The Securities and Exchange Commission recently issued a release regarding charges brought against Eliyahu Weinstein, a twice-convicted fraudster from Lakewood, N.J., and five other individuals for their involvement in a $38 million Ponzi-like scheme aimed at defrauding investors. The fraudulent activities started in November 2021 and continued in 2022, according to the release.
“Over and over, the defendants took money from unsuspecting investors for fake deals and shuffled funds around to pay out earlier investors to give the false impression that they were receiving real profits from those deals, sometimes even concealing Weinstein’s criminal history and involvement in the deals,” Director of the SEC’s New York Regional Office Antonia M. Apps said in the release. “The SEC remains committed to holding accountable those who prey upon innocent investors and conceal the truth about their criminal pasts and schemes.”
The six individuals are charged with the scheme which defrauded approximately 150 investors, the release reported. The scheme involved raising investments for purported deals in healthcare products through entities like Optimus Investments Inc. and Tryon Management Group LLC, while concealing Weinstein's identity and criminal history from investors.
When some of the deals proved unprofitable, the defendants allegedly engaged in a fraudulent scheme to use funds from new investors to pay earlier ones, mischaracterizing these payments as investment returns, according to the release.
Weinstein, the mastermind behind the scheme, is a criminal recidivist with two earlier convictions for fraud and money laundering related to a real estate Ponzi scheme and a fraudulent securities offering, the release said. He was sentenced to 24 years in prison for these schemes, but had his sentence commuted to time served in January 2021.
The SEC's complaint, filed in the U.S. District Court for the District of New Jersey, alleges violations of the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 by all six defendants, the release reported. The SEC is seeking various remedies against the defendants, including permanent injunctive relief, disgorgement with prejudgment interest, civil penalties, officer and director bars and conduct-based injunctions to prevent future participation in the sale of promissory notes and investment contracts.
The SEC was thankful for the assistance provided by the U.S. Attorney's Office for the District of New Jersey and the FBI in this ongoing investigation, according to the release. The litigation efforts will be led by Jack Kaufman of the New York Regional Office, while the investigation is conducted by Teresa A. Rodriguez, Mary Kay Dunning, Laurel S. Fensterstock, Neil Hendelman and Wendy B. Tepperman, supervised by Tejal D. Shah.
The charges brought against these individuals underscore the severity of their alleged actions and demonstrate the ongoing efforts to maintain the integrity of the financial system, the release said. The case will now proceed to the U.S. District Court for the District of New Jersey, where the defendants will face the consequences of their alleged wrongdoing.
