Pils take the Fifth in depositions about their home

Lawyer Malcolm Leader-Picone's statement regarding the Fifth Amendment came during the latest battle in the Pils' yearlong legal war over the now-bankrupt and defunct Jewish Educational Center. The Pils founded and ran the S.F.-based nonprofit, which became famous for its multimillion-dollar auctions of donated used cars.

During a pretrial hearing in U.S. Bankruptcy Court on Monday, lawyers for the Pils and the bankruptcy trustee focused on the couple's decision to invoke the Fifth Amendment during three days of depositions in May.

The Fifth Amendment protects citizens against self-incrimination in criminal cases.

Leader-Picone, the bankruptcy trustee's attorney, said the Pils' decision to repeatedly invoke their constitutional right is preventing him from forming a clear picture of their financial dealings and from building his case.

"I may be barking up the wrong tree. But I don't know if I'm barking up the wrong tree because they won't answer," Leader-Picone told the judge in the S.F. courtroom.

Bankruptcy trustee Stuart Kaplan is suing to take possession of the couple's $472,000 home in order to help pay off creditors owed an estimated $1 million. He asserts that at least $100,000 in charity money went toward the home's purchase and related expenses.

The Pils' attorneys contend all the money that went into the home legally belonged to the Pils. But the couple is taking the Fifth Amendment to protect themselves from other potential problems.

"They're invoking the Fifth because the U.S. attorney has indicated through a subpoena of the JEC records that [he] is investigating a variety of potential federal violations," David Schwartz, one of the Pils' attorneys, said in an interview Tuesday.

Last June, the Internal Revenue Service, along with the U.S. Attorney's Office, confiscated JEC records in search of evidence of possible wire fraud, mail fraud and money laundering.

The U.S. attorney has not charged the Pils with any crime. Right now, the Pils do not want to assist that criminal investigation by testifying in the bankruptcy suit.

If the Pils continue to invoke the Fifth on certain issues, however, Bankruptcy Court Judge Dennis Montali must decide whether he would still allow the Pils' attorneys to use those issues as a defense in the trial. The attorneys could, for example, attempt to put third-party witnesses on the stand in the Pils' defense.

The judge made no decision Monday. Because of such delays in pretrial information gathering, the trial has been moved from late July to late October.

Without that defense, the Pils may find it impossible to keep their home — though Leader-Picone wrote in court documents that the couple may lose their home anyway because "they have defaulted on their payments."

Schwartz confirmed that the Pils are currently trying to refinance the house, located in S.F.'s Richmond District.

The house was purchased in 1995 in the name of Mattie Pil's brother, Levi Plotkin, and deeded to the Pils in 1996.

According to court documents filed by Leader-Picone, virtually all the questions in which the couple invoked the Fifth Amendment are related their financial dealings — "anything concerning the source of their income, and other funds, loans and gifts they made and received, all financial dealings with JEC, and any agreements with JEC concerning the purchase of [the home]."

The questions for which the couple invoked the Fifth Amendment included:

*Why was the home purchased in Plotkin's name?

*What was the origin of the money for the home's escrow?

*Where did the money for the mortgage payments come from?

In the court documents, Leader-Picone added that "somewhat inconsistently, Rabbi Pil did testify that he made `loans' to JEC from time to time by either not taking paychecks, taking paychecks but not signing them, or taking paychecks and not cashing or depositing them."

The couple said in the depositions that their personal loans to the charity totaled about $100,000, Leader-Picone said in court.

Schwartz did not contest that some money from JEC accounts was used to buy and maintain the home. But he also confirmed the couple's assertion that the JEC money was repayment for paychecks Bentzion Pil never cashed and for personal loans the couple made to the charity.

"He would get paychecks and he wouldn't cash them," Schwartz said Tuesday. "When he needed to buy a house, he took the money that covered those uncashed paychecks."

Though it might ordinarily be simple to verify financial transactions, Schwartz also contends that many of the dealings reflect informal business practices that are common among native Russians and Lubavitcher Chassidim, such as Bentzion Pil.

In court papers filed by Schwartz, he asserted that in the former Soviet Union, loans, donations and other business transactions "were commonly done on the basis of oral discussions with little or no written documentation." In addition, he asserted, Lubavitcher Chassidic organizations make charitable gifts among themselves "without adherence to commercial formalities."