The following text is the background for the case appealed before this circuit court after the guilty verdict:UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT - 224 F.3d 107 (2nd Cir. 2000)

The original indictment charged the appellants and two other defendants (now fugitives), Chaim Berger and Avrum David Friesel, with conspiracy and substantive counts based upon their participation in a massive conspiracy to defraud the Department of Education ("DOE"), the Department of Housing and Urban Development ("HUD"), the Small Business Administration ("SBA"), the Social Security Administration ("SSA"), and the Internal Revenue Service ("IRS"). A redacted indictment, used at trial, eliminated charges against the fugitive defendants. Count 1 of the redacted indictment charged all four appellants with conspiracy to defraud several federal agencies. The remaining counts charged the appellants, in various combinations, with substantive crimes relating to this conspiracy, including embezzlement, mail fraud, wire fraud, false statements, money laundering, filing a false tax return, and failing to file a tax return.

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The evidence at trial, taken in the light most favorable to the government following the jury verdict in its favor, revealed that the appellants -- most of whom resided in New Square, a Hasidic Jewish community in Rockland County, New York -- participated in a massive conspiracy to obtain by fraud millions of dollars in student financial aid, rental subsidies, social security benefits, and small business loans. All four appellants participated in a fraud upon the DOE, which formed the centerpiece of the government's case, but the government also proved that the conspirators or subsets of them victimized other agencies as well. They also concealed their income to increase the amounts they could obtain under federal subsidy programs and reduce their tax liability. The conspiracy involved a number of other participants, including major figures in the New Square Hasidic community. We now examine the scheme in greater detail.

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First, the conspirators defrauded the DOE's Pell Grant Program by falsely enrolling thousands of New Square residents and others in schools offering mentor-based independent study programs. Many students never actually studied at these institutions, even though the conspirators prepared a paper record of their academic progress. Ultimately, most of the false students were enrolled at Toldos Yakov Yosef Seminary ("TYY"), an institution that purported to employ all four appellants and received over $11 million in Pell Grants but never existed except on paper. As part of the conspiracy, the conspirators made extensive efforts to deceive the Accrediting Council for Continuing Education and Training ("ACCET") in order to gain accreditation for TYY so that the school could qualify for federal aid.

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Each of the appellants played a role in TYY. Elbaum was named as Board Secretary and had signature authority over bank accounts into which Pell Grant funds were wire-transferred and out of which payments were made to community organizations, to conspirators, and to the DOE (to repay student loans). Stern was named as Administrator (1987-88); pretended to be Arye Reich, the supposed Registrar -- who was living in Israel at the time -- during ACCET visits; and made false statements to the accreditors in this capacity. Goldstein was named as Administrator (1988-91) and helped deceive the accreditors in 1989. He resigned in 1991 and later served on the ACCET Board of Trustees. In addition, he made statements to a DOE investigator in 1996 that maintained the fiction of TYY, identifying officials and claiming to have fulfilled the duties of Administrator while at TYY. Finally, Berger served as an alleged mentor, and paychecks for supposed TYY employee Cheindel Bernat -- Ayre Reich's daughter, who also lived in Israel -- were deposited into a bank account controlled by Berger in Bernat's name.

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Second, the conspirators defrauded HUD's Section 8 housing subsidy program. Elbaum and Stern failed to report to HUD payments they received from accounts controlled by Chaim Berger, thus fraudulently increasing the amount of Section 8 subsidies for which they could qualify as tenants. Benjamin Berger fraudulently obtained Section 8 rent payments as a landlord by disguising his ownership of property in New Square -- placing it in Cheindel Bernat's name -- and then depositing checks from HUD in an account he controlled in Bernat's name. In addition, Berger obtained greater subsidies as a Section 8 tenant in Spring Valley by failing to report the income he received as a shadow landlord.

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Third, various conspirators, including Goldstein and Stern, participated in schemes to defraud the SSA and the SBA, the details of which are not relevant to this appeal.

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Fourth, the conspirators attempted to disguise from the IRS the income that they had diverted to the New Square community and to themselves through the above schemes. Elbaum and Stern received proceeds through off-the-books payments made from accounts controlled by Chaim Berger. Elbaum also failed to file a tax return for one year. Finally, Berger received and concealed income through his control of an account in Cheindel Bernat's name.

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The defendants moved to dismiss some or all of the counts against them on various grounds. The district court denied these motions. See United States v. Berger, 22 F. Supp. 2d 145 (S.D.N.Y. 1998); United States v. Stern, No. 97-CR-410(BSJ), 1998 WL 813477 (S.D.N.Y. Nov. 19, 1998). On issues relevant to this appeal, the district court held that: (1) the conspiracy charge did not improperly combine multiple distinct crimes into a single count; (2) various charges against Goldstein did not need to be dismissed as time-barred, since whether he successfully withdrew from the conspiracy in 1991 was an issue of fact for the jury to decide; and (3) the government's intended proof on the wire fraud count against Berger did not vary impermissibly from the transaction alleged in the indictment.

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On January 25, 1999, after a two-and-a-half month trial, the jury returned verdicts of guilty against all the appellants on all counts. In November 1999, the district court sentenced the appellants to prison terms ranging from 30 to 78 months and ordered them to pay restitution ranging from about $500,000 to over $10 million. This appeal followed.