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A federal judge has allowed to proceed a bombshell lawsuit alleging that prominent Lakewood askonim colluded with an alleged Ponzi schemer and outside counsel in an effort to silence victims, suppress public exposure, and derail civil litigation, FAA News has learned.
U.S. District Court Judge Edward S. Kiel denied dismissal of key claims, permitting the case - described by observers as extraordinary in scope and allegations - to move forward.
According to the complaint, the defendant at the center of the case induced dozens of local residents to invest millions of dollars by promising returns of up to 30%, while allegedly operating nothing more than a classic Ponzi scheme - using new investor funds to pay earlier investors.
At least 35 victims, upon realizing they had been defrauded, commenced a din torah in an attempt to recover remaining assets. That effort, the lawsuit claims, yielded no meaningful recovery.
One investor chose a different path.
Rather than submit to the bais din, he filed a nine-count civil lawsuit in Ocean County Superior Court seeking accountability and asset recovery through the civil justice system.
After filing suit, the investor served subpoenas on the bais din and a financial expert it retained, demanding records relating to the alleged scheme.
Those subpoenas were ultimately quashed. Defense counsel successfully argued that compelling production would undermine confidentiality and cause litigants to “get nervous” about participating in bais din proceedings.
According to a subsequently filed federal lawsuit, what followed next was far more troubling.
The complaint alleges that the accused scammer - a follower of the Orthodox Jewish faith, who resides in a community of like-minded individuals in Ocean County - sought to keep his alleged misconduct from becoming public within the tight-knit community. To accomplish this, the lawsuit claims, he and his counsel reached out to influential Lakewood askonim to retain additional counsel and steer all disputes into a confidential bais din process - thereby avoiding civil discovery, public scrutiny, and potential criminal exposure.
After meeting with the scammer's attorney, the askonim allegedly turned to a Baltimore-based attorney and hired him to do the dirty work.
What followed, the complaint alleges, was a coordinated campaign of coercion and intimidation aimed at forcing the investor to abandon his civil lawsuit and submit to bais din arbitration under a strict confidentiality agreement.
The lawsuit asserts that the sole purpose of the bais din was not justice - but silence.
According to the complaint:
- At a July 16, 2023 meeting, the investor raised concerns that the alleged scammer was hiding assets through trusts and affiliated entities.
- Instead of addressing those concerns, askonim allegedly threatened retaliation, warning that if the investor continued in civil court, they would shift blame onto him and encourage other victims to pursue him instead.
- The Baltimore attorney allegedly labeled the investor a “recalcitrant” party within the community for refusing to submit to bais din.
- On September 7, 2023, askonim allegedly stated that no settlement discussions could occur outside the bais din framework - effectively conditioning peace on silence.
Despite repeated pressure, the investor refused to withdraw his lawsuit.
The complaint alleges that the Baltimore attorney then crossed the line from advocacy into harassment - continuing to threaten retaliatory litigation, applying communal pressure, and attempting to bury the allegations within the confidential arbitration process.
Even more astonishing, the lawsuit claims that after all of this uninvited interference, the law firm issued invoices totaling $250,000 and demanded a proportional payment from the very investor they were allegedly pressuring.
The federal complaint, filed by Lakewood attorney Afiyfa H. Ellington, Esq. includes a Fifth Count for Unauthorized Practice of Law, citing N.J.S.A. 2C:21-22a - and Judge Kiel has just allowed that cause of action to proceed without issue.
According to the court’s ruling, plaintiffs plausibly allege that:
The Baltimore attorney and others provided unsolicited legal advice in New Jersey despite not being licensed in the state;
That advice interfered with settlement negotiations and litigation strategy;
Plaintiffs suffered quantifiable financial losses, including increased litigation costs and diminished settlement value;
And that there was a direct causal connection between the alleged unauthorized practice and those losses.
Judge Kiel held that, at this stage, plaintiffs adequately pleaded all required elements - allowing the claim to proceed.
With discovery looming and serious allegations of collusion, coercion, and racketeering now heading toward the evidentiary phase, this case threatens to expose deeply uncomfortable questions about power, secrecy, and accountability within Lakewood’s communal institutions. FAA News will continue to follow this developing story.
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