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Investigative Reports

FOR IMMEDIATE RELEASE:
January 23, 2002

Contact:
Public Information Office
Marvin Smilon
(212) 637-2600
Herbert Hadad
(718) 422-1870
Deborah E. Landis
(212) 637-2512

A LEADER OF THE MULTI-MILLION-DOLLAR NEW SQUARE SCHEME PLEADS GUILTY IN MANHATTAN FEDERAL COURT

JAMES B. COMEY, the United States Attorney for the Southern District of New York, announced today that CHAIM BERGER pled guilty today in Manhattan federal court to charges of conspiracy and mail fraud for participating in a number of schemes to defraud the United States Government of tens of millions of dollars through state and federal grant and loan subsidy programs, for the benefit of members of the conspiracy and residents of the Village of New Square, New York, where the defendant resided.

BERGER was indicted in 1997 and a warrant was issued for his arrest after he failed to appear in court to face the charges. After an extensive search, he was located in Israel, where he had obtained Israeli citizenship, and he was arrested by the Israeli Police on February 18, 1999, in response to a formal request submitted by the United States Department of Justice for his arrest and extradition.

After more than two-and-one-half years of legal proceedings in Israel, BERGER was ordered extradited by the Supreme Court of Israel on November 15, 2001, and was returned to the United States the following day. BERGER was one of the first fugitives to be extradited to the United States under an Israeli law enacted on April 19, 1999, which permits the extradition of Israeli citizens.

BERGER, an alleged leader of the schemes, and six others were charged with having defrauded several federal and state grant, loan and subsidy programs, for the benefit of themselves and other residents of the Village of New Square, an incorporated village in Rockland County. BERGER today admitted that he and others created entities through which federal and state funds could be obtained; submitted fraudulent documentation in order to establish the eligibility of New Square residents and others to participate in these programs; and used the funds obtained from these programs for impermissible purposes.

Among the programs allegedly defrauded by BERGER and his co-conspirators were the Bell Grant program funded by the United States Department of Education ("U.S. Department of Education°), a Small Business Administration ("SBA") program designed to provide venture capital to small, minority-owned businesses, the Section 8 rental subsidy program funded by the United States Department of Housing and Urban Development (°HUD"), and the Social Security Administration..

Four other defendants, who were charged together with BERGER, were convicted on January 25, 1999, following an 11-week jury trial in White Plains federal court. Two other defendants, AVRUM DAVID FRIESEL and NATHAN ADLER, remain fugitives.

BERGER, 75, faces a maximum sentence on each of two counts of five years in prison, and the greater of a $250,000 fine or twice the gross gain or loss resulting from the crimes, plus restitution.

United States District Court Judge BARBARA S. JONES scheduled sentenced for April 26, 2002 at 10 a.m.

Mr. COMEY praised the efforts of the United States Marshals Service for locating and helping to apprehend BERGER in Israel, and for providing essential support in obtaining his return the United States. Mr. COMEY also praised the efforts and cooperation of the Department of Education, the Internal Revenue Service, the Federal Bureau of Investigation, the Department of Housing and Urban Development, the Small Business Administration, and the Social Security Administration.

Assistant United States Attorney DEBORAH E. LANDIS is in charge of the prosecution of BERGER.


 
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Last Modified: 03/03/2005