Dwek, 36, is to appear first in federal court. Later in the day, he is expected to be in Superior Court in Monmouth County to plead to similar state charges, according to a source familiar with the investigation who did not want to be identified because he was not authorized to speak about the matter.Expect defense attorneys involved in the corruption busts to focus on Dwek and his veracity; they will attempt to claim that Dwek is trading testimony for a lighter sentence and/or that their clients were entrapped.
Officials at the U.S. Attorney’s office issued an advisory saying only that “a central figure” in the July 23 arrests of 43 people on public corruption and money laundering charges would appear in federal court today before U.S. District Judge Jose L. Linares in Newark. A spokesman for the office declined to answer questions and Dwek’s attorney did not return calls to his office.
Dwek was initially arrested on the fraud charges in May 2006 after he deposited a bogus $25.2 million check into a closed PNC Bank account he controlled. According to the original criminal complaint, Dwek went to a drive-in window at the bank’s Eatontown branch. The check was drawn on an account he controlled, but the account had been closed and had no money in it.
Dwek assured a reluctant PNC employee that “corporate” had agreed to reopen the account and that funds to cover the check would soon arrive by wire transfer, the complaint alleged.
With those assurances, Dwek was allowed to deposit the check into a second account he controlled.
The next morning, he began spending the money, even though the promised wire transfer to cover the check had never been made, according to the complaint. He made four payments totaling $22.8 million. The largest was made to HSBC Bank to cover a loan in the name of Dwek and a fellow investor.
When PNC discovered the fraud, they called authorities.
Following his arrest, Dwek apparently spent 29 months as a cooperating witness, setting up rabbis and others in the religious community, as well as mayors, political candidates and public officials in an undercover sting operation that prosecutors have called unprecedented in its scope.
Dwek is described in nearly every criminal complaint and every indictment as a “cooperating witness who had been charged with bank fraud” but his name never appears. And he has not appeared publicly in court since the sting broke.
In a two-tiered investigation, Dwek used his connections with the rabbis to launder millions of dollars he claimed to be hiding from the banks in the bankruptcy that came after his arrest. Talking of “schnookie deals,” he told them he was involved in a new counterfeiting scheme involving knock-off high fashion bags. According to prosecutors, he wrote checks to yeshivas and other religious institutions and got back cash, minus a percentage that would be taken for the transaction.
Thus far, seven of the 43 busted have entered guilty pleas, figuring it was better to cooperate with the authorities than try to defend the indefensible.