Monsey man sentenced to prison on federal fraud conviction
Steve Lieberman • Journal NewsA Monsey man was sentenced Wednesday to three years in federal prison for orchestrating a financial fraud in Connecticut during which he stole $1.68 million.
Chaim Citronenbaum, 52, of 11 Jay Court, also was fined $10,000 fine and ordered to repay $1,683,903, according to the U.S. Attorney's Office in Connecticut.
Citronenbaum was sentenced Wednesday on his May guilty plea to conspiracy to commit mail fraud and to defraud the Internal Revenue Service.
He's been ordered to surrender for prison on July 7. After prison, he must serve two years of supervised release.
Citronenbaum's fraud involved illegally investing in and profiting from mutual savings banks that were converted to publicly traded entities.
He and others bought shares of stock when the banks made offerings, according to a release by Nora R. Dannehy, the U.S. attorney in Connecticut.
After buying shares, Citronenbaum transferred them to brokerage accounts so that the shares could be sold for a profit on the open market.
Citronenbaum and others recruited "investors" to finance stock purchases, and recruited account-holders at mutual savings banks so they could use their subscription rights.
They then entered into illegal arrangements with the investors and account holders through whom co-conspirators and the investors would provide funds to buy shares, Dannehy said.
On certain transactions, Citronenbaum forged account holders' signatures on stock order forms and submitted them via mail or commercial interstate carrier to the banks for the purchase of shares, Dannehy said.
At times, Dannehy said, the shares were sold through a brokerage account in the name of "The Citronenbaum Foundation," thus avoiding proper reporting to the IRS.
Citronenbaum and his associates then made payments to the account holders whose subscription rights had been used to buy the stock, and arranged for and made payments to other investors who helped to fund the purchases.
Citronenbaum and others controlled accounts in his name and the names of other individuals, Dannehy said. They also used a nonprofit "foundation" to avoid paying taxes.
He incorporated the "Citronenbaum Foundation" as a charitable, religious or educational organization in 1996 and was required to donate a percentage of its funds yearly to other similar groups.
In addition to opening accounts at mutual banks using false information, Citronenbaum and his co-conspirators sought to profit through the purchase of stock they were not entitled to buy, Dannehy said.
[Hat Tips: Rosen, Yisroel Pensack.]