A 45-count indictment for fraud and money laundering has been charged by a federal grand jury in Newark, N.J., against the leader of an investment fraud scheme that allegedly caused more than $200 million in losses.
Eliyahu Weinstein, along with Vladimir Siforov and other conspirators, allegedly defrauded investors in multiple states and overseas between June 2004 and August 2011 in this real estate scam.
According to the indictment, the conspirators made false and misleading statements to entice investors to participate in their schemes, including telling them that Weinstein's “inside access” to certain real estate opportunities allowed him to buy these properties at below market prices.
Weinstein allegedly told his victims that their money would be used to purchase a property, which would then be flipped to a third-party buyer the defendant knew. Victims were also informed their money would be held in escrow until the closing of the false transaction.
The indictment said Weinstein created fraudulent documents such as “show checks” that led victims to believe Weinstein's investments in these transactions were never deposited and forged checks that the defendant altered from appearing as a small value to millions of dollars.
He also supposedly produced false operating agreements, which showed that victims had ownership interests in specific properties they did not have any real affiliation with, as well as other forged legal documents including leases, mortgages and deeds.
The Orthodox Jewish community, which Weinstein was a member of, was the target victims for this scheme, the indictment said.
“Weinstein abused the community's practice of engaging in transactions based on trust and without paperwork to obtain money from his victims without substantial written records,” the indictment said. “Weinstein would then falsely represent that specific real estate transactions existed, that the victims' monies were used to fund those transactions, or that the victims' profits from those transactions were being ‘rolled' into new investments.”
Weinstein purportedly used the investors' money for his own use not related to the real estate transactions promised to the investors. He allegedly took significant portions of their money and funded other unrelated real estate transactions, paid prior scam victims and made charitable contributions to his religious affiliation.
Additionally, Weinstein spent the money for his own personal use including purchasing antique Jewish artwork, buying a multimillion-dollar collection of jewelry and watches, gambling and paying off credit card bills, millions in legal bills and luxury car lease payments.
Siforov, who has not been caught by federal officials, was identified for three counts of wire fraud in the indictment.
Both defendants are facing a prison term between 20 and 30 years if convicted of this fraudulent crime and a fine that could range from $250,000 to $1 million.
