NOT SO SWEET: Prosecutors say convicted gem fraudster Joshua Kestenbaum hides profits from his Freedom Cake business and fails to make restitution. (
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This time, prosecutors want him to get his just “desserts.”
Accused fraudster Joshua Kestenbaum — who accepted a sweetheart plea deal in 2008 for participating in a $32 million scam involving a gem business — is now accused of a half-baked scheme to launder money through his latest venture, a cake company.
The firm, Bake Me a Wish, has been featured on “Today,” “Good Morning America,” “The View,” and “Rachael Ray” for its Freedom Cake promotion.
When customers purchase one “Freedom Cake” from his Web site, Kestenbaum’s firm sends another cake, free of charge, to a member of the US military stationed overseas.
For his gem swindle — in which he admitted overstating the assets of his company to firms providing financing — he was sentenced to five years’ probation and ordered to pay off what he stole.
A good slice of it was repaid by his co-defendants. But Kestenbaum has paid back only several thousand dollars of the $11 million he owes.
Brooklyn federal prosecutors say he’s stopped making the court-ordered $2,500-a-month restitution, claiming poverty. They say he’s actually hiding his bakery’s profits by putting them in accounts held by relatives.
Prosecutor Ilene Jaroslaw told a judge last week that Kestenbaum “engaged in egregious financial gymnastics to hide his true cash inflow.”
“It is not normal for a person with upwards of $11 million in debt to live in a $6,400-a-month apartment on the Upper West Side,” she added.
Defense lawyer Alan Lewis said the cake executive is “struggling” and his life is “not rosy by any stretch of the imagination.”
Kestenbaum lives an existence of constant “financial insecurity” as the cake business struggles with seasonal fluctuations in demand, rising fuel costs that affect shipping prices and significant capital outlays, Lewis said.
The feds don’t buy that, either — especially after a probation officer walked into Kestenbaum’s apartment on June 8 and discovered a housekeeper “in the kitchen preparing a meal of some kind,” the officer testified.
Lewis says the housekeeper actually works for Kestenbaum’s mother-in-law and was just helping out.
Prosecutors now want to send Kestenbaum to prison for violating probation and for making false statements about his finances.
They want the judge to give him a sentence in the 108- to 135-month range, which he faced after pleading guilty.