Friends, the cracks are beginning to show!!!

Yeshiva fighting off foreclosure
Banks owed nearly $5M; new loan anticipated
Posted by the Asbury Park Press on 08/30/06
BY JAMES W. PRADO ROBERTS
STAFF WRITER

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Saying they are owed millions in unpaid loans, two banks have moved to foreclose on the main campuses of the Deal Yeshiva, a 300-student Jewish school once led by embattled real estate investor Solomon Dwek.

But late Tuesday, the yeshiva's lawyer said one of the lenders, Amboy National Bank, had agreed to issue the yeshiva a new $4.7 million, 18-month, interest-only balloon loan that will pay off the overdue loans.

The foreclosure lawsuits that were filed against the yeshiva, which has buildings in West Long Branch and Ocean Township, came after the nonprofit group in recent months stopped making payments on more than $5.3 million in loans, according to Amboy and the second bank, Sovereign Bank.

The new Amboy loan "will give them some breathing room to get their financial house in order and to get their contribution list back up. Like any nonprofit they rely on contributions," said William F. Maderer, the yeshiva's lawyer. "They fully expect and anticipate their sources of income and contributions will allow them to move forward."

[color="Red"]Solomon Dwek was vice president of the yeshiva but resigned following his arrest in May on federal bank fraud charges.

The loans were secured by five yeshiva properties that include both of the yeshiva's schoolhouses and two rabbi residences. Dwek's parents reportedly live at one of those homes in Ocean Township, a property assessed at $1.1 million, that is now targeted for foreclosure.

PNC Bank has accused Dwek of bouncing a $25.2 million check that left the institution with a $21 million shortfall in April. A Superior Court judge later froze Dwek's assets. Dwek's holdings, worth as much as $420 million, are being sold to pay 84 banks, investors and others who claim Dwek owes them more than $338 million.

It is unclear why the yeshiva stopped paying the loans. Its assets are not under court control.

Schools rely on donations

The organization relies on donations for the bulk of its income. One major benefactor, Joseph Dwek, Solomon Dwek's uncle, has said in court papers that his nephew defrauded him of $60.2 million.

Amboy Bank, based in Old Bridge, said it loaned the yeshiva $3.2 million that was secured with school property. The yeshiva obtained one loan with the purported signature of Dwek's mentor in real estate, Jack Adjmi, who was listed as yeshiva president.

The other Amboy mortgage listed Adjmi's son, Mark, as vice president of the yeshiva. But neither Adjmi was a yeshiva official, records show. Solomon Dwek signed both mortgages as a yeshiva official.

Last week, the Asbury Park Press reported that a forensic handwriting expert concluded that it was "highly probable" that Solomon Dwek signed the Adjmis' names to those mortgages.
Amboy Bank attorney Cyndi Bleier could not be reached for comment Tuesday.

The foreclosure complaints by Sovereign Bank, of Wyomissing, Pa., also named Jack Adjmi for failing to make payments on $2,152,948 in loans. Adjmi personally guaranteed payments of the yeshiva's debts, even after his death, the bank said. Adjmi died in 2003 at age 75.

The properties facing foreclosure are the yeshiva's girls school on Wall Street in West Long Branch, its boys school on Logan Road in Ocean Township, a learning center adjacent to the Synagogue of Deal in Deal, and two homes owned by the yeshiva in Ocean Township.

Dwek's parents, Rabbi Isaac Dwek, the head rabbi at the Deal synagogue, and his wife, Raizel Dwek, live in one of the homes, records show. Isaac Dwek was listed as president of the yeshiva and Raizel Dwek as treasurer in the yeshiva's 2004 filing with the IRS, the most recent available report.

Isaac Dwek is also the communal leader of the wealthy Deal-area Syrian Jewish community, a key source of the schools' charitable contributions. He could not be reached for comment.

The yeshiva's income between 1997 and 2004 was $57.8 million. About 80 percent of that amount came from donations, its IRS filings show.

Creditors' claims

Since May, however, more than two dozen members of the area Syrian community have claimed that Solomon Dwek owes them tens of millions of dollars.
In court papers, Joseph Dwek said he gave the yeshiva $2 million since 2003 as payment to Solomon Dwek, who agreed to buy and manage about $60 million in properties. But the uncle said he did not learn until April that all of the properties were in Solomon Dwek's name, not Joseph Dwek's.

Joseph Dwek and his lawyer could not be reached for comment. Solomon Dwek's lawyer also could not be reached.

Following PNC's claim of fraud, Solomon Dwek, 33, of Ocean Township agreed to transfer 129 properties to his uncle, Joseph Dwek said in court papers.

From 1998 through 2004, Joseph Dwek and his wife, Terry, were directors of a foundation that gave more than $9.7 million to the Deal Yeshiva, according to its filings with the IRS.

The contributions from the Adjmi-Dwek Foundation, Inc., represents almost a fifth of the yeshiva's income over that period. The foundation supports Jewish educational and religious charities. Until his death, the third director was Jack Adjmi.

Adjmi's widow, Rachel, is now suing Dwek and Sovereign Bank, saying Solomon Dwek forged her signature and her husband's on a $1.5 million loan secured by her Deal summer home.

In 2004, Solomon Dwek was the highest-paid member of the yeshiva staff. He was paid $212,000 as vice president. Dwek's wife, Pearl, an office secretary, was the second highest paid at $106,000, according to IRS documents.

Properties valued at $18M

In addition to its three educational facilities, the yeshiva owns seven houses in Deal and Ocean Township. The new $4.7 million loan will cover three overdue loans originally worth $5.2 million, since the school had paid down some of the principal over time, according to the yeshiva's lawyer. A fourth loan worth $152,948 will be paid off, the lawyer said.

In all, the yeshiva properties are valued at $18 million and have more than $8.1 million in loans taken out since 1998.

[color="Red"]The two schools and the two rabbi houses, valued at $10 million, are exempt from property taxes.

In 2004, the yeshiva stated that it had 314 students from preschool through high school, and it reported an unspecified number of graduate students.