NJ man charged in $200M investment fraud

August 12, 2010 3:44:55 PM PDT
Federal prosecutors say a New Jersey man operated a real estate investment scheme that defrauded investors of at least $200 million.

Eliyahu Weinstein was arrested Thursday morning at his Lakewood home. He was scheduled to appear in Newark federal court later in the day.

Prosecutors say the 35-year-old Weinstein never owned many properties he claimed were his and sold his fake and real interests multiple times using forged deeds and other bogus documents.

"Based on the allegations in the criminal complaint ? lies, threats, deliberate misrepresentations, and even counterfeit checks, it is clear to us that the defendants in this matter exploited the close community ties of the Orthodox Jewish Community for one goal: to steal money through an elaborate real estate and Ponzi scheme," said Special Agent In Charge Michael B. Ward of the FBI's Newark division. "This investigation highlights the need for consumers to do their own homework before entering into any business arrangements and not simply take the word of the other partners. If something seems too good to be true, it almost always is. I want to thank the IRS and the office of the U.S. Attorney for their important roles in this investigation.

Weinstein has been charged with bank fraud and wire fraud.

As an example of Weinstein's scheme, Weinstein and another individual purported to enter into a contract to purchase 1209 DeKalb Avenue in Brooklyn, New York, through an LLC.

The LLC then sought a $6 million purchase money mortgage loan from a victim bank, conditioned on Weinstein and his partner paying approximately 25 percent of the purchase price in cash. To induce the victim bank to close on and fund this loan, Weinstein caused a fax to be sent to the bank's closing attorney, attaching copies of two fraudulent checks, purportedly written by a Weinstein entity, for approximately $2.1 million.

Also named in the federal complaint is Vladimir Sifovrov of Manalapan, who is charged with wire fraud. He remains at large.

It was not immediately known if Weinstein has retained an attorney.

If convicted of the wire fraud charge, Weinstein and Siforov each face a maximum potential penalty of 20 years in prison and a $250,000 fine. Weinstein also faces a maximum potential penalty of 30 years in prison and a $1 million fine on the bank fraud count with which he is charged.

(The Associated Press contributed to this report)