By Thomas Moriarty | NJ Advance Media for NJ.com

Published June 28, 2017

Don't Edit

(Left to right) Yocheved Nussbaum, Mordechai Sorotzkin, Rachel Sorotzkin and Shimon Nussbaum leave the federal courthouse in Trenton on Monday following their initial appearances on benefits fraud charges. (Cristina Rojas | NJ Advance Media for NJ.com)

UPDATE from Dec. 5, 2018: 4 Lakewood men admit to welfare fraud, agree to repay stolen benefits

Two couples hid more than $1.5 million each while collecting tens of thousands of dollars in Medicaid and other benefits as part of an elaborate scheme in Lakewood, according to criminal complaints filed against them by the FBI.

Mordechai and Rachel Sorotzkin were arrested by agents on Monday along with Yocheved and Shimon Nussbaum on federal criminal complaints, since unsealed, that accuse them of stealing government funds from a variety of federal benefit programs, including Medicaid.

The Sorotzkins and Nussbaums were charged as a result of what investigators described as a wide-ranging probe of benefits fraud in the Ocean County community that also led county prosecutors to bring state charges against two other couples, including Rabbi Zalmen Sorotzkin — Mordechai's brother — and his wife Tzipporah.

Here's what court documents say they claimed they needed, but were actually making:

Don't Edit

Yocheved (left) and Shimon Nussbaum leave the federal courthouse in Trenton on Monday following their initial appearance on benefits fraud charges. (Cristina Rojas | For NJ.com)

Nussbaums claimed family of 7 lived on $1.5K a month, feds say

On applications she made between 2011 and 2013 for benefits through NJ FamilyCare, Section 8 and the Supplemental Nutritional Assistant Program — better known as food stamps — Yocheved Nussbaum claimed her seven-person household's income was never any higher than $1,500 a month, according to a criminal complaint filed against her and her husband Shimon.

Investigators said the Nussbaums collected more than $178,000 in Medicaid, Section 8 and SNAP benefits from 2011 through August 2014.

Don't Edit

FBI agents take Shimon Nussbaum into custody at his home in Lakewood on Monday. (Peter Ackerman/The Asbury Park Press via AP)

Before they ever applied for benefits, investigators said, the Nussbaums had been in control of numerous businesses opened under the names of relatives, including a clothing company, a real estate business and a daycare company, as well two bank accounts in the name of an autism non-profit opened in 2011 and 2012. Investigators said they determined the family went on to make more than $265,000 in 2011, more than $198,535 in 2012 and $1.8 million in 2013, largely from those company's funds.

"Tellingly, during calendar year 2015, after Yocheved Nussbaum and Shimon Nussbaum had stopped applying for and receiving Medicaid, SNAP and Section 8 benefits, they received an additional $1,500,000 in checks from Daycare Company 1 made payable to Individual B (a relative)," an FBI agent wrote. "Rather than deposit this money into the Real Estate Company Account, as they had done in 2013, they deposited these funds directly into their personal bank account at FultonBank."

Don't Edit

Rachel Sorotzkin (left, in dark blue) leaves the federal courthouse in Trenton on Monday following her initial appearance on benefits fraud charges. (Cristina Rojas | For NJ.com)

Sorotzkins downplayed finances, investigators say

Mordechai and Rachel Sorotzkin first signed their family up for NJ FamilyCare benefits in 2011, when Rachel Sorotzkin told the state she was making $1,333 every two weeks, and her husband was receiving a $350 scholarship payment each month, money that went towards supporting four children, according to the complaint.

Her family went on to collect approximately $96,000 in benefits, the complaint said, including $22,000 in Medicaid payments for care associated with the birth of a child.

Don't Edit

Don't Edit

Mordechai Sorotzkin leaves the Trenton federal courthouse on Monday following his initial appearance on benefits fraud charges. (Cristina Rojas | For NJ.com)

Later the same year she signed up for benefits, investigators said, she became a partner in a limited-liability corporation, which entitled her to more than $46,000 of its 2011 profits, according to court documents.

On subsequent applications for Medicaid benefits, authorities said, Sorotzkin never disclosed that income — or more than $1.5 million in payments from the company that her husband deposited into their joint bank account.

Don't Edit

(Left to right) Zalmen Sorotzkin, Tzipporah Sorotzkin, Mordechai Breskin and Jocheved Breskin were arrested by the Ocean County Prosecutor's Office on Monday in connection with the same investigation. (Ocean County Prosecutor's Office)

Thomas Moriarty | NJ Advance Media for NJ.com

The others charged

Mordechai and Jocheved Breskin have been charged in state Superior Court in Ocean County with second-degree theft by deception on allegations they wrongfully collected more than $585,000 in Medicaid, SNAP, Housing and Urban Development and Supplementary Security Income. Zalmen and Tzipporah Sorotzkin face the same charge, stemming from accusations they wrongfully collected more than $338,000 in benefits

All four were released Monday after pleading not guilty before Superior Court Judge Steven Nameth in Toms River.

Don't Edit

Ocean County Prosecutor Joseph Coronato, shown here in a file photo, said he previous warned the Lakewood community about the potential consequences of abusing public assistance programs. (Ed Murray | NJ Advance Media for NJ.com)

Prosecutor said he warned Orthodox community about benefits fraud

In a statement released Monday, Ocean County Prosecutor Joseph Coronato said he had previously warned the Lakewood community in 2015 and given "clear guidance and notice" of what would be considered financial abuse of public assistance programs.

"Those who choose to ignore those warnings by seeking to illegally profit on the backs of taxpayers will pay the punitive price of their actions," he said.

Don't Edit

A Lakewood beeper store owner pleaded guilty in February to running an illegal money transfer business out of his shop. (File photo, Patti Sapone | NJ Advance Media for NJ.com)

Beeper store case contributed to current investigation, source says

A source told The Star-Ledger on Tuesday that an illegal money transfer business run out of a Lakewood beeper store helped investigators make some of the connections that led to Monday's arrests.

Yisroel Malamud pleaded guilty in Trenton federal court in February to running an unlicensed money transmitting business, following an investigation by the FBI's Red Bank office, which the Ocean County Prosecutor's Office said also initiated the Medicaid fraud investigation.

The Lakewood man admitted transferring $3.5 million to third parties on behalf of his customers between January 2010 and May 2015. A law enforcement official told The Star-Ledger that some of the defendants in the benefits fraud case had transferred money through Malamud's business, Beepers Plus.

Malamud's sentencing had been scheduled for June 1, but has since been pushed back to October, according to court records.

Don't Edit

Shimon and Yocheved Nussbaum were arrested by FBI agents Monday at this home in Lakewood. (Michael Mancuso | For NJ.com)

What's next for federal cases?

An attorney for Rachel Sorotzkin told NJ Advance Media that all of the defendants will be vindicated in court, while attorneys for Mordechai Sorotzkin and the Nussbaums declined to comment.

Both couples were released Monday after making initial appearances before a federal judge in Trenton. Their cases would typically next go to a grand jury, which would decide whether there is sufficient probable cause to return an indictment. Future court dates have not yet been scheduled, and authorities have said more arrests are forthcoming.

Don't Edit

Don't Edit

Related coverage

Don't Edit

Thomas Moriarty may be reached at tmoriarty@njadvancemedia.com. Follow him on Twitter at @ThomasDMoriarty. Find NJ.com on Facebook.