Thursday, August 26, 2010
Weinstein Gets Bail in $200 Million Ponzi Scheme
Eliyahu Weinstein, a New Jersey man charged with leading a $200 million Ponzi scheme that targeted fellow Orthodox Jews, was granted $10 million bail today by a U.S. judge.
Weinstein, 35, was accused Aug. 12 of running a real-estate investment fraud that duped victims in New Jersey, New York, Florida, California and abroad.
Weinstein, who faces as many as 50 years in prison, has been in custody since his arrest. A prosecutor opposed bail for Weinstein, saying he poses a “profound” risk of fleeing if released before trial.
The bond must be secured by four properties with $4.2 million in equity. Weinstein must live under 24-hour house arrest in Lakewood, New Jersey, and undergo electronic monitoring with a global positioning system, said U.S. Magistrate Judge Mark Falk. Weinstein also can’t go near any airports.
“There’s no question that given the circumstances here, there is a risk of flight,” Falk said in federal court in Newark, New Jersey. “While none of this is foolproof, it certainly is the best that is available and would impose a serious obstacle to someone trying to fly out of the country.”
Weinstein was charged with committing bank fraud and wire fraud from 2005 to this month. Vladimir Siforov, 43, who was charged with wire fraud, remains at large.
Community Ties
By using “lies, threats, deliberate misrepresentations and even counterfeit checks,” Weinstein and Siforov “exploited the close community ties of the Orthodox Jewish community for one goal: to steal money through an elaborate real estate and Ponzi scheme,” Michael B. Ward, special agent in charge of the Federal Bureau of Investigation’s office in Newark, said in a statement on Aug. 12.
New victims come forward daily, and the fraud caused “at least a $200 million loss,” Assistant U.S. Attorney Zach Intrater said today at the bail hearing. “The vast bulk of this money is missing, and the number keeps climbing.”
Weinstein, a bearded, bespectacled man with a wife and five young children, appeared at the hearing in a green shirt from the Hudson County Detention Center. About 40 members of the Orthodox Jewish community supported him in the courtroom.
His attorney, Ephraim Savitt, asked Falk for a $5 million bail package secured by the four properties. He also proposed home confinement and electronic monitoring, saying Weinstein posed no risk of flight and is “eminently bailable.”
Savitt assailed the investors who went to the FBI, saying one perjured himself in a civil deposition.
‘Unregulated Money Lending Machine’
“These victims are really an unregulated money lending machine,” Savitt said.
In a letter to the judge, Savitt said Weinstein was close to settling an $80 million lawsuit against him in Trenton, New Jersey, and that judgments had been entered against him of $35 million in Philadelphia and $6 million in New York.
After Weinstein’s arrest, Savitt said, he was the victim of extortion attempt at the jail, when he was “approached by a gang member who said he would provide for Mr. Weinstein’s protection within the facility.” The alleged extortionist was released on bail, and he called Weinstein’s wife to demand a down payment, Savitt told Falk.
Intrater argued that Weinstein has “a profound motive to flee,” saying that he has flown out of the country 40 times since 2007, including to Israel, Russia and Ukraine.
Of the four properties Weinstein was posting to secure his bond, one was owned by a man who was convicted of failing to file a currency transaction report, Intrater said. When authorities searched Weinstein’s house, the prosecutor said, his wife, Rivka, “attempted to sneak jewelry out of the house in the undergarments of a housekeeper.”
‘Very Relieved’
After the judge granted bail, Savitt said in an interview: “I’m very relieved. It was the right result.”
The FBI arrest complaint said Weinstein falsely represented that he owned or could buy property and that victims could make “a healthy profit in a short time period.” He sold his real or fake interest in property multiple times, fraudulently altered checks, drew up phony leases and hid zoning changes from his victims, according to the FBI.
When investors tried to collect their earnings, he ignored them, promised payments that never came, and paid smaller amounts than he owed, according to the complaint.
Weinstein used proceeds of the fraud to amass manuscripts and antique Judaica worth $6.2 million, a jewelry and clock collection that he bought for $7.6 million, and another jewelry and watch collection valued at $6.2 million.
He also charged $1.7 million to an American Express account, according to the complaint.
The case is United States of America v. Weinstein, 10-mj- 7115, U.S. District Court, District of New Jersey (Newark).
http://www.businessweek.com/news/2010-08-26/weinstein-gets-bail-in-200-million-ponzi-scheme.html
Weinstein, 35, was accused Aug. 12 of running a real-estate investment fraud that duped victims in New Jersey, New York, Florida, California and abroad.
Weinstein, who faces as many as 50 years in prison, has been in custody since his arrest. A prosecutor opposed bail for Weinstein, saying he poses a “profound” risk of fleeing if released before trial.
The bond must be secured by four properties with $4.2 million in equity. Weinstein must live under 24-hour house arrest in Lakewood, New Jersey, and undergo electronic monitoring with a global positioning system, said U.S. Magistrate Judge Mark Falk. Weinstein also can’t go near any airports.
“There’s no question that given the circumstances here, there is a risk of flight,” Falk said in federal court in Newark, New Jersey. “While none of this is foolproof, it certainly is the best that is available and would impose a serious obstacle to someone trying to fly out of the country.”
Weinstein was charged with committing bank fraud and wire fraud from 2005 to this month. Vladimir Siforov, 43, who was charged with wire fraud, remains at large.
Community Ties
By using “lies, threats, deliberate misrepresentations and even counterfeit checks,” Weinstein and Siforov “exploited the close community ties of the Orthodox Jewish community for one goal: to steal money through an elaborate real estate and Ponzi scheme,” Michael B. Ward, special agent in charge of the Federal Bureau of Investigation’s office in Newark, said in a statement on Aug. 12.
New victims come forward daily, and the fraud caused “at least a $200 million loss,” Assistant U.S. Attorney Zach Intrater said today at the bail hearing. “The vast bulk of this money is missing, and the number keeps climbing.”
Weinstein, a bearded, bespectacled man with a wife and five young children, appeared at the hearing in a green shirt from the Hudson County Detention Center. About 40 members of the Orthodox Jewish community supported him in the courtroom.
His attorney, Ephraim Savitt, asked Falk for a $5 million bail package secured by the four properties. He also proposed home confinement and electronic monitoring, saying Weinstein posed no risk of flight and is “eminently bailable.”
Savitt assailed the investors who went to the FBI, saying one perjured himself in a civil deposition.
‘Unregulated Money Lending Machine’
“These victims are really an unregulated money lending machine,” Savitt said.
In a letter to the judge, Savitt said Weinstein was close to settling an $80 million lawsuit against him in Trenton, New Jersey, and that judgments had been entered against him of $35 million in Philadelphia and $6 million in New York.
After Weinstein’s arrest, Savitt said, he was the victim of extortion attempt at the jail, when he was “approached by a gang member who said he would provide for Mr. Weinstein’s protection within the facility.” The alleged extortionist was released on bail, and he called Weinstein’s wife to demand a down payment, Savitt told Falk.
Intrater argued that Weinstein has “a profound motive to flee,” saying that he has flown out of the country 40 times since 2007, including to Israel, Russia and Ukraine.
Of the four properties Weinstein was posting to secure his bond, one was owned by a man who was convicted of failing to file a currency transaction report, Intrater said. When authorities searched Weinstein’s house, the prosecutor said, his wife, Rivka, “attempted to sneak jewelry out of the house in the undergarments of a housekeeper.”
‘Very Relieved’
After the judge granted bail, Savitt said in an interview: “I’m very relieved. It was the right result.”
The FBI arrest complaint said Weinstein falsely represented that he owned or could buy property and that victims could make “a healthy profit in a short time period.” He sold his real or fake interest in property multiple times, fraudulently altered checks, drew up phony leases and hid zoning changes from his victims, according to the FBI.
When investors tried to collect their earnings, he ignored them, promised payments that never came, and paid smaller amounts than he owed, according to the complaint.
Weinstein used proceeds of the fraud to amass manuscripts and antique Judaica worth $6.2 million, a jewelry and clock collection that he bought for $7.6 million, and another jewelry and watch collection valued at $6.2 million.
He also charged $1.7 million to an American Express account, according to the complaint.
The case is United States of America v. Weinstein, 10-mj- 7115, U.S. District Court, District of New Jersey (Newark).
http://www.businessweek.com/news/2010-08-26/weinstein-gets-bail-in-200-million-ponzi-scheme.html
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