Arkady Gaydamak

Yosef Aharonov and three others are accused of embezzlement, tax evasion and money laundering. The arrests and a November 13 raid on the community of Kfar Chabad follow an eight-month investigation by the Israel Tax Authority and the Central District Fraud Squad.

Arkady Gaydamak, an Israeli-Russian billionaire and a potential Jerusalem mayoral candidate, is accused of donating $256,000 to the money-laundering facilities allegedly run out of Kfar Chabad, according to Israel's Channel 10. He and other prominent businessmen are currently under investigation.

Young Chabad, also known as Lubavitch Youth, is a nonprofit organisation and one of the more prominent Chabad institutions in Israel. It has a budget of about $7.7 million a year, including allocations from the Israeli government.

Yosef George Segal, a Chabad employee who was accused more than a year ago by Young Chabad officials of embezzling $4.5 million from the organisation, also was arrested.

"Like Chabad-Lubavitch offices everywhere, the Chabad Youth Organization in Israel is fiscally independent. However, its noble social service programs and educational outreach are legendary and a source of pride to the Jewish people everywhere," read a statement from the umbrella organization of the worldwide Chabad Lubavitch movement.

"Clearly, every individual is instructed by the Torah to uphold the laws of his/her land, and this is, of course, a basic principle of Chabad Lubavitch operations.We are confident, therefore, that the authorities will receive full cooperation in their efforts and that, ultimately, the results will be satisfactory."

(c) JTA