Deal, NJ – The massive, multi-million-dollar bankruptcy case against Solomon Dwek came to a quiet end today with a court-approved plan that will repay creditors about 30 cents on the dollar.
Dwek — the government informant behind last summer’s sweeping political corruption and money laundering sting — had filed for bankruptcy long before the federal criminal case came to light, amid the collapse of a real estate empire once thought to be worth over $400 million. But his empire turned out to be little more than a wild Ponzi scheme, which only emerged after Dwek was charged in a $50 million bank fraud.
After his arrest by the FBI, Dwek began secretly cooperating with federal authorities in a two-track investigation involving the use of religious charities to launder millions of dollars in cash, as well as hundreds of thousands of dollars in payoffs to public officials and politicians to expedite approvals for development projects that never really existed.
While wearing a wire for the government, setting up friends, former business partners and public officials, the bankruptcy case continued to unfold in federal bankruptcy court in Trenton. Charles Stanziale, the court-named trustee in the case, had found Dwek was running little more than a shell game, promising huge returns on properties that sometimes did not exist, in a Madoff-style scheme that took money from investors and banks to pay off others.
Stanziale said today that Dwek, 37, the son of a respected Monmouth County rabbi, left a trail of investors who “believed or wanted to believe in his lies, deception and false promises in one of the largest Ponzi schemes in the state.”
The bankruptcy case required the sale of more than 350 properties and resulted in 140 lawsuits filed mostly against banks and investors who profited from the Ponzi scheme.
Other lawsuits were filed against the Deal Yeshiva, where Dwek was employed, as well as several charities that received millions in donations from Dwek over the years. The property sales and ongoing settlements are expected to bring in about $35 million against approved claims of well over $150 million.
“People have to understand there was no free money in this case,” Stanziale said. “We had to create an estate by selling properties bought at inflated prices and sold in a down market.”
In court today, as Dwek himself looked on, U.S. Bankruptcy Judge Kathryn Ferguson approved what is known as a plan of orderly liquidation, filed by Stanziale and agreed to by creditors as well as Dwek.
Stanziale will remain in place as the liquidation trustee to oversee the sales of remaining properties and the lawsuits that were filed in the case.
Dwek, who has been living off a $12,800 monthly allowance paid out of the assets of his bankrupt empire, will continue to receive that money until the case is formally closed. Meanwhile, he recently put up his house in Deal for sale. The large ranch-style home, near the Deal Golf Course, is in his wife’s name, but no one has been living there for months. According to the listing, they are seeking $1.59 million.