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 Posted Sunday, May 9, 1999

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Warning: The fact that authorities are investigating should not be taken to imply guilt. John Lewis & Rubber Improvements Ltd v Telegraph Newspapers.


La Presse
Montreal, Thursday, May 6, 1999



by Andre Noel

REVENUE Canada has launched an extensive investigation into the Rabbinical College of Montreal, located in the Jewish Hassidic community at Boisbriand, and into their rich donors, suspected of having siphoned off more than 60 million dollars from the taxman.

Thorough searches were carried out last Wednesday on the premises of the Rabbinical College of Montreal, Yeshiva Oir Hachaim D'Tash, at Boisbriand, in the offices of Doctor Julius Pfeffer and those of the construction firm "Construit Toujours Avec Bonté Philip Klein" (trans: "Constructs Always With Goodness Philip Klein").

Contacted yesterday, Nicole Lessard, spokesperson for Revenue Canada, declared: "There is an investigation under way and it is far from finished: we cannot say more". However, search warrants, deposited at the courthouse in Saint-Jerome, contain numerous allegations.

One can read there, in particular, the declaration of Joseph Gutstadt, President of Magil Construction International, who alerted Revenue Canada last year. The promoter submitted to tax authorities records of conversations he had had with Rabbi Aron Mizrachi, director of the Rabbinical College.

In two interviews with La Presse, one last year and one this week, the promoter affirmed having received a number of threats because of his declaration.

In his declaration, Mr. Gutstadt affirms that his former associate, Sol Polachek, created a foundation for the purpose of making charitable gifts in the amount of about 1.8 million dollars to the Rabbinical College. In return, The Rabbinical College is reported to have given back to Mr. Polachek tax receipts and about 80% of the amount of the donations in liquid cash.

Mr. Polachek apparently reduced, in this way, his tax contributions, charitable gifts being tax-deductible. The Rabbinical College also found its profit in the transaction: this system allowed it to collect considerable sums.

In the course of an interview, this week, Mr. Polachek denied categorically that the Rabbinical College gave him money in liquid cash. He said Mr. Gutstadt invented this story to force him to settle a conflict. Revenue Canada investigators, however, decided that Mr. Gutstadt's declaration justified an investigation.

Search warrants stipulate that the Rabbinical College gave out receipts for charitable donations in the amount of 47.3 million dollars between 1992 and 1996, and for about 11 million dollars more in 1997. An associated firm, Construit Toujours Avec Bonté, gave out charitable receipts in the amount of 5.4 million dollars between 1995 and 1997. The total comes to 63.7 million dollars.

Mr. Gutstadt affirms that he saw Rabbi Aron Mizrachi heading towards Mr. Polachek's office carrying a full paper bag, once or twice every year. One day, writes he in his declaration, he entered Mr. Polachek's office without knocking and saw the Rabbi counting out dollar bills and handing them over to his former associate.

He subsequently had the idea of setting a trap for the Rabbi. He telephoned and obtained a meeting with him, telling him that he wished also to take advantage of the system. According to him, the Rabbi showed himself well disposed to help him hide tax monies from the taxman.

"On Wednesday September 24, 1997, I invited Rabbi Aron Mizrachi to come to my office, writes Mr. Gutstadt in his declaration. During their conversation, he confirmed to me that Mr. Polachek had been dealing with him for 12 years and described to me the nature of their deal. The system worked as follows: he (the promoter) makes a charitable donation to Rabbi Aron Mizrachi and to his organization, and the Rabbi, for his part, gives him back 80% to 90% of the charitable donation in the form of liquid cash."

It was impossible to speak with Rabbi Mizrachi. A man, contacted at the Rabbinical College on Tuesday, said that someone would call La Presse, but as of yesterday there had been no call. Mr. Gutstadt, who was born in Israel and immigrated to Canada many years ago, said his declaration had the effect of a bomb amongst the members of his community. "Many persons in the Jewish community are involved in this affair", he declared. "Ever since I alerted Revenue Canada, I've been receiving threats. An anonymous telephone caller suggested that I buy a remote-controlled starter for my car. I received two or three other calls of this type. But this doesn't bother me much. I believe it is wrong to defraud Revenue Canada. It is the other taxpayers that wind up paying the bill for these fraud artists."

Our opinion
 RECENTLY, Bill Phipps, Moderator of the United Church of Canada, urged all Canadian tax-payers to render joyously unto our socialist Caesar our taxes. Apparently, some clerics might have different notion on the matter...

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