Earlier this week, it was announced that a longtime San Diego real estate agent and businessman had been sentenced to prison for defrauding investors in several Ponzi real estate investment schemes. Alexander Avergoon was sentenced to 64 months in prison. As a condition of his guilty plea, Avergoon admitted to taking part in numerous fraud schemes and tax evasion schemes with Rabbi Yisroel Goldstein who was a former director at Chabad of Poway.
Avergoon has also been ordered to pay more than $9 million in restitution to several victims and forfeit more than $5 million in proceeds to the United States. When pleading guilty in July 2020, Avergoon admitted that he and Goldstein recruited at least nine taxpayers to make more than $275,000 in fraudulent “donations” to the Chabad from 2010 to 2015. Avergoon served as a conduit to covertly return 90% of the money to the supposed donors.
He also admitted to being involved in a grant fraud scheme with Rabbi Goldstein in which the schemers acquired hundreds of thousands of dollars in misappropriated grant funds. They were also involved in a government benefits fraud scheme. As a part of the government benefits fraud, Avergoon used several shell companies, including Imagination Construction Company, to create fraudulent and backdated invoices for services to Chabad Poway. For instance, the invoices were for replacing damaged books, carpet installation, and repairs to Chabad of Poway’s HVAC system.
In reality, Avergoon never performed the services. Instead, he gave Goldstein several fake bids from numerous shell companies so Goldstein could use them to trick the administrators of the grant program into believing he had complied with the competitive bidding requirements. The two allegedly pretended the government grant funds were used to upgrade facilities, security systems, and fund community programs. In actuality, the money regularly went into their pockets. In some cases, some of the money was used to pay contractors who charged much lower prices.
Avergoon admitted to partaking in real estate Ponzi schemes from 2010 to 2016 in which he cheated more than $12 million from retirement investors. Avergoon used his experience and industry knowledge to find victims to invest in supposed rental property while promising to pay monthly dividends from the rental income. He used written investment materials, including prospectus and projected income and expenses calculations to give investors the false impression that their money would be safely stored in passive-income retirement investments.
Instead, Avergoon spend the money himself and pretended he was buying office space and apartment buildings as promised. Dividend payments were funded using money obtained from new investors instead of rental income. The defendant defrauded at least a dozen investors out of $5 million or more. To conceal the fraud, Avergoon used false purchase documents and deeds, forged signatures of his investors, and fake partnership agreements. He was indicted in August 2019 before being apprehended in Latvia and extradited to the United States in November 2019. 46-year-old Alexander Avergoon was sentenced to 64 months in prison.
As for the Rabbi who was once hailed as a hero after a deadly attack on his congregation, he was sentenced to 14 months on charges of tax fraud and wire fraud.