By Matthew Russell Lee, Patreon Thread Letter
SDNY COURTHOUSE, Aug 11 – When government cooperator Jona Rechnitz came up for sentencing for defrauding among others the NYC Correction Officers' annuity fund on December 19, 2019 before U.S. District Court for the Southern District of New York Judge Alvin K. Hellerstein, Assistant US Attorney Martin Bell urged leniency.
Bell said that so that Rechnitz can continue to pay restitution, he should remain free in order to keep selling jewelry to the Kardashians.
In February 2020 Rechnitz was sued in California for fraud. Inner City Press published the complaint on Scribd here, and for download on Patreon here.
On July 26, 2023, after appeal the Second Circuit ruled that the case should be reassigned, as "the judge's relationship with [Andrew] Kaplan was sufficiently close... that a reasonable person would have questioned the district court's impartiality."
Thereupon, Rechnitz' counsel wrote it suggesting his case be reassigned to Judge Carter, or Judge Wood or Liman. It was reassigned to Judge Katherine Polk Failla, who set an August 11 conference noting that "Defendant may participate by telephone. The Court will provide him with dial-in information at a later date."
On August 11: "Minute Entry for proceedings held before Judge Katherine Polk Failla: Status Conference as to Jona Rechnitz held on 8/11/2023. Defendant Jona Rechnitz, appearing by phone, present with attorney Noam Korati Biale. AUSA Jarrod Lee Schaeffer present. Attorney Christopher J. Gunther representing COBA present. Court reporter George Malinowski present. The Government shall inform the Court if there is any conflict in its being assigned to this matter. Sentencing is set for 10/17/2023 at 2:30 p.m. The parties' simultaneous supplemental sentencing submission(s) are due by 9/29/2023; any responsive submissions are due within one week after the submission deadline. Defendant continued released." Watch this site.
Back on August 3, 2021 Judge Hellerstein held another proceeding on Rechnitz, expressed his concern at having been "conned" about Rechnitz' resources, with a letter about diamonds and a Bugatti cited but not public, having been submitted under seal - by the prosecutors.
Inner City Press filed to unseal, here.
On October 12, 2022, Rechnitz' counsel asked Judge Hellerstein for permission for Rechnitz to travel to Dubai in the United Arab Emirates (UAE), saying it could help him pay back COBA.
On October 13, it was OK-ed: "MEMO ENDORSEMENT granting [178] CONSENT LETTER MOTION filed by Jona Rechnitz (1), addressed to Judge Alvin K. Hellerstein from Attorneys Michael Tremonte/Noam Biale dated 10/12/22 re: Motion to Travel.... We write on behalf of our client, Jona Rechnitz, to respectfully request that the Court authorize Mr. Rechnitz to travel to Dubai on business between November 7 and November 17, 2022. ENDORSEMENT: So Ordered."
Amid yet another travel request, Judge Hellerstein asked for a letter on how much Rechnitz has, in fact, paid in restitution. After 5 pm on December 20 came the answer: $315,000.
Back on November 9, this: "OPINION & ORDER GRANTING MOTION FOR RESTITUTION as to Jona Rechnitz. The New York City Correction Officers' Benevolent Association, Inc. ("COBA") moves for restitution under the Crime Victims' Rights Act ("CVRA"), 18 U.S.C. § 3771, seeking the immediate payment of COBA's unpaid loss, approximately $14 million.(See Footnote 1 on this Opinion & Order). See ECF No. 81. Rechnitz's appeal from his sentence was pending at the time the motion was filed, and I ruled that I had been divested of jurisdiction to rule on the motion. See ECF No. 90. COBA petitioned the Second Circuit to issue a writ of mandamus to allow me to consider its motion, and its petition was granted. The Second Circuit returned jurisdiction to the district court with a mandate to "reconsider its assessment of [Rechnitz]'s culpability and financial conditions in light of the new evidence presented by [COBA] and any other [relevant] factors." Mandate (ECF No. 104) at 2. Rechnitz then petitioned the Second Circuit to order that COBA's motion be heard by a different judge and to reverse my ruling refusing to give confidential treatment to the details of financial contributions to Rechnitz by his family and friends. See ECF No. 134. The Second Circuit denied Rechnitz's motion to transfer the case to a different judge but granted his motion for confidential treatment. See ECF No. 145. Pursuant to the Mandate of the Second Circuit, I have reconsidered my assessment of Rechnitz's culpability and financial condition. I grant COBA's motion for full restitution. Since a reliable picture of Rechnitz's financial condition remains elusive and prevents me from imposing a rational payments schedule, judgment may now be entered in favor of COBA and against Rechnitz in the full amount of COBA's remaining loss, $12.01 million.... CONCLUSION: The Court has reconsidered its assessment of Rechnitz's culpability and financial conditions pursuant to the Second Circuit's mandate. For the foregoing reasons, COBA's motion is granted, and it shall have judgment against Rechnitz in the amount of $12 million. SO ORDERED. (Signed by Judge Alvin K. Hellerstein on 11/9/2021)."
Back on August 11, the US Attorney's Office doubled down in requesting sealing for an unnamed investigation: "Re: United States v. Jona Rechnitz, 16 Cr. 389 (AKH) Dear Judge Hellerstein: The Government writes in response to the August 3, 2021 letter submitted to the Court by email by Matthew Russell Lee of Inner City Press requesting that the Court unseal a letter submitted by the Government ex parte and under seal to which defense counsel referred during the proceedings on August 3, 2021. The Government has submitted ex parte and sealed correspondence with the Court concerning an ongoing investigation by the Federal Bureau of Investigation in Los Angeles and the U.S. Attorney’s Office for the Central District of California for conduct unrelated to the defendant’s prosecution or cooperation in this District. Because the Government understands that the California Investigation is ongoing, the Government respectfully submits that the correspondence should remain under seal. See United States v. Smith, 985 F. Supp. 2d 506, 531 (S.D.N.Y. 2013)."
Now on the morning of August 12 Inner City Press has replied: "the Smith case then cited concerned discovery, and stated that 'the Government has the burden of demonstrating, and not just alleging, that public disclosure of the Rule 16 materials in this case could jeopardize ongoing investigations.'
In this case, the government has merely alleged the claimed jeopardy. While not conceding that a judicial document in this case, on which the government is asking this Court to reply, can be withheld, it is impossible to believe that the entirety of the letter would have to be withheld, even if one balances the government's stated interest for another Office with its duties in this case / Court. See, generally on segregability, this And see Judge Furman's recent decision that redactions after his grant of Inner City Press request to unseal in US v. Avenatti, 19-cr-374 (JMF), Docket No. 134 were too extensive and the information should be made available. Docket 140: "The Court is unpersuaded that privacy interests justify redacting the names and locations of the corporate entities in Paragraphs 14, 15, and 17 of ECF No. 139-1." Please confirm receipt of and docket this application (the undersigned cannot for now file on ECF)." [So, reply on DocumentCloud here.]
Inner City Press may have more on all this - for now, the August 3 thread is here: (and podcast here)
Briber/cooperator Jonah Rechnitz had been ordered to pay restitution to COBA of $500,000 a year. But then he whipped out $7 million in diamond. So today, @SDNYLIVE Judge is moving toward ordering him to pay $7 million, then $250,000 a quarter.
Judge Hellerstein: Mr. Rechnitz pays $17,000 a month in rent... How does he have a Bugatti? It's very dis-spiriting. He told me he would be a different person. But it seems he's the same. He conned me.
Judge Hellerstein: I've had to rethink these criteria, and come up with a solution that gives a chunk of money to COBA presently, has an adequate installment period beyond that, and perhaps gives discovery rights to COBA. [Lawyer tries to cut in]
Defense lawyer Noam Biale: The US made a sealed filing about the diamonds & the Bugatti, refer back to that.
[Inner City Press: Why sealed? By the US?]
Judge Hellerstein: If I give it to you, I'll have to give to [COBA].
Defense: Let me take that up with AUSA.
Defense: Let me take that up with AUSA Pomerantz. Mr. Rechnitz cannot afford the payment schedule your Honor previously imposed. We'll write to your honor.
[So now has Inner City Press - see DocumentCloud here.]
Back on August 7, 2020 the Correction Officers' Benevolent Association COBA submitted a motion for $14.01 million of restitution from the Crime Victims Rights Act.
On January 4, 2021 COBO has written to Judge Hellerstein citing information from a California bankruptcy proceeding, quoting the Trustee that Jadelle Jewerly's Wells Fargo account between 2018 and October 2020 "sent wire transfers of $2,329,500 to accounts held a Signature Bank in the names of Jona Rechnitz and JSR Capital LLC." COBO is asking for subpoena power, or the $14.01 million. Watch this site.
The California complaint recites: "On or about January 24, 2019, the Jadelle Entities, which are owned by Jona and Rachel, borrowed money from Plaintiff pursuant to a written agreement. The terms of the written agreement were memorialized in a Debt Acknowledgment, Promissory Note and Security Agreement (“Debt Agreement”) dated March 2019. A true and correct copy of the Debt Agreement is attached hereto and incorporated herein as Exhibit “A”. 15. The original principal amount in the Debt Agreement is $2,850,000 at 9% interest per month, however, the total debt owed by Defendants later increased to $5,800,000. The maturity dates are reflected in the Debt Agreement. 16. Pursuant to the Debt Agreement, the loans were secured by jewelry delivered to Franco and a 2012 Bugatti. Jona delivered the Bugati and the jewelry to Franco as security/collateral for the loan.
17. After a series of further advance transactions, the debt on the loan grew to $5,800,000. 18. The Bugati was liquidated and the funds were credited against principal for a total credit of $400,000. 19. As background on Jona Rechnitz, a sealed information was filed against him in the Southern District of New York on June 6, 2016 for wire fraud. A copy of the information is attached hereto as Exhibit “B”. 20. Jona entered a guilty plea on June 6, 2016. 21. On March 15, 2017, the information against Jona was unsealed. On March 15, 2017, Jona was released on bond pursuant to release conditions imposed by Judge Alvin K. Hellerstein. 22. On December 6, 2019, Jona was sentenced to 10 months of custody. He was granted release pending appeal. 23. The government in its sentencing memorandum indicated that “Rechnitz was in a position to cooperate regarding a broad range of subject matters in part because, for several years beginning when he was 26 years old in 2008, Rechnitz rode a wave of unbridled ambition and a seemingly limitless sense of entitlement through a series of misdeeds. Rechnitz had been a brazen criminal, and the seriousness of his crimes of conviction cannot, and should not, be minimized.” 24. Yet, apparently misunderstanding his role as a “one of the single most important and prolific white collar cooperating witnesses in the recent history of the Southern District of New York” according to the government, Jona mistakenly believes that this provides him immunity from committing fraud in California. 25. No sooner than within weeks of being sentenced in the Southern District of New York, Jona swindled Franco in a large scale fraud totaling $5,800,000. On information and belief, Jona and Rachel have defrauded other diamond dealers in Southern California and as those victims authorize the release of their names, the complaint will be amended to recover their stolen goods as well.
26. At the time of the fraud, Jona Rechnitz was and still is a convicted felon from the Southern District of New York. He is presently out on bond for a wire fraud conviction where he was granted bail pending appeal. He is married to Rachel Rechnitz and they have six children together. 27. They both now reside in a rental home in the Beverlywood area in the City of Los Angeles. 28. Jona and Rachel operate a jewelry business through two similarly named entities, defendants Jadelle Inc. and Jadelle Jewelry and Diamonds, LLC, herein the Jadelle Entities, whose marque client is the Kardashian family. Each of their clients will be added to this action as the facts unfold showing the stolen collateral was sold to retail customers of Jona and Rachel. 29. The Debt Agreement between the parties was simple. Jona tendered over $7,000,000 worth of diamonds to Plaintiff to be held as a collateral against a loan which totaled $5,800,000. 30. In late December of 2019, AFTER, Jona was sentenced, Jona indicated to Franco that he was going to get a credit line and asked for the release of the diamond collateral in exchange for payment in full. This representation by Jona was false when made. Jona knew the representation was false when made. Jona made this representation with the intention of causing Franco to rely on it. Franco relied on this representation to his detriment. 31. Jona persuaded Franco and Franco’s brother to deliver the collateral to Jona and Rachel’s office at 9454 Wilshire Blvd. in Beverly Hills. Jona exchanged two checks payable to Franco in exchange for the diamond collateral dated January 14, 2020 and January 16, 2020 in the amounts of $2,500,000 and $1,300,000, respectively. True and correct copies of said checks are attached hereto as Exhibit “C.” At the time Jona issued the checks to Franco he had no intention of honoring the checks. Franco relied on Jona issuing and intending to honor the checks by releasing the diamond collateral. 32. Plaintiff and Plaintiff’s brother complied by exchanging the diamond collateral and Jona tendered two checks attached hereto as Exhibit “C”. The checks, however, were NSF at the time of tender. Jona has repeatedly lied, lulled, and attempted to fabricate one excuse after another to delay paying Plaintiff.
33. Based upon information and belief, Prado, acting in concert with Jona and Rachel, and to further their scheme, had his girlfriend or another representative at Wells Fargo Bank issue a stop payment on the checks, attached hereto as Exhibit “C”, that Franco was going to deposit. 34. Jona falsely enlisted attorneys to pretend payment on the loan was coming from family members to buy himself more time. A number of these family members had written letters to the Court for Jona’s sentencing. 35. In reality, Jona liquidated Plaintiff’s diamond collateral and spent Plaintiff’s money, but refuses to tell Plaintiff how he liquidated the collateral or how he spent the loan proceeds. 36. It is apparent that Jona is continuing his criminal conduct in California after being convicted in New York. 37. Upon realizing he had been swindled and defrauded, Franco immediately filed a police report with the Beverly Hills Police. 38. Repeated demands have been made to Jona to return the diamond collateral. Jona, who wants to conceal his criminal conduct from the sentencing judge in New York and the federal prosecutors who vouched for him, as well as U.S. Probation, took numerous steps to lull the victim, Franco, to buy more time. 39. On January 16, 2020, with the assistance of a local Beverly Hills attorney, Jona drafted more documents and an additional check, attached hereto as Exhibit “D” and Exhibit “E”, to further stop Franco from disclosing and revealing that Jona’s fraudulent conduct has only grown in scope and size and that he has learned nothing from his life of crime which spanned from 2011 to 2015, which then halted while he was cooperating from 2016 to 2018. 40. The fact that Jona only received 10 months custody time with 5 months house arrest has only emboldened him to commit more fraud, grand theft, and to issue worthless instruments." We'll have more on this.
Back in December 2019, Rechnitz mentioned that he had raised major funds for the Mayor of New York City, but it went to his head.
Rechnitz' lawyer Alan Levine questioned why older men like Norman Seabrook and Murray Huberfeld would have used the younger Rechnitz as a "bag man." Background from Inner City Press previous stories on Seabrook here, and Huberfeld here.
Judge Hellerstein took a ten minute break. When he returned, as live tweeted by Inner City Press, he said "The concept of the just punishment is impossible to achieve. Nonetheless. I have to punish. I gave Mr. Seabrook 58 months. I gave Mr. Huberfeld 30 months. I think the just punishment here is ten months."
But that was not the end, rather a form of new beginning. Rechnitz' lawyer Levine first said his client would only have to spend five months incarcerated - then tried to put the number at one month. He asked for Lompoc or Taft by Los Angeles, if it it still open, he said.
More on Patreon here.
While AUSA Bell cited the time service sentence for UN briber Francis Lorenzo, also subject to an over-the-top 5K1 letter from the US Attorney, no one mentioned for example cooperated Daniel Hernandez a/k/a Tekashi 6ix9ine, given 24 months by Judge Engelmayer just the day before. Nor the much harsher sentence given out to other defendants in the SDNY. We'll have more on this case.
This case is now US v. Rechnitz, 16-cr-389 (Failla)
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