n Ocean County, New Jersey man today admitted that he ran a real
estate investment fraud scheme that caused $200 million in losses and
then laundered the proceeds of the scheme, U.S. Attorney Paul J. Fishman
announced.
Eliyahu Weinstein, a/k/a “Eli Weinstein,” a/k/a “Edward Weinstein,”
a/k/a “Eddie Weinstein,” 37, of Lakewood, New Jersey, pleaded guilty
before U.S. District Judge Joel A. Pisano in Trenton federal court to
two counts of the indictment pending against him: one count of
conspiracy to commit wire fraud and one count of money laundering.
Weinstein’s trial on these charges was scheduled to start January 7,
2013. Weinstein’s co-defendant, Vladimir Siforov, is charged in the
indictment with three counts of wire fraud and remains a fugitive.
Under the terms of the plea agreement, which Judge Pisano accepted
today, Weinstein may be sentenced to up to 25 years in prison and up to
three years of supervised release. He must also provide a full
accounting of all money paid to him during the period covered by the
indictment. Weinstein has also agreed to forfeit $2 million in seized
property and pay restitution to the victims of his offenses. Sentencing
is scheduled for April 2, 2013.
“Weinstein shamelessly exploited investors’ trust, using doctored
documents for properties he didn’t own—including in a town that doesn’t
exist—and continued to commit crimes while out on bail,” U.S. Attorney
Fishman said. “With false promises of sound investments and charitable
donations, he stole $200 million, spending freely on fancy cars,
jewelry, and gambling trips. And in using victims’ money to collect
Judaica, Weinstein robbed from his own community’s present to stockpile
artifacts of its past.”
FBI Acting Special Agent in Charge David Velazquez said, “Mr.
Weinstein came to the wrong conclusion when he assumed he would never be
held accountable for his criminal activity. His greed got the best of
him and he will pay a heavy price before the law for the frauds he
committed.”
According to documents filed in this case and statements made in court:
From June 2004 through August 2011, Weinstein orchestrated—with the
help of Siforov and others—a real estate investment fraud scheme,
headquartered in Lakewood, that has resulted in multi-million-dollar
losses to victim investors.
To induce victims to invest, Weinstein and others made various types
of materially false and misleading statements and omissions. Weinstein
and others told victims that Weinstein’s inside access to certain real
estate opportunities allowed him to buy a particular piece of property
at a below-market price. Weinstein and others also told victims that
their money would be used to purchase a specific property, and the
property would be quickly resold—or “flipped”—to a third-party purchaser
that Weinstein had lined up. Victims were also told that the victims’
money would be held in escrow until the closing of a purported real
estate transaction.
Weinstein bolstered his lies by creating, and causing to be created,
various types of fraudulent documents, including “show checks,” which
Weinstein led victims to believe represented Weinstein’s investments in
specific transactions, but which in fact were never deposited; forged
checks, which had actually been negotiated for small amounts, but which
Weinstein altered so as to appear worth millions of dollars; and various
kinds of phony legal documents, including mortgages and deeds.
Weinstein and others initially targeted victims from the Orthodox
Jewish community to which Weinstein belonged, exploiting his standing
in, and knowledge of, the customs and practices of this community to
further the scheme. This type of illegal activity is commonly referred
to as “affinity fraud” and refers to investment scams that prey upon
members of identifiable groups, such as religious or ethnic communities,
the elderly, or professional groups. The perpetrators of affinity fraud
scams frequently are, or pretend to be, members of the group, and they
exploit the trust and friendship that exist in groups of people who have
something in common.
Weinstein abused the Orthodox community’s practice of engaging in
transactions based on trust, and without paperwork, to obtain money from
his victims without substantial written records. He would then falsely
represent that specific real estate transactions existed, that the
victims’ money was used to fund those transactions, or that the victims’
profits from those transactions were being “rolled” into new
investments. Weinstein also used a portion of the fraud’s proceeds to
fund “charitable and religious contributions,” which he used to elevate
his reputation within the Orthodox Jewish community.
By 2010, Weinstein had tarnished his reputation in the Orthodox
Jewish community due to the massive losses caused by his fraud scheme
and found it difficult to obtain more money to further the scheme from
within the Orthodox Jewish community. In April 2010, Weinstein and
others began soliciting victims from outside the Orthodox Jewish
community, whom they defrauded out of additional millions of dollars.
Weinstein also used millions of dollars fraudulently obtained from
his victims to fund his own lavish spending, including millions of
dollars worth of antique Judaica and other artwork; a
multi-million-dollar collection of jewelry and watches; gambling in Las
Vegas and elsewhere; and Weinstein’s personal expenses, including
millions of dollars in credit card bills, millions of dollars in legal
bills, and luxury car-lease payments.
U.S. Attorney Fishman credited special agents of the FBI, under the
direction of Acting Special Agent in Charge David Velazquez in Newark,
for the investigation leading to today’s guilty plea. He also credited
agents of the IRS-Criminal Investigation, under the direction of Acting
Special Agent in Charge Shantelle P. Kitchen, for their important
contributions to the investigation.
The government is represented by Assistant U.S. Attorneys Zach
Intrater and Gurbir S. Grewal of the U.S. Attorney’s Office Economic
Crimes Unit and by Rachael A. Honig, Deputy Chief of the Office’s
Criminal Division.
The charges and allegations against Siforov are merely accusations,
and he is considered innocent unless and until proven guilty.
This case was brought in coordination with President Barack Obama’s
Financial Fraud Enforcement Task Force. President Obama established the
interagency Financial Fraud Enforcement Task Force to wage an
aggressive, coordinated, and proactive effort to investigate and
prosecute financial crimes. The task force includes representatives from
a broad range of federal agencies, regulatory authorities, inspectors
general, and state and local law enforcement who, working together,
bring to bear a powerful array of criminal and civil enforcement
resources. The task force is working to improve efforts across the
federal executive branch, and with state and local partners, to
investigate and prosecute significant financial crimes, ensure just and
effective punishment for those who perpetrate financial crimes, combat
discrimination in the lending and financial markets, and recover
proceeds for victims of financial crime.
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