This article was published upon the advice and with the guidance of rabbanim and askanim. Even one case is too many.
The Practical Perspective
Sadly, on any given day, millions of Americans are evading taxes or illegally skimming benefits from government agencies or insurance companies. Even so, it’s embarrassing and frustrating to occasionally see frum Jews featured in blaring headlines about fraud. While cheating is hardly just an “Orthodox” issue, we’re supposed to be living on a higher plane. And, as Rav Moshe Feinstein zt”l clearly paskened (Igros Moshe, C”M 2, 29), we live in a medinah shel chessed and it is forbidden to cheat the government—not to mention potentially create a massive chillul Hashem.
However, not being a posek or a mashgiach myself, my position here is not to address the halachic or hashkafic problems with fraud, but the practical ones. And from a practical perspective, going the crooked route is risky and naive. Beyond the Torah prohibitions, why is engaging in fraudulent behavior a terrible idea?
Yes, The Government Knows
People who play games with the law probably don’t realize just how easy it is to get caught nowadays. The US government has cutting-edge technological resources at its disposal. Detecting fraud is a simple matter of cross-referencing vast databases of bank accounts, tax returns, credit card bills, car and real estate deeds, travel records, charity donation records, social media postings, etc. Amazon does it. Google does it. The IRS does it, too.
If someone in the country is committing ongoing fraud right now, chances are the government knows about it on some level. They have just decided not to act on it right now. But eventually, they might.
Weak Excuses Won’t Stand
Perhaps someone thinks that if they do get caught, they can simply hire a good lawyer to offer justifications such as, “The tax codes are unfair,” “Everyone does it! Why should I be the only loser?” “The money was used for good causes,” or even, “It’s because of the Holocaust.”
But if they are pulled into court chas v’shalom, they may well discover that it’s obvious to everyone present that these excuses are just that—excuses. Railing against unfair tax codes and anti-Semitism when we Jews have never had it so good materially comes off as just plain silly or demeaning when laid bare before a judge and jury.
Gray Areas Vs. Willful Ignorance
There’s a vast difference between acting within a gray area of the law and choosing to ignore the law completely. While judges may take into consideration that the rules in a case are fuzzy, they won’t accept someone’s simple ignorance or blatant oversight as a viable excuse. Ignorance of the law is not an acceptable excuse. All citizens must do their best to determine what the law actually is and comply accordingly.
The LRRC’s take
Sarah Sternbach, director of social services at the LRRC (Lakewood Resource and Referral Center), explains, “At the LRRC, we’re privileged to see the honesty of our community on a daily basis. People come to us proactively, asking questions because they want to do what’s right.” She continues, “It’s important to note that each agency has an investigations/recovery department dedicated to reviewing files and flagging households that received benefits they were not eligible for. Unfortunately we often see letters demanding repayment of benefits improperly received from various agencies like NJ FamilyCare, SNAP, Unemployment Insurance, Section 8 (HUD), and SSI.” The sums demanded can be substantial.
Sternbach explains, “In many cases, the overpayment was a result of an agency’s error. Regardless of why the overpayment occurred, the recipient needs to repay the benefits they mistakenly received. The bottom line is that you must report all income and household details completely and accurately and never accept benefits you are not eligible for,” adding, “We often get questions about cash income. It’s important to understand that all income must be reported, whether it’s paid through a payroll company or in cash.”
Successful Businesspeople Don’t Cheat
Some people have the mistaken notion that in order to get rich you need to pull shtick. This is false; successful businesspeople know that the way to make it big in modern society is to follow the legal rules.
Say you’re running a business “under the table.” You’re raking it in by not forking over your money to the government, right? But what happens if you suddenly have an idea for a new product and need to get it out to the market soon? In order to grow, you usually need to take out a bank loan or form a partnership with someone else or hire professionals. You can’t do any of these if your business is illegal.
A business run under the table will stay under the table. And if you’re investing much of your energy in avoiding getting caught by the government, your business will never be able to grow.
A Bullet to the Heart
Back in 2004, I took a PCS real estate course given by the frum mogul David Lichtenstein. Multiple times, Mr. Lichtenstein compared risks in business to those facing a soldier on the front. A soldier who gets wounded in his leg or arm can get patched up in the infirmary and go back onto the battlefield. But if he gets shot in his heart, it’s over.
By the same token, he said, there are different types of risks a business owner takes. They may invest in a new product which ends up failing or an investment that ends up going bad. Those are blows they can absorb; they can pick themselves up and eventually get back to the battle. But if they take a risk doing funny business with government laws and get caught, that’s like a bullet to the heart. Their business is probably over. Taking that kind of risk is just plain dumb.
Your Peace of Mind
The most compelling, practical reason to avoid fraud is if you want to be able to sleep at night! The emotional anxiety that results from constantly working to evade detection, of worrying whether and when they’re going to catch up to you, and what that will do to you and your family’s lives, chas v’shalom, is not worth all the money in the world.
Play it straight. It’s the smart way to go.
Want to dig deeper?
Try these related articles
Black, White, and Gray: Navigating Ambiguous Tax Terrain