The informant who sparked the biggest criminal sting in New Jersey history briefly emerged

from federal protection long enough today to plead guilty to a $50 million bank fraud.
But even as Solomon Dwek stood fidgeting before a judge in a perfunctory 30-minute
appearance, explosive new details about his private con schemes and his role as the cooperating
witness in the ongoing federal corruption investigation were coming to light.

Tony Kurdzuk/The Star-

LedgerSolomon Dwek is led out of the courtroom after pleading guilty to misconduct by a
corporate official this afternoon at the Monmouth County Courthouse in Freehold.
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• Solomon Dwek's brief, 'scrupulously managed' court appearances hints at role in N.J.
corruption trials
• Full Star-Ledger coverage of the New Jersey corruption probe
A Star-Ledger examination of court documents shows that before Dwek became an informer for
the FBI, he was running a wild Ponzi operation in which one investment was being used to pay
off the debt mounting from the last one and on into the millions in the same kind of geometry
that eventually exposed financier Bernard Madoff. The documents also seem to show that once
Dwek turned informant he was so good at his work — money launderer to religious leaders,
bribe-taking developer to politicians — that some of his targets seemed to be virtually throwing
money at him.
In an amended bankruptcy petition, Dwek disclosed almost $500,000 in 20 separate secret
payments:
There was $75,100 from a former partner, "left in a garbage bag behind his office."
And another $28,400, labeled as "kickbacks for the sale of Florida properties."
Some $9,000 in deposits returned on a cancelled deal for two condominium units located in
Miron, Israel.
And $5,000 that were listed as "fictitious charitable donations given through Solomon Dwek’s
American Express card."
The payments mostly came from people who were set up by Dwek. And the money went straight
to the feds, the documents show. The entries, in Dwek’s own words, were included in the
amended petition because by law all assets must be accounted for, even, it seems if the money
came from a sting and was passed on to the Feds.
Dwek began cooperating with the government after being charged in 2006 in connection with a
bank fraud tied to the Ponzi scheme. Not long after, he began his role as an undercover informant
in what turned into a widespread money laundering and public corruption probe, eventually
leading to dozens of arrests of rabbis, mayors, political candidates and public officials last July.
Solomon Dwek, key witness in FBI's N.J. corruption probe, pleads guilty

Before his arrest, Dwek — the son of a prominent rabbi in the Sephardic Jewish community in
Deal — appeared to be a successful real estate investor, seemingly worth millions. He was a high
school graduate who had gone to rabbinical school for two years, before he started buying and
selling properties with abandon, giving generously to charitable organizations and political
candidates.
But while Dwek had held himself out to be a wealthy real estate investor, it has become clear
from filings in the bankruptcy case that it was all a mirage. Court records describe his business
enterprise as a multi-million-dollar scam orchestrated by Dwek who cheated friends and even his
own uncle on fraudulent land deals.
His real estate properties were basically a shell game. He used money from investors to repay
others, cover shortfalls on so-called "bleeder" properties that did not generate the income needed
to cover carrying costs, taxes or mortgage payments, and also to make charitable donations,
according to filings by Charles Stanziale, the court-named trustee in the case.
"Dwek was able to raise money from new investors by delivering false profits to earlier investors
and creating an illusion that he was a successful, philanthropic real estate mogul who delivered
incomparable investment returns," stated Stanziale in court papers.
The bankruptcy proceeding involves the liquidation of more than 350 properties he had once
owned, and has sparked some 120 lawsuits.
According to the court filings, investors were led to believe that Dwek would buy properties and
simultaneously flip those sales to what turned out to be fictitious third parties at a higher price.
In another part of the scheme described in a series of lawsuits filed by the trustee, Dwek
allegedly paid off Eli Seruya, the comptroller of his uncle’s business, to facilitate the fraudulent
deals being made through the company. The trustee described gifts to Seruya of a new Lexus,
partial payments on nine condominiums in Israel, and transfers through Dwek’s American
Express account in excess of $1.3 million to a synagogue where the controller’s brother was a
rabbi and he had access to its accounts, and had the ability to write checks to himself, the court
documents charge.
Seruya has denied all allegations. His attorney did not return calls to his office.
Another partner, Isaac Franco of Brooklyn, repeatedly threatened Dwek in a series of e-mails,
the court records claim, as the Ponzi scheme began to falter and financial pressures started
spilling over to others.
In one, Franco demanded: "THE $ IS STILL NOT IN MY ACCOUNT. IF IT IS NOT THERE
IN THE NEXT 5 MINUTES — I AM GOING TO YOUR OFFICE AND YOU ARE NOT
GOING TO LIKE IT."
In another, Dwek was warned: "I STILL DO NOT HAVE ANYTHING IN MY ACCOUNT!
THEY ARE CALLING ME EVERY 5 MINUTES AND NEED THIS RIGHT NOW!!!!! IF I
DON’T SEE IT IN THE NEXT TWO MINUTES I’LL STRANGLE YOU!"
The Ponzi scheme ultimately collapsed like a house of cards after HSBC Bank, which provided
Dwek with a $25 million credit line, belatedly did a title search and discovered that it did not
own the mortgages on properties it believed it was financing on behalf of Dwek in Neptune.
According to court documents, Dwek already owned the properties. When the bank finally began
looking at the property records, red flags went up, said Stanziale in court filings.
HSBC called in Dwek to a meeting at the bank’s office in New York in April 2006 and
demanded the money be repaid, or they would report him to authorities.
That same day, Dwek went to the PNC bank in Eatontown and pulled to the drive-up window
with a bogus $25,212,076 check, according to the federal criminal complaint. While the check
was drawn on an account he controlled, the account had been closed and had no money in it.
He assured a reluctant PNC employee that "corporate" had agreed to reopen the account and that
funds to cover the check would soon arrive by wire transfer, and was allowed to deposit the
check into a second account he controlled.
Under the bank’s policies, the account was immediately credited and the next morning, he
checked by telephone access to see if the money was there. At 8:51 a.m., he began wiring funds
out of the account, even though the promised wire transfer to cover the check had never been
made, according to court filings.
Dwek made four payments totaling $22.8 million. The largest was made to HSBC Bank to repay
the money they were demanding back.
Within hours, PNC knew it had been defrauded and tried unsuccessfully to reverse the wire
transfer. Once PNC moved to reclaim the money, Dwek began transferring his properties to an
uncle, Joseph Dwek of Brooklyn after a tense meeting in Hackensack with a law firm
representing the uncle.
Accompanied by his father, he signed over the deeds and then drove to Roseland to meet with
the criminal attorney he had retained. Days later, he was charged with criminal fraud and in
January, entered into a plea agreement with the government.
The bankruptcy action in Newark — a complex and convoluted proceeding involving dozens of
creditors, former partners, relatives and investors — was filed after Dwek began cooperating
with the government, and has dragged on nearly three years, all while Dwek was getting deeper
and deeper into the sting operation.
But even while that proceeding was underway, Dwek was receiving payments from those tied to
the criminal case, as well as others, records show.
Those payments were detailed on an amendment to Dwek’s original bankruptcy petition to
correct the list of assets he held, and were described in startlingly frank language. Included were
checks coming out of several Florida and Israeli real estate deals, some involving partial payouts
to Eliahu Ben Haim, principal rabbi at Congregation Ohel Yaacob in Deal. Ben Haim was
among those charged in July with money laundering. Another $15,300 came out of a $20,000
cancelled deal that involved Ben Haim and Moshe "Michael Altman," a Hudson County
developer who, according to the criminal complaints, "washed" more than $600,000 in dirty
checks to cash for Dwek through charitable, non-profit entities.
The most curious — and still unexplained — payment included on the new asset list filed with
the court was $75,100 in cash received from Barry Kantrowitz, a Monmouth County real estate
broker who represented Dwek in many property deals. According to the filing, the cash was left
in a garbage bag behind the broker’s office. Neither Kantrowitz nor his attorney returned
repeated phone calls.
The money was all turned over to the government, according to the court records.
Dwek’s bankruptcy attorney, Timothy Neumann, would not elaborate on the filing.
"I’m not at liberty to talk about it. The document speaks for itself," he said.
In court today, Dwek admitted that he schemed with mortgage broker Joseph Kohen, 39, of Deal,
to defraud PNC Bank of more than $50 million and launder $22.8 million of the proceeds
through other banks.
Kohen pleaded guilty in the case in March 2007. His sentencing is still pending.
Appearing before U.S. District Judge Jose L. Linares in Newark this morning, Dwek stood as he
entered pleas to separate counts of bank fraud and money laundering in connection with two
bogus checks totaling more than $50 million that he tried to deposit at the PNC Bank.
"I am guilty your honor," he declared, firmly and without hesitation. Later in Monmouth County,
the scene was repeated before Superior Court Judge Thomas Scully in Freehold, where Dwek
pled to similar state charges.
He arrived first at the federal courthouse shortly before 9 a.m., brought in by U.S. Marshals and
the FBI in a caravan that included two black Chevy Suburbans with dark tinted windows. One
parked parallel to the courthouse, shielding the vehicle carrying Dwek from photographers as it
rolled into an underground parking garage.
About one hour later, Dwek emerged from a secured entrance to Linares’ courtroom. A stout
man with a trim beard, he wore a dark suit with a light blue tie and a black velvet yarmulke atop
his thinning black hair. He tapped his fingers on the defense table during parts of the hearing,
adjusted his steel-wire glasses and touched his face, shifting his weight from foot to foot while
glancing around at the courtroom, which was crowded with reporters. Other times he just smiled,
touching his hands lightly to the table in front of him or clasping his hands together, as he
answered questions of the judge clearly and directly.
He faces between nine and roughly 11 years under the terms of his plea deal, although judges are
not bound by such agreements and have wide discretion when imposing sentence. Linares
scheduled Dwek’s sentencing for Feb. 9.
After the 30-minute hearing, Dwek poured himself a white Styrofoam cup of water, smiled and
nodded at federal prosecutors. He shook hands with an FBI agent and Stanziale, and then walked
back through the secure door of the courtroom, accompanied by U.S. Marshals and FBI agents.