Gutnick to repay $1 million

September 4, 2013 Agencies
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Mining magnate Joseph Gutnick, one of Australia’s most senior Chabad-Lubavitch rabbis, has been ordered to repay $1 million after a judge found him guilty of engaging in “misleading and deceptive conduct” in a business deal with a fellow Lubavitcher in Melbourne according to a report in Israeli paper “Haaretz”.

Joe Gutnick

Joe Gutnick

The report stated: In the Supreme Court of Victoria last week, Justice Ross Robson found in favor of Roy Raphael Tashi, who was convinced by Gutnick in 2010 to buy $1 million worth of shares in Northern Capital Resources Corporation, a Canadian gold mining company he owned.

Tashi, who had lost his job and faced the prospect of having to sell his multi-million-dollar home, believed letters he had faxed to the grave of the late Lubavitcher Rebbe asking for a “miracle” had borne fruit when Gutnick offered him the shares at a “bargain price.”

But in a withering 80-page ruling, Justice Robson said Gutnick knew the shares were “probably close to worthless.”

“Mr Gutnick’s behavior was not that of a friend assisting another in trouble,” Robson wrote. “Rather, I find that it was predatory behavior in which Mr Gutnick was primarily motivated by enriching himself at Mr Tashi’s expense.”

Tashi said he didn’t question the deal because he knew Gutnick was a “very generous person” who was respected in the community.

“I would not have bought the shares if I knew that I was buying at market price, at no bargain,” Tashi said.

He asked Gutnick to buy the shares back, but was refused.

Justice Robson ordered the share sale agreement be declared void and Gutnick to repay Tashi $1 million with interest.

In one of several letters to the Rebbe’s grave cited in the judgment, Tashi wrote: “If you can further intervene and provide a ‘miracle’ that brings about a windfall financial gain in one form or another I will share this with the community with at least 20% going to tzedekah [charity] as well as taking it upon myself to be more observant.”

Tashi told Haaretz this week he was “obviously delighted with the result” but unhappy that his letters to the late Rebbe had been published.

“I was disturbed that my letters to the Rebbe were made public in court,” he said. “They’d not been seen by my rabbi or my wife.”

Tashi added that he was “not uncomfortable” taking a fellow Lubavitcher to a secular court, saying: “I got advice from my [Chabad] rabbi.”

Contacted in New York this week, Gutnick, who denied any wrongdoing during the court case in April, declined to comment on the judgment except to say his legal team may consider an appeal “in the coming days.”

Gutnick was appointed by the late Lubavitcher Rebbe as special emissary to the integrity of the Land of Israel. He is one of three chief Chabad rabbis in Melbourne sanctioned by Chabad headquarters at 770 Eastern Parkway, Brooklyn.

In 2001 he built a replica in Melbourne of the Chabad headquarters, which was opened by Benjamin Netanyahu. Gutnick is widely credited with helping him win the 1996 Israeli election by bankrolling the controversial “Bibi is good for the Jews campaign.”

Gutnick, 61, claims the Rebbe told him in 1988 exactly where to mine in Western Australia. When he struck gold he was dubbed “Diamond Joe.”

A father of 11 children, he was also known as “Demon Joe” after he was elected president in 1996 of the Melbourne Football Club, an Aussie Rules football team. But he was controversially ousted in 2002.

Gutnick’s wealth is estimated at $285 million, according to Business Review Weekly magazine’s 2013 rich list. He recently relocated from Melbourne to Singapore, where he is reportedly in the process of establishing a Chabad house in the tiny city-state where he said there is “no anti-Semitism.”

Israel and Indonesia have no formal diplomatic relations although there are trade and security ties.

Tashi said he joined the Chabad movement about 25 years ago and is a director of the Chabad House of Malvern in Melbourne, to which Gutnick previously donated $250,000 for a preschool.

He is also chair of the Community Security Group in Melbourne, a former president of the Mount Scopus College Foundation, a life governor of the college, life member of Jewish Care and life governor of Montefiore Homes. He was awarded an Order of Australia in 2006 for “service to the Jewish community.”

Justice Robson said he would hear the parties’ case for interest and costs.

Gutnick told J-Wire that he would appeal He said in a text message: “I will. Once my lawyers have studies the judgement.”

 

 

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