Twenty-four hours before the start of Passover, Rabbi David Pinto paid a short visit to the compound where his institutions are situated, in Ashdod. The rabbi hadn't been in Israel for several months, and at the entrance 100 of his disciples gathered to welcome him. Speaking in a quiet tone, his Hebrew marked by the hint of a French accent, Pinto whipped up for them a cocktail of tales of anti-Semitism and insight gleaned from the terrorist murder of the children at a Jewish school in Toulouse a few weeks earlier. All of this was seasoned with remarks about heavenly signs, indications of miracles, and coincidences that could never be explained had the man talking not been endowed with a messianic touch. In recent years, with the rise in prestige of the Sephardi rabbinic dynasties, Pinto has been building his stature as the head of a French-Israeli sect that bases its strength on the waves of Jewish immigration from France to Israel. In recent years, the rabbi built a kollel (yeshiva for married men ) and yeshiva in Ashdod. Disciples flock to his door, whether there or in Paris, to receive his blessings or travel with him to the graves of Torah sages in various locations.
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An investigation by the registrar of nonprofit organizations, whose findings are being reported for the first time by Haaretz, reveals the trail of funds that serve Pinto's institutions. According to the report, over the years Pinto has weaved a web of nonprofits, a hekdesh (a philanthropy collective ) and a private company. All these transfer monies to each other - loans of millions of dollars and reimbursements for international travel expenses.
From a complaint submitted to the registrar, whose accountants subsequently confirmed its validity, it emerges that the nonprofit organizations actually serve as a sophisticated conduit for transferring funds from overseas to Israel and then to Pinto. According to the registrar of nonprofit organizations, his real estate deals ultimately led to 28 Ashdod apartments, valued at tens of millions of shekels, being put under a lien in his name.
David Pinto is the scion of a well-known rabbinical family, whose roots reach all the way back to Rabbi Chaim Vital, a kabbala scholar in 16th-century Safed. His father, Rabbi Moshe Aharon Pinto, immigrated from Morocco to Israel after the state's founding, and settled in Ashdod. David was already enrolled at a yeshiva in France at the time, so remained there.
Rabbi Moshe Pinto's name began to be associated with miracles. Rabbi David Pinto relates about his father that, during World War II, when news of the Holocaust of European Jewry became known, he did not change his clothes at all and only a single slice of bread with olive oil passed his lips each day. It is also said of him that he did not leave his room for 40 years. His Ashdod home, in Rova Bet, became a pilgrimage destination for adherents, who came seeking a blessing from his mouth. Rabbi Moshe died in 1985, and his grave was marked with a stone structure that indicates the burial place of an important figure. Every year, late in the summer, a big hilula, or memorial celebration, is held in his honor.
Rabbi Moshe Pinto was survived by 10 children; two became rabbis. The younger and most famous, Rabbi Chaim Pinto, who is married to the granddaughter of the revered spiritual leader Baba Sali, was appointed rabbi of Kiryat Malakhi in the 1970s. In 2011, he was appointed to the post of Sephardi chief rabbi of Ashdod. His son, Rabbi Yoshiyahu Pinto, has become known in recent years as an charismatic leader, to whose court politicians and businesspeople swarm. However, there is no organizational connection between Rabbis David and Chaim Pinto. Each has his own court.
David Pinto was a yeshiva student when his father moved to Israel. Even though he lived here for several years, he never became an Israeli citizen. After his father died, he began wandering between Jewish congregations in the world, benefiting from his lofty lineage; he was considered someone who placed an emphasis in his rabbinical work on morality, mysticism and legends.
In the 1990s Pinto acquired a large tract of land adjacent to the cemetery where his father is buried, where he hoped to establish a community. The registrar of nonprofit organizations reported that he thereby actually sought to set himself up as a business. In hearings, he claimed that his goals were entirely charitable and intended to aid the needy.
First he set up the firm Beer Moshe Ltd., which was joined by the nonprofit Orot Haim ou Moshe. In the United States, he founded another, religious nonprofit Hevrat Pinto. Later on, Hekdesh Pahad David was founded. These were joined in the 2000s by the nonprofit Peninei David.
The person who actively runs the network of associations and serves as a director for each of them is Eli Pinto, the rabbi's younger brother, who also works for the Ashdod municipality.
To raise money, David Pinto occasionally gathers together wealthy individuals and close associates for trips to visit the graves of tzadikim in different places. For example, every year in the Hebrew month of Elul, before the New Year, he flies to Morocco to visit the grave of his grandfather, Rabbi Chaim Pinto. People who have participated tell of a mystical atmosphere on the journeys, and recount that Pinto speaks well of each and every tzadik (righteous man ) in the family dynasty. Every six months, his institutions publish pamphlets in Hebrew, English and French summarizing his activity during the preceding period - a veritable cult of personality surrounding David Pinto.
The pamphlet issued this past Passover, for example, contains 50 pictures of the rabbi: at graves of the righteous, seated, lecturing, teaching, preparing matzot for Passover, and at several more graves of the righteous.
In 2009 the registrar of nonprofit organizations launched an inquiry into all of the ties between the network of philanthropic collectives and companies operated by Pinto in Ashdod. The probe found that the main focus of the activity took place through the Beer Moshe company, which was founded in 1992. Its first manager was David Morgenstern, who was charged with fraud in a previous affair in 2002 in which the state was cheated out of $20 million, with which it supposedly bought property belonging to the Greek Patriarchate in Jerusalem. The Supreme Court acquitted Morgenstern of fraud but convicted him on charges of obstruction of justice, and sentenced him to six months of community service. It was he who sold Pinto the land in Ashdod, which Pinto transferred to the company as collateral.
Housing the disciples
Morgenstern began moving ahead with building plans. In the first phase, an apartment development went up, to house Pinto's followers. Apartment buyers included his brother and right-hand man, Eli, and Amram Knafo, then an enthusiastic adherent and today the acting mayor of Ashdod and chairman of the municipal planning and building committee, who was arrested recently on suspicion of taking bribes. Knafo left the neighborhood several years ago.
The crux of the investigation by the registrar pertains to Stage 2 of the project: a row of homes in the center of the neighborhood, on which construction began in 2006. The purchasers of these units are the nonprofit organizations themselves: Peninei David bought 22 apartments for a total of NIS 15 million, and Orot Haim ou Moshe bought 42 for a total of NIS 38 million.
The registrar's report explains how the deal was carried out: NIS 13 million was transferred in cash from Orot Haim ou Moshe. The second part of the deal was financed in a circular manner. When the company was founded, Pinto extended it a loan of NIS 25 million to buy the land. In 2009 Pinto transferred the rights on the repayment to Orot Haim ou Moshe. The nonprofit used that money to purchase the apartments, which were put under a lien with a notice in Pinto's name stating that they be rented only to needy families. The significance of the lien is that if the nonprofit disbands or it stops renting the apartments to the needy for any reason, it will have to repay NIS 25 million to Rabbi David Pinto, or else he will become the personal owner of 28 apartments in Ashdod, worth tens of millions of shekels.
The nonprofit groups gave as the reason for buying the apartments their wish to rent them out to needy individuals at a low price, and to use the rental fees to pay for scholarships for their kollel students. One of the apartments was rented to a son of the chairman of a nonprofit.
As it turned out, building for the needy yielded significant profit for Beer Moshe: The organization's financial report states that in 2009 alone the company had profits of NIS 8.5 million, before taxes.
The investigation by the registrar of nonprofit organizations turned up interesting findings about the money trail behind the purchase of the apartments. The money from overseas was funneled along three axes: The first, from Hevrat Pinto - a religious nonprofit incorporated in the United States and controlled by one Brown Goldberg of New York; the second, Goldberg himself, who also transferred millions of shekels in contributions, registered in his name, separately; and the third axis was via a NIS 4.5-million loan that the rabbi gave the nonprofit organization. From the nonprofit organization the funds continued onward, to the Beer Moshe company. Thus it happened, for example, that money that Pinto had loaned to the nonprofit organization was transferred to a company owned by him, and was listed as net profit there. The inquiry by the registrar discovered a discrepancy between the organization's own description of its activity, and its financial reports and activity in practice. In addition, the registrar's report expresses concern that the organization is being used as a conduit for money allocated to other activities.
The report also states that Hevrat Pinto transfers funds "to affiliated bodies" and this "gives rise to concern that a business is being run under cover of a nonprofit organization and profits are being distributed to members of the nonprofit organization, officials and interested parties by means of purchasing services and other payments." The organization claimed in response that the monies go to other nonprofits that help the needy.
In the wake of the investigation, after a discussion with the registrar, which included a detailed hearing, the nonprofits stopped the transfer of monies onward to the Beer Moshe company, and after the deal in which the apartments were put under a lien in Pinto's name, all the shares of the company were transferred to joint ownership of the nonprofit organizations.
Last November, the office of the registrar wrote that continued investigation suggests that the income tax authorities ought to ascertain whether the operation is considered "business activity" or "activity that is not for profit."
The investigation uncovered a series of other monetary transactions among the nonprofits and between Pinto and the nonprofits. One of these was a loan of NIS 4.4 million that the rabbi gave Orot Haim ou Moshe in 2007. It is unclear where the rabbi - who is portrayed as a man who instills Torah in his disciples without asking anything in return - would have acquired such a large sum to give out as a loan. The organization explained to the registrar that it needed the loan because it had encountered cash-flow difficulties. A year later, Pinto forgave the loan. The registrar's findings give further cause to wonder how he could afford to make such a gesture, considering that the sum had come out of his own pocket.
In contrast to his treatment of Orot Haim ou Moshe, the rabbi was tough on the Peninei David organization. There the registrar's probe found that in late 2006, this nonprofit transferred NIS 492,000 to David Pinto "in repayment of a loan." It had an explanation for the transfer: travel expenses for the purpose of raising money for the organization, which Pinto had paid out of his own pocket in 2005, and which had been recorded as a loan. In 2006, when the organization was in better shape (after a large infusion of funds from abroad ), the money was repaid.
The documents transferred to the registrar of nonprofits organizations offer an intriguing glimpse into Pinto's travel "industry." In practice, the organization in Israel footed the bill for the fund-raising expenses of Hevrat Pinto in the United States.
Perusal of the flight documents makes one wonder if they were registered retroactively to conceal that Pinto and his associates had covered the expenses of his worldwide flights through the nonprofit organization. For example, in September 2005, Pinto secured a donation of $99,994 to Hevrat Pinto in the States. The money was entered in the log as "donation No. 2."
Yehuda Eder, a member of the nonprofit's board, flew to Paris to secure the donation in February, at a cost of $1,715. In May 2005, Rabbi Pinto flew Paris-New York-Paris-Israel, at a cost of $7,938. A few days later, he flew round-trip from Tel Aviv to Brazil, by way of Paris, at a cost of $5,773. In June he flew from Paris to Caracas-Costa Rica-Mexico-Paris, at a cost of $7,688. On the latter flight the rabbi was accompanied by a colleague, William Marciano, who, like Pinto, flew business class at an added cost of $7,688. In June the rabbi also flew from Tel Aviv to Paris, at a cost of $2,632. The total expenses for all the business class trips flown in order to obtain "donation No. 2" came to $33,425.
Another noteworthy gift was listed on the books as "donation No. 25." It too came from Hevrat Pinto, and was for an identical sum, $99,994. Pinto, together with Yehuda Eder, flew from Tel Aviv to New York and back, via Paris. Each man's business-class flights cost $5,171. The two men remained in Paris for 20 days in what was described as "convening a gathering of donors, and Torah lessons." In the case of "donation No. 25" as well, the cost of the flights came to about a third of the donation.
The investigation also found evidence of additional money transfers from Pinto's nonprofit organizations to others - "without a record of any assistance," as the registrar put it. Rabbi Pinto previously opened a hekdesh called Pahad David, through which he manages part of his activities. In 2006, Pahad David transferred to Peninei David a donation of NIS 315,000. The latter, in return, repaid the hekdesh NIS 490,000. The following year, Peninei David transferred NIS 3.1 million to a string of other nonprofits. This included NIS 1.5 million to the organization Shalhevet Mordechai, whose chairman, Masoud Revivo, was also employed at Peninei David. The registrar's calculations found that only 20 percent of the monies transferred to Peninei David actually went toward its declared goal of helping the needy and providing scholarships to students.
Eli Pinto, David's brother, said in response on behalf of all the nonprofit organizations and his brother: "The nonprofit organization's activity is broad and diverse and demands plentiful resources. The funds of the nonprofit organization serve to promote its causes, which are primarily the building and management of Torah institutions in Israel and abroad and giving aid to the needy. The main funding of the nonprofits comes from donations raised from philanthropists and various bodies in Israel and abroad. Additionally, sometimes they make use of monies that are given to them as a loan until contributions arrive.
"In 2007 Rabbi David Pinto extended a loan of NIS 4.4 million to the nonprofit organization Orot Haim ou Moshe. In 2008 the organization fell into cash-flow distress, and under the recovery program the organization received the honorable rabbi's consent to forgive said debt. It is worth noting that the recovery plan was approved by the registrar of nonprofit organizations."
Eli Pinto adds: "As you know, by law the assets of a nonprofit organization belong solely to the organization and do not belong to the members of the organization. The organizations are monitored and subject to oversight by the registrar of nonprofit organizations and are accompanied by professionals. There is not and cannot be any motive to evade payment of taxes or to conceal the volume of assets when everything is transparent and monitored. The organizations operate according to the framework of purposes that have been approved by the registrar of nonprofit organizations and are primarily intended to increase the Torah, to glorify it and give succor to the needy.
"Orot Haim received permission from the registrar as well as the tax authorities to rent apartments to needy families, according to predefined criteria and reduced rental fees. The nonprofit organization of Talmudei Torah and charity of Rabbi David Hanania Pinto shlita [acronym for "may he live and be well"] are a model of clean hands and proper management."
According to Eli Pinto, "the Torah and charity nonprofit organizations of Rabbi David Hanania Pinto Shlita are a breath of fresh air. The institutions of the rabbi shlita and he who heads them are occupied day and night with utter dedication to strengthening Judaism in communities around the world and in Israel and with acts of charity on a most extensive scale. The institutions are run in a manner that can only elicit admiration - extremely modest salaries for the directors of the organization; the rabbi Shlita himself does not receive any salary and does not benefit from the organizations in any way. On the contrary, we have learned that the rabbi shlita himself is one of the contributors to the nonprofits to very significant extents."
The office of the registrar of nonprofit organizations offered this response: "Following a routine in-depth audit by the registrar of nonprofit organizations of the nonprofit organization Peninei David, a report was submitted to the Proper Management division at the registrar of nonprofit organizations of an accountant's audit that included ostensibly grave findings. In the light of these findings, a warning letter was sent to the organization, stating that it must respond to the findings with explanations backed up by documents. In the months after the report of the audit was received, the organization was required to provide explanations, affidavits and various documents to prove its claims that there had been no flaw in its conduct; later a hearing was held for it at the offices of the registrar. Following that, the organization was called upon to submit additional proof that failings that had been discovered in its conduct have been corrected."
With regard to the organization Orot Haim ou Moshe, the registrar's office added: "The in-depth audit ended in January 2012 and the organization was asked to correct a number of failings that were found in its conduct. In looking into the findings of the report on the Peninei David organization, numerous documents were submitted to the Proper Management division, which did not justify transferring the matter to criminal law enforcement officials. However, the latest audit of Orot Haim was passed on to the tax authorities to handle. Under the existing practice at the registrar of nonprofit organizations, according to which the registrar monitors organizations at which substantial flaws have been discovered by means of an additional in-depth audit, a repeat audit of Peninei David is expected to be held in 2012, which will also include a review of its present conduct alongside its ties to Orot Haim ou Moshe and other organizations."