Bloomberg News

New Jersey Man Indicted by U.S. in $200 Million Ponzi Scheme

October 28, 2011

Oct. 28 (Bloomberg) -- A purported New Jersey real estate investor was charged in an indictment with leading a $200 million Ponzi scheme that initially targeted fellow Orthodox Jews.

Eliyahu Weinstein, 36, was accused by a federal grand jury in Newark, New Jersey of using sham real estate deals to bilk investors -- some of them while he was out on $10 million bail after his arrest in August 2010. Prosecutors said he spent his stolen money on jewelry, art, gambling, cars and legal bills.

An investor identified as H.D.W. sunk $70 million into Weinstein projects, including $5.4 million to buy property for a project in Trotwood, Georgia. Prosecutors say the town doesn’t exist. An H.D.W. representative met with Weinstein, according to the indictment. Weinstein asked what he and the man’s wife had in common. The representative said he didn’t know.

“We both f---ed you,” Weinstein said, according to the indictment.

Weinstein’s “exploitation of investors’ trust was so shameless he used doctored documents for properties he didn’t own,” U.S. Attorney Paul Fishman said yesterday in a statement, “and continued to commit crimes while out on bail.”

Weinstein’s attorney, Henry Klingeman, said in an interview: “Mr. Weinstein intends to plead not guilty and vigorously defend himself at trial.”

Money Laundering

Weinstein, of Lakewood, New Jersey, was charged with one count of conspiracy, 29 counts of wire fraud, two counts of wire fraud while on pretrial release, one count of bank fraud and 12 counts of money laundering. He faces as long as 30 years in prison on three of the counts.

Prosecutors said Weinstein, who began his scheme in 2004, targeted Orthodox Jews until 2010, when he also began targeting victims outside of that community including hedge fund principals.

One victim, identified as R.B.S., was also a widowed retiree in Los Angeles who worked to assist orphaned and poor children in Israel, according to the indictment. Weinstein promised that he would help R.B.S. fulfill her dream of a music school for orphaned and poor children in Israel, prosecutors said.

R.B.S. invested about $1.1 million with Weinstein, and he promised to secure her investment with collateral in three properties in Lakewood, according to the indictment.

Those properties “were either fraudulently obtained, pledged to other victims of defendant Weinstein’s scheme to defraud, or were in foreclosure proceedings” before he pledged them to R.B.S., according to the indictment.

‘Send the Money!!!’

In June 2010, R.B.S. sent an e-mail imploring Weinstein to “stop screwing around” and “send the money!!!,” according to the indictment.

“The next morning defendant Weinstein responded to R.B.S.’s e-mail by writing simply: ‘F--- u,’” according to the indictment.

Weinstein was indicted with Vladimir Siforov, 44, a resident of Manalapan, New Jersey. Siforov, a fugitive, is named in three wire fraud counts, according to prosecutors.

Siforov’s attorney, Timothy Neumann, didn’t immediately return a call seeking comment.

The case is United States of America v. Weinstein, 10- mj-7115, U.S. District Court, District of New Jersey (Newark).

--Editors: Fred Strasser, Mary Romano

To contact the reporter on this story: David Voreacos in Newark, New Jersey at dvoreacos@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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