition funds from the School for Children with Hidden Intelligence to the fundraising foundation, authorities said.

The stolen funds then allegedly were transferred through several unrelated entities and individuals, including TAZ, and ultimately into Eisemann’s personal bank account, they said. Eisemann subsequently paid the money back to the school from his personal account, they said.

Through this scheme, which was completed in six days, Eisemann allegedly obscured the origin of the money so that he could use the school’s own money to create the false appearance that he was using personal funds from independent sources to repay debts he owed to the school, authorities said.

The investigation began with a referral from the Department of Education regarding SCHI’s financial practices, authorities said.

Second-degree charges carry a sentence of five to 10 years in state prison and a fine of up to $150,000. The second-degree money laundering charge carries an enhanced fine of up to $500,000 and an additional anti-money laundering profiteering penalty of up to $250,000.

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