Once a stomping ground for the rich and famous, Lakewood is now in the news for the tensions growing around its burgeoning ultra-Orthodox Jewish community. The tensions have spread to neighboring towns, where residents have said they have been bombarded relentlessly with solicitations to purchase their homes.
The town’s school system is in crisis, with a deficit that threatens to cause layoffs in the public schools while most of the school-age children in town attend private religious schools.
Here’s a closer look at what has been happening in Lakewood:
Shimon Nussbaum is taken to a police vehicle after he and and his wife and Yocheved Nussbaum were arrested Monday, June 26, 2017, in connection with a public-assistance fraud scheme in Lakwood, N.J. Their arrest was part of a larger operation, led by federal and state authorities, that netted the arrests of six others. (Peter Ackerman/The Asbury Park Press via AP)
1. Fraud arrests
Federal and state authorities this week, in two separate raids, arrested seven Lakewood couples and accused them of defrauding government assistance programs out of more than $2 million over five years by collecting benefits to which they were not entitled.
Authorities allege the couples received Medicaid, SNAP food assistance, housing assistance and Social Security benefits by lying about the amount of their income. Two of the couples allegedly hid $1.5 million each while collecting tens of thousands in welfare benefits.
Lakewood’s population has been growing by leaps and bounds over the past several decades and Orthodox Jews make up 60 percent of the residents. The town, which has the second largest (behind Brooklyn) Orthodox Jewish community on the East Coast, grew from a total population of 45,000 in 1990 to more than 100,000 in 2016.
3. Building boom
To accommodate the rapid influx of residents, the town has undergone a building boom over the past few decades. In 2016, it had the most new-home construction in the state. That’s when 710 permits were issued — 560 for one- and two- family homes and another 150 for multi-family homes. Covering 25 square miles, Lakewood has more than 80 synagogues.
4. Tax exempt organizations
With so much of Lakewood centered on the Orthodox Jewish community, the town has more than 100 yeshivas and more than 80 synagogues. Because they’re considered religious, they’re exempt from paying property taxes. Lakewood has about 350 properties that fit into this category for this community, officials have said. That’s led some residents to complain that the town is not getting enough in taxes to cover the cost of essential services and infrastructure.
5. State monitor
The state Department of Education stepped in when Lakewood’s board of education failed to close annual budget deficits. While it’s not considered a full takeover, the state in 2014 appointed a monitor and a team of others to oversee the district and its finances. The monitor is still in place.
6. Busing crisis
Faced with a nearly $15 million budget shortfall, Lakewood’s board of education the end of this school year fired nearly 150 teachers and staff and eliminated all sports programs. At the root of the problem, the superintendent has said, is its busing expenses. Lakewood public schools have 6,000 students but the town also has another 30,000 students who go to private yeshivas. That transportation costs the school district $24.5 million. Schools Superintendent Laura Winters asked the state Department of Education for help — in the form of $10 million. The state kicked in $8.5 million, helping to get the budget approved this week by the state monitor. The budget so far calls for reinstating nearly all of those targeted for layoffs and keeping the soccer and track programs only. The township has agreed to pay for the football program and the district says it will try to find a way to reinstate other sports programs to the public schools.
7. Development struggles
With so much development within Lakewood’s borders, residents have complained building and planning codes are not being enforced, leading to overcrowding. In March 2016, the issue came to light when an illegal dormitory for a yeshiva was destroyed by fire. The owner was cited for illegal change of use for converting a single family home into a dormitory.
8. Tension with neighboring towns
As some in the Orthodox Jewish community have been looking to expand out of Lakewood, residents of neighboring communities have complained they feel pressured into selling their homes or accepting dormitories in neighborhoods they say are not zoned for that purpose. Strong opposition to a proposed dormitory in Ocean Township and an all-girls yeshiva in Jackson are being waged in court. In response to residents’ complaints about relentless pressure from some sales agents seeking properties on behalf of Orthodox Jewish clients, Toms River passed an ordinance prohibiting those types of solicitations in neighborhoods closest to its border with Lakewood.
9. Beepers Plus
A federal investigation into the owner of an electronics business in Lakewood helped lead authorities to the welfare fraud case, a law enforcement source has told The Star-Ledger. The source had said some of the defendants arrested on Monday transferred money through Beepers Plus, a business in Lakewood owned by Yisroel Malamud. In February, Malamud pleaded guilty in federal court to running an unlicensed money transmitting business through his store. Admitting he accepted a fee for transferring customers’ money to a third party, Malamud was responsible for transferring at least $3.5 million between June 2010 and May 2015, court documents say. His sentencing was scheduled for June 1 but has been pushed back to October.
10. Previous Medicaid fraud
This week’s arrests weren’t the first Medicaid fraud allegations against members of Lakewood’s Orthodox Jewish community. In 2015, the Ocean County Prosecutor’s Office charged another Lakewood couple with defrauding government assistance programs by lying on their applications for Medicaid and Supplemental Nutrition Assistance Program (food stamps) to get more than $151,000 in benefits combined between November 2010 and July 2013.
Al Della Fave, spokesman for the Ocean County Prosecutor’s Office, said this was among a series of arrests made in 2015 that stimulated Prosecutor Joseph Coronato to make a presentation to Lakewood’s Orthodox Jewish community about welfare fraud.
11. Another Lakewood black eye
The Orthodox Jewish community in Lakewood suffered an embarrassment in 2015 when a prominent rabbi, Mendel Epstein, was convicted along with two others of conspiracy in a scheme to torture husbands until they granted their wives divorces. Epstein, who specialized in religious divorces, was convicted in federal court of conspiracy to commit kidnapping.