Rabbi, Doctor Arrested in Elaborate Fraud Scheme : Crime: A third person is also charged with setting up money-laundering networks said to involve charities.

A rabbi, a physician and a Lomita woman have been arrested and charged with setting up money-laundering schemes totaling $2 million that were said to involve Hasidic diamond dealers and a “holy network” of bank accounts held by religious charities, the FBI said in Los Angeles on Monday.

Abraham Low, 42, rabbi at the ultra-Orthodox Mogen Abraham synagogue in the Fairfax district; Dr. Alan Weston, 50, a Hollywood physician, and a woman known to the FBI as “Charlie” who has used the alias of Bernadette Chandler were arrested Monday morning and arraigned later in the day in U.S. District Court in downtown Los Angeles. The three remained in custody pending a bail hearing this morning.

The FBI said that during a “sting” operation set up after the initial $500,000 scheme was uncovered, the rabbi laundered $10,000 in supposed “drug money” from an undercover agent and the woman set up a $1.5-million deal with the agent, also offering to sell him assault rifles and other weapons.

Some Los Angeles-area rabbis, who asked not to be named, said Low and his synagogue had suffered severe financial setbacks in recent years--possibly as much as $18-million--as a result of his investment of the congregation’s money in calamitous real estate deals.

The financial problems split the congregation, with some of the members leaving Mogen Abraham to found another synagogue nearby.

Low’s attorney, Mitchell Egers, said Monday night that the FBI, “acting prematurely and without any evidence tried to trap Rabbi Low.

“The facts have not unfolded yet,” Egers said. “But it would not surprise me to learn that the story got completely twisted from the truth.”

In an affidavit filed Friday in federal court in Los Angeles, the FBI gave this account of the alleged schemes:

The Bank of America discovered in September, 1991, that 50 blank cashier’s checks had been stolen from a branch office in West Los Angeles.

On Dec. 5, 1991, Low’s wife, Braca, walked into a Home Savings of America office at 449 N. La Brea Ave. and presented one of the stolen checks, made out in the amount of $496,000.19, for deposit in an account that she shared with her husband.

Immediately after the check was deposited, Braca Low withdrew $345,000 from the account in three Home Savings cashier’s checks. This money has not been recovered.

The next day, Braca Low withdrew $148,000 more from the account with another cashier’s check.

A few hours later, Home Savings learned that the Bank of America check deposited by Braca Low had been stolen and forged. The bank contacted Abraham Low, and he returned the $148,000 Home Savings check.

Abraham Low later gave the FBI phony documents, prepared by Weston, supporting Low’s claim that the Bank of America check was a loan he had obtained from a lender who had solicited him “out of the blue.”

Little surfaced in the case until Nov. 12, when Christopher Golasz, a prisoner in the Orange County Jail, summoned the FBI to his cell and told agents that he, Abraham Low, Weston and the woman, known only to him as Charlie, had been partners in crime.

Golasz said that at Low’s request he had contacted Charlie in late November or early December, 1991, and arranged for the purchase of one of the stolen Bank of America checks. Golasz said he paid Charlie $40,000 cash, delivered in a paper bag, as payment for the check.

After receiving the stolen check from Charlie, Golasz and Weston took it to Low’s house in the Fairfax district, where Weston handed it over to Low, Golasz said. Weston paid Golasz $30,000 in cash and two diamond rings for his participation in the scheme, Golasz said.

After telling the FBI about the plot, Golasz agreed to help the agency.

On Dec. 9, the FBI listened in while Golasz and Charlie talked on the phone about how she had acquired the stolen and forged cashier’s checks from “bank insiders.” That same day, the FBI equipped Golasz with a recording device and sent him to talk with Weston.

During their recorded conversation that day, Weston implicated himself in the sale of the stolen check to Low and agreed to participate in a new scheme to negotiate stolen cashier’s checks.

On Dec. 22, Golasz introduced Weston to an undercover FBI agent posing as a loan shark and drug dealer named Ronny.

“Weston told (Ronny) that he and Rabbi Low had the capability of laundering substantial amounts of illegally obtained, or ‘dirty,’ money on a weekly basis,” the FBI affidavit said. “Weston described what he called the ‘holy network’ of bank accounts held by charitable organizations through which the money would be channeled.

“Weston stated that the cash which (Ronny) wanted laundered would be delivered to Hasidic diamond dealers known to the rabbi,” the affidavit said, adding that the laundered money would then be wired overseas.

Setting up the sting, Ronny suggested a test transaction.

The undercover agent said he wanted to exchange $10,000 in small bills contaminated by drug residue for clean, large denomination bills. Weston agreed, and two days later, Weston and Low met with Ronny.

“Rabbi Low told the undercover agent that he had the ability to transfer millions of dollars in cash through diamond dealers he knew and through a series of charities with which he was connected,” the affidavit said.

“Ronny, the undercover agent, specifically told Rabbi Low that what Ronny was dealing with was ‘illegal drug money,’ ” the affidavit continued. “Rabbi Low stated that he understood.”

On Dec. 28, during a meeting that was recorded and videotaped, Ronny gave the rabbi $10,000 in small bills, and Low handed him $10,000 in large bills.

The two men then discussed plans for an “imminent deal to send $500,000 in cash through Europe and back to an account set up by Rabbi Low for Ronny in the name of a synagogue related to charity.”

On Dec. 29, Charlie gave Golasz four forged checks totaling $1.5 million, drawn on the account of the Residence Mutual Insurance Co. at two Santa Monica branch offices. The FBI said these checks were to be used to pay Ronny for more “drug money” that he purportedly wanted to launder.

As the FBI listened and watched, Charlie showed Ronny photographs of assault rifles, pistols, bullet-proof vests and knives, saying she could sell him “any quantity of these or other weapons he desired on a regular basis.”

Armed with its evidence, the FBI obtained warrants for the arrests of the three defendants.

Agents made no attempt in their affidavit to explain how Low is believed to have become involved with his co-defendants, but two prominent Orthodox rabbis said Low and his congregation had incurred debts ranging up to “maybe $18 million.”

Stuck with high-interest loans on apartment houses and the synagogue building--an imposing red brick structure on La Brea Avenue just north of Beverly Boulevard--Low had turned to congregation members, who lent him money to help him out, the rabbis said.

Low and his congregation lost millions when the real estate market fizzled, the rabbis said.

They said some members of the congregation were never paid back and left Mogen Abraham to found another synagogue, but Low’s weekly services are still filled with worshipers.

The financial crisis became public knowledge in the world of Orthodox Judaism just before the High Holy Days last fall.

Low reportedly told his congregation, members of the ultra-Orthodox, mystically inclined Satam Hassidim sect, that he had done nothing wrong, claiming that he had been victimized by an international con man.

“Whether it was a Ponzi scheme or he borrowed from one guy to pay another guy, we don’t know,” one rabbi said. “We do know that he borrowed a lot of money, paid high interest and then stopped paying. No one knows where the money went.”

“He lost his proverbial tzitzis (fringed ritual garment),” one rabbi said.

One immediate victim was a 10-man kolel, or graduate-level Talmudical academy, which Low staffed with scholars brought from New York and housed in a pair of apartment houses on Sycamore Avenue, just behind the synagogue.

“To say that people were upset at Rabbi Low, there’s no question,” one rabbi said.