Ponzi Schemer Confesses To Additional Fraud

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Ponzi Schemer Confesses To Additional Fraud

Eliyahu Weinstein, a New Jersey Ponzi schemer already serving 22 years in prison for a $200 million real estate scam, confessed in federal court last week that he additionally defrauded potential investors in Facebook’s initial public stock offering and other real estate transactions. He then admitted to laundering the illicit proceeds.

Weinstein pleaded guilty to conspiracy to commit wire fraud, committing wire fraud while on pretrial release, and money laundering. According to U.S. Attorney Paul J. Fishman, the crimes occurred while he was awaiting trial for his previous crimes. Fishman stated, “Even while facing federal charges that eventually netted him decades in prison, Weinstein couldn’t resist the buzz around the Facebook [initial public offering] and the opportunity to fleece unsuspecting investors. Shamelessly, he even used the money he stole to pay the legal fees he accumulated from the previous scam.”

Weinstein and his conspirators offered a pair of investors the opportunity to purchase blocks of Facebook shares prior to the social media company’s initial public offering in May 2012, even though they had no access to the shares. The offer appeared especially attractive because large blocks of the shares were extremely hard to come by and were expected to increase in value at the time of the initial public offering.

Weinstein and his conspirators falsely claimed they had buyers lined up to whom they would sell the Facebook shares at a substantial profit and that they had collateral to secure the investments, even though that collateral was worthless, according to a federal indictment issued on April 17. The victims wired a total of $4,675,000 to accounts controlled by Weinstein and his conspirators in February and March 2012 for the blocks of Facebook shares, but the money was never used to purchase the stock.

Weinstein also was charged in the indictment with persuading the Facebook investors to invest in an apartment complex in Florida at a discounted price by telling them the property would be flipped immediately at a substantial profit. The victims wired a total of $2,830,000 in two payments in February and April 2012 to an attorney trust account that was supposed to be held in escrow to purchase the property, but Weinstein and a conspirator wired out most of the money soon afterward. They gave about $1.8 million of it back to the Facebook investors, falsely claiming it represented the return of their principal and a profit on the Facebook transaction.

A third component of the fraud involved misrepresentations to induce investment of about $1.5 million in notes on seven South Florida condominiums that Weinstein claimed were in foreclosure, although he had lost the units in a foreclosure years earlier and the money was never invested in the notes. To further the scheme, he provided the investment group with phony documents that falsely claimed the condominiums earned about $780,000 a year in rental income.

Weinstein will be sentenced on December 15th. He faces up to 20 years in federal prison for the new conspiracy, up to 30 years for committing wire fraud while on pretrial release, and up to 10 years for the money laundering.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.

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