Eliyahu Weinstein, who has already been convicted twice for fraud, has together with five other individuals been charged for orchestrating a multi-million-dollar Ponzi-like fraud scheme. The fraudulent scheme involved raising investments to fund purported deals to purchase, distribute, and sell in-demand healthcare products – for a total of $38m.
Along with Weinstein, the SEC has also brought charges against Aryeh L Bromberg, Joel L Wittels, Richard M Curry, Christopher J Anderson, and Alaa Mohamed Hattab for taking part in the scheme.
According to the SEC, while raising money from investors for purported deals through Optimus Investments Inc in late 2021, Weinstein, Bromberg, and Wittels were concealing Weinstein’s identity, his criminal history, and his involvement from the investors. Allegedly, Weinstein went under the fake name Mike Konig to disguise who he was in front of investors. In a secretly recorded conversation, Weinstein acknowledged that investors wouldn’t give the group “a penny” if they knew of his involvement.
“These were brazen and sophisticated crimes that involved multiple conspirators and drew right from Weinstein’s playbook of fraud.”
Philip R Sellinger, US Attorney
In January 2022, Anderson and Curry started raising funds for Optimus deals through Tryon Management Group LLC, and by August, they had joined the others in “actively concealing Weinstein’s role” in the scheme. Allegedly, the sixth defendant Hattab, provided other substantial assistance to the group in carrying out the scheme.
Pardoned by President Trump
Later in April, when some of the deals proved to be unprofitable, Weinstein, Bromberg, Wittels, Curry, and Anderson allegedly used investor’s funds to make Ponzi-like payments to earlier investors, labelling them as investment returns. In total, the SEC believes that the scheme raised over $38m from over 150 investors.
“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,” said Antonia M Apps, Director of the SEC’s New York Regional Office.
Weinstein is a twice-convicted felon who pleaded guilty to wire fraud and money laundering in a real estate Ponzi scheme in 2013 that caused $200m in losses. He then pleaded guilty to fraud, conspiracy, and money laundering charges regarding a $6.7m fraudulent securities offering in 2014. He was sentenced to 24 years in prison for both schemes, but on January 20, 2021, was pardoned by then-President Donald J. Trump.
“He was aware his actions were against the terms of his release on a previous investment fraud conviction.”
James E Dennehy, Specia Agentl in Charge, Newark FBI
The SEC’s complaint alleges that all six individuals violated the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.
For each defendant, the SEC seeks permanent injunctive relief, disgorgement and prejudgment interest, a civil penalty, an officer and director bar, including a conduct-based injunction which would prohibit their future participation in the sale of promissory notes and investment contract, and more.
Wire fraud conspiracy
In a separate action, the DOJ is also charging Weinstein, aka Mike Konig, Aryeh Bromberg, Joel Wittels, and Alaa Hattab, plus Shlomo Erez who were not named in the SEC complaint.
Each of the five defendants have been charged with one count of wire fraud conspiracy, and one count of conspiracy to obstruct justice.
“As alleged in the complaint, Weinstein, along with four other individuals, has once again perpetrated a sophisticated fraud scheme causing losses of millions of dollars,” said US Attorney Philip R. Sellinger. “He did so by using a fake name and falsely promising access to deals involving scarce medical supplies, baby formula, and first-aid kits supposedly destined for wartime Ukraine. These were brazen and sophisticated crimes that involved multiple conspirators and drew right from Weinstein’s playbook of fraud.”
According to the DOJ, Weinstein revealed his true identity to the Tryon owners in a secretly recorded meeting in late August 2022. In another meeting, he admitted running a Ponzi scheme where he misappropriated Tryon investor money and had made various false statements about the Optimus deals. “I finagled, and Ponzied, and lied to people to cover us,” he said.
Hiding assets from government
Besides defrauding investors and helping Weinstein concealing his identity, the three other defendants also helped hide his assets that should have been used to pay over $200m in restitution to previous victims.
They also helped concealed Weinstein’s myriad business activities – which were prohibited by the terms of his supervised release.
“I finagled, and Ponzied, and lied to people to cover us.”
Eliyahu Weinstein
In other secretly recorded conversations, Weinstein was also found discussing hiding his assets from the government, and referenced the assets as something he “can’t touch” while being on supervised release because he would then “go to jail”.
“We allege Mr. Weinstein took part in a new scheme to rip off investors by hiding his real identity,” Special Agent in Charge James E Dennehy of the Newark FBI said. “He was aware his actions were against the terms of his release on a previous investment fraud conviction, and we allege he engaged in criminal activity anyway.”
The charge of wire fraud conspiracy can carry a maximum of 20 years in prison, and the obstruction conspiracy charge five years. Each count is also punishable by a maximum fine of either $250,000 or twice the gain or loss from the offense, whichever is greatest.