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It took a thief: Eliyahu Weinstein Sentenced to 22 years for $200 million fraud of fellow Orthodox Jews

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Associates

The schemes of Eli Weinstein needed able assistants. One of Weinstein’s most common methods of stealing money was to have a third-party “buyer” supposedly lined up to acquire the ‘flipped’ property. The presence of a ready purchaser was strong inducement for the investor/victim to act quickly on Eli’s great deal.

Vladimir Siforov, a shady Russian national, helped Weinstein on several scams. Siforov, a resident of Manalapan, New Jersey, was well compensated for his acting. In the FBI indictment of Weinstein, it was revealed that Siforov charged more than $350,000 on Weinstein’s American Express account in 2006 alone. Among other things, Siforov claimed to own a trucking business in New York.

Weinstein had another accomplice, unknown except for his designation in the FBI indictment as “A.Y.P.”

[Writer’s note: the accomplices described below were sourced in the FBI indictment of Weinstein from August, 2010. Their names are not revealed there, so this book will use the indictment’s initials for their identities. Siforov, a defendant in the indictment, was the only named accomplice.]

“A.Y.P.” was a Haredi resident of Lakewood, who was a signatory for bank accounts held in the name two of Weinstein’s shell Limited Liability Companies (LLCs), and two of Weinstein’s “charitable” organizations. At various times, A.Y.P. allowed Weinstein to use the bank accounts associated with these organizations. As the nominal head of the charitable organizations, Weinstein used A.Y.P as a recruiter for investor/victims.
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A key Weinstein accomplice was“B.H.,” an attorney based in New York City. B.H. represented Weinstein and several of Weinstein entities in purported real estate transactions. B.H. created legal documents which facilitated Weinstein’s fraudulent transactions. In several cases, B.H. allowed Weinstein access to B.H.’s attorney escrow accounts, where trusting investors’ money sat.

“R.N.,” a Haredi from New Jersey, was the principal of Watch Hill, another of Weinstein’s shell LLCs. R.N. was the signatory for Watch Hill bank accounts. Like A.Y.P., R.N. solicited victim/investors for Weinstein. He also freely permitted Weinstein unchecked access to the Watch Hill bank accounts.
Targets

Eli Weinstein went after the big Kosher fish.

Although he lowered himself at times, and stole money in the mid-six figures, Eli Weinstein racked up most of his ill-gotten $200 million with a few huge heists. One investor, Wolinetz, mentioned earlier in connection with one of Weinstein’s phony “charities,” filed suit in 2009, claiming to have been bilked out of nearly $80 million.

In one particularly bold scam, Weinstein showed the deviousness and chutzpah of a true criminal. In this case, Weinstein “sold” the same property he never actually owned, twice; once to a bank, then to an unsuspecting Orthodox British investor. He made tens of millions from the robberies.

As outlined in the FBI indictment, in September of 2005, Weinstein and an accomplice, M.G., discussed with the owners of 1209 DeKalb Avenue in the Bushwick section of Brooklyn, purchasing the property.

On February 1st, 2006, Weinstein and M.G. formed an LLC called Bushwick Enterprise Group (BEG).

The next day, February 2nd, 2006, Weinstein and M.G drafted an Operating Agreement for BEG, that specified that BEG’s “registered agent shall be Eli Weinstein.”

Weinstein, then representing BEG, sought a $6 million purchase money mortgage loan from a Chicago bank. The bank agreed to the loan, but made it conditional on Weinstein and his partner paying approximately 25 percent – about $2 million — of the purchase price in cash.

The Chicago bank also insisted that there be no other mortgages on 1209 DeKalb other than the bank’s.

Unknown to the bank, according to the FBI indictment, was that Weinstein had made a separate deal with the sellers of 1209 DeKalb to provide BEG with a second mortgage of $2 million to cover the bank’s cash equity requirement.

Weinstein then faxed a copy of two fraudulent BEG checks totaling $2.1 from Brooklyn to the bank’s closing attorney on Long Island.

In March of 2006, the 1209 DeKalb deal closed, and, based on the fraudulent representations made by Weinstein, the Chicago bank released the $6 million to BEG.

By October, 2007, Weinstein had stopped making timely mortgage payments on the Chicago bank loan. The bank had also discovered the second mortgage on the 1209 DeKalb property.

On January 24th, 2008, Weinstein was called to a meeting in New York City with representatives from the bank to discuss the loan.

During the meeting, according to the FBI indictment, Weinstein admitted that he did not abide by the requirement that he invest his own money into the transaction.

When the bank representative reminded Weinstein that the money was required to have come from Weinstein personally, Weinstein said: “You’re right, we f – – -ed you. Get over it. Don’t you wanna solve the problem?”
Another multimillion-dollar fish ensnared in Weinstein’s net was a wealthy British Orthodox Jewish investor named Berish Berger.

Berger, who alleged in a civil lawsuit against Weinstein that he was defrauded out of more than $30 million, said that Weinstein specifically targeted him “as a wealthy member of the Orthodox community.”

In May of 2007, after the 1209 DeKalb deal closed (and before it was foreclosed), Weinstein contacted the London-based Berger and offered to sell him 80 percent of BEG’s shares in the DeKalb property for a price of $4.8 million.

To induce Berger to “invest,” Weinstein represented to Berger that BEG owned 1209 DeKalb outright, and that a qualified buyer, named “Siforov, Inc.,” was lined up to buy the property for $16.2 million.

Weinstein then sent a “Share Sale Agreement” to Berger in England. The agreement detailed the terms of the “sale” of 1209 DeKalb to “Siforov, Inc.”

The Share Sale Agreement was a fraudulent document. It asserted that Weinstein and M.G. owned all BEG shares and that they had agreed to “sell” their shares to “Siforov, Inc.” for $16.2 million.

Weinstein’s fake Share Sale Agreement with Berger also claimed that Siforov, Inc. was represented by attorney B.H., who, it was not disclosed, was another Weinstein accomplice.

In June 2007, to further the Berger fraud, Weinstein directed another accomplice to transfer $1 million through a bank account Weinstein controlled, and into a trust account of attorney B.H.

A few days after the $1 million transfer into the account of attorney B.H., according to the FBI indictment, Weinstein and Siforov directed B.H. – in writing – to withdraw the money from the attorney and make the proceeds “payable to the discretion of Eli Weinstein.”

After receiving the Share Sale Agreement, Berger spoke on the telephone with Siforov, who was in New York City. During the conversation, Siforov pretended to Berger he was the buyer for the 1209 DeKalb property.

Convinced that Weinstein and the deal he was brokering were legitimate, Berish Berger wired $4.8 million from one of his bank accounts in Europe to a bank account controlled by Eli Weinstein in New Jersey. In return, Berger got 80% of the shares of a worthless sham company, BEG, which had just defrauded a bank out of millions of dollars.

But Eli Weinstein wasn’t finishing bilking Berish Berger.

In October of 2007, to persuade Berger to invest more money, Weinstein represented that the transaction with “Siforov, Inc.” had closed. To “prove” the deal went through, Weinstein faxed a copy of a $9.9 million cashier’s check to Berger in England.

Berger bit, again, and wired Weinstein another $1.7 million for another ‘rollover’ investment.

The FBI indictment revealed that the actual cashier’s check was for a different amount, issued on a different date, and payable to a different person. Weinstein had altered virtually everything on the check before copying it and faxing it to Berger.

The entire transaction with 1209 DeKalb, start to finish, was a sham engineered by Weinstein. In eighteen months, Weinstein stole more than $13 million from two parties, including a bank.

The FBI indictment of Weinstein from 2010 is a fascinating look at an extremely energetic, and apparently conscience-less criminal in action.

In yet another affinity fraud perpetrated by Weinstein, in late 2009, Weinstein targeted a Jewish female widowed retiree in Los Angeles, California.

After a series of lies concerning Weinstein’s phony real estate transactions, Weinstein persuaded the widow to wire him approximately $2,000,000 (two million). Weinstein promised an 18 percent return within 90 days. The widow said she was going to use the profits to fund a music school for orphans in Israel.

After more than a year of not having her principal returned, and after only a few token interest payments, the widow pressed Weinstein for the return of her money.

“Stop screwing around,” wrote the widow in an email. “Send the money!!!”

Weinstein’s response to the Jewish widow who gave him $2 million?

“F—k you.”

As seen in the case of the bank he defrauded, and above with the widow, Weinstein’s attitude toward those he cheated can only be described as utter contempt.

According to the court documents of still another ripped off investor, the disgruntled investor showed up at Weinstein’s door in Lakewood to inquire about his lost investment. When Weinstein came outside he asked the investor what the investor’s wife and he – Weinstein — “have in common.”

“I don’t know,” the victim replied.

“We both f – – ked you,” scoffed the ganav, the thief, Eli Weinstein.
Eli Weinstein exploited family and friendship connections in some of his schemes. One small group which lost millions, according to the FBI indictment, was a group of six people, three from the Chicago area, and three from Long Island. The group, all Jewish, and which included a financial investor, had known each other since childhood.

From May until August of 2010, this group wired more than $7 million to two LLC’s controlled by Eli Weinstein. They got virtually none of it back, only a few hundred thousand dollars in ‘lulling payments,’ money designed to keep them quiet.
The End of Eli Weinstein
On August 12, 2010, the FBI came knocking on Eli Weinstein’s door.

A small brigade of FBI agents arrested the 35 year-old scam artist at his 596 Seton Circle home, leading Weinstein away in handcuffs in front of his wife and children.

FBI and IRS agents also raided Wweinstein’s business address on Cross Street in Lakewood.

Days earlier Weinstein had been levied a $34 million civil judgment in connection with the DeKalb fraud scheme.

When Weinstein appeared later before U.S. Magistrate Judge Esther Salas in Newark, the former rabbinical student sat with his hands cuffed as federal prosecutors read the FBI complaint, charging him with bank and wire fraud.

The judge ordered him held without bail.

Weinstein’s accused partner, Vladimir Siforov, was at large.

“One of the hallmarks of this particular fraud was the extent to which the individual took advantage of the trust he enjoyed in his own community,” said U.S. Attorney Paul Fishman after Weinstein’s arrest.

The FBI’s lead investigator also commented after Weinstein was jailed:

“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 Michael B. Ward of the FBI’s Newark division.

The FBI indictment revealed several things about Weinstein’s schemes. One was that the feds put a monetary value on Weinstein’s thefts: $200 million.

Weinstein’s holding were also listed in the indictment, including the assets of eight bank accounts. The accounts, which were controlled by Weinstein’s shell LLCs, had funds on deposit ranging from $822,091.76 to just $228.79 and $11.72.

The indictment also showed that Weinstein spent part of his investor/victims’ money on luxuries, which included $7 million on jewelry and designer (Bulgari, Cartier) watches, and a $6 million collection of Judaica, fine Jewish ceremonial art.

“It is always offensive when someone steals from others to finance his own luxurious lifestyle, but it is especially galling to exploit a community with whom one shares an inherent trust,” remarked U.S. Attorney Fishman, about the luxury items.

Eli Weinstein was held at the Hudson County Correctional Center in Kearny, New Jersey, for the first couple of weeks after his arrest.

On August 27th, a bail hearing was held. U.S. District Judge Mark Falk presided

About half of the public seating area in the courtroom was taken up by Weinstein’s family and supporters.

The prosecution, Assistant U.S. Attorney Zach Intrater, argued that Weinstein, who traveled frequently to Israel and had a valid passport, was a flight risk.

“He will be gone if he gets out,” Intrater said.

Intrater also argued against allowing Weinstein to be released to his wife, Rivka, Prosecutor Intrater reminded the Judge that as FBI agents were raiding Weinstein’s Lakewood house that Rivka attempted to “smuggle” some jewelry out of the house in her housekeeper’s underwear.

“This is who he’d be living with,” Intrater said.

Weinstein’s attorney, Ephraim Savitt, used the prosecution’s argument to petition for Weinstein’s release on bail. Savitt said that Weinstein, who plead not guilty, was aware that he was under investigation for years, yet he traveled abroad and always returned to the United States.

Eli Weinstein was released from a Hudson County jail on August 27th. He was released on $10 million bail and given a list of restrictions.

The $10 million bond was secured by liens on property owned by Weinstein’s parents, sister, brother-in-law and two local Haredi businessmen who, claimed attorney Savitt, Weinstein had never met.

The bail restrictions included:
– 24-hour house arrest,
– GPS monitoring with exclusionary zones — no airports —
– Forfeiture of passports belonging to Weinstein, his wife and children.
– Travel is limited to New Jersey,
– Only allowed to leave his house to meet with his attorney, medical visits and religious observances.
– Any financial transactions more than $1,000 must be approved by a special counsel.

Judge Falk noted that Weinstein’s bail package was similar to Bernard Madoff’s before his sentence of 150 years.

On October 27th , 2011, fourteen months after being released on bail, Eli Weinstein was formally indicted on 45 counts of fraud, money laundering, and conspiracy to commit wire fraud.

The charges were: 29 counts of wire fraud, 12 counts of money laundering, two counts of wire fraud while out on bail, and one count each of bank fraud and conspiracy to commit wire fraud.

Despite the additional charges committed while on bail, Weinstein was still not jailed, and remained under house arrest with Rivka and the kids.

On January 12th, 2012, Eli Weinstein’s trial date was set. Judge Joel A. Pisano set a date of January 7th, 2013, with pre-trial motions due in mid-August, and a pre-trial hearing set for October 29th, 2012.

The trial was scheduled nearly two-and a half years after Eli Weinstein was arrested in August of 2010. He had spent barely two weeks in jail during that time.

And to make it easier on Weinstein, Judge Pisano, during the one-hour hearing, also relaxed the 36 year-old Weinstein’s house arrest terms. Weinstein was now allowed to leave his home between the hours of 7 a.m. and 8 p.m.. He still had to wear the monitoring bracelet.

Within weeks of having his federal criminal trial date set, believe it or not, Eli Weinstein hatched another fraud scheme.

The financial markets were in a frenzy over the impending Facebook public offering in early 2012.
Weinstein claimed he had access to large blocks of hard-to-get Facebook stock shares.

Weinstein found a rich investor/victim in New Zealand and persuaded the investor to send Weinstein and two accomplices nearly $7.2 million in wire transfers in February and March 2012.

That is what Eli Weinstein did while awaiting trial on federal charges that could imprison him for the rest of his life.
On January 4th, 2013, three days before his trial was scheduled to begin, Eliyahu Weinstien pleaded guilty to wire fraud conspiracy and money laundering charges.

Weinstein, 37, and his attorneys reached a plea agreement with the U.S. Attorney’s Office. Weinstein now faced up to 25 years in prison.

“Weinstein shamelessly exploited investors’ trust, using doctored documents for properties he didn’t own and continued to commit crimes while out on bail,” U.S. Attorney Paul J. Fishman said after Weinstein’s plea. “With false promises of sound investments and charitable donations, he stole $200 million, spending freely on fancy cars, jewelry and gambling trips.”

Weinstein pleaded guilty to two counts of a revised 37-count indictment. Judge Pisano scheduled sentencing for April 2nd, 2013.

FBI Acting Special Agent in Charge David Velazquez said after Weinstein’s guilty plea: “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.”

Still, Eli Weinstein was not put in prison. He was allowed to remain free until his scheduled sentencing.

After Weinstein pleaded guilty to wire fraud conspiracy and money laundering, the New Zealand investor — seeking his money from the Facebook investment — flew to New Jersey in February to confront Weinstein.

The investor arranged a meeting with Weinstein at New Jersey Marriott hotel. The meeting was secretly recorded by the investor’s son.

“You’ve got to trust me,” Weinstein is heard on tape. “It’s going to be hard for you because I’m the bad guy. I’m the thief.”

It was the last con that got Eli Weinstein jailed for good.

On May 14th , 2013, Weinstein was arrested, along with his two partners, for stealing the $7 million from the New Zealand “investor.

His partners bail was set at $1 million. Weinstein is being held without bail.

Eli Weinstein was already facing 25 years in prison under the terms of his plea in the federal case. He now faces another 30 years for the fraud in this one.
Afterword: Eli Weinstein

As of this writing, in the late spring of 2013, Eli Weinstein has spent a total of less than one month in jail since being charged by the FBI in August, 2010.

Even after he was charged, indicted, and plead guilty, Eli Weinstein continued to steal money from those who still, inexplicably, trusted him.

As is always the case with massive religious affinity fraud, the biggest casualty is not the money, as damaging as the loss of millions of dollars is to many. No, the worse part is the faith that is broken. The greatest loss is the betrayal by one to whom one was bound by shared belief, a connection of the heart with the same God.

In the case of the awful frauds of Eli Weinstein, he used the codes and symbols and trappings of the Orthodox Jewish Community to rip off his own people. Weinstein proved that, without a conscience, one could steal hundreds of millions of dollars on the trust that comes from sharing a religious belief system.

Now, the family of Eli Weinstein, his parents, his wife, his fatherless children, and his people, the distinguished Haredim, must live with the shanda, the shame, that Eliyahu Weinstein’s brought to them with his selfish and greedy acts.

Predictably, there hasn’t been much public comment from the Haredi people regarding the Eli Weinstein story.

But a few frum Haredim have logged onto Haredi chatrooms, and have commented on the stories.

One, “Shredready,” wrote:

“It seems the anger towards Weinstein is that he stole from yidden, not the fact that he is a ganov. If the victims would be non-Jews, the comments would be much different. I understand there is more anger when something happens to you, your relative, and so on.
That is very sad.
P.S. this is not unique. most scams that people perpetrate are almost always against their own. Mainly for two reasons, access and trust.”

Another, “Shamai,” on a site called dasTorah.com, wrote after Weinstein’s guilty plea:

“In the words of a prominent member of the Orthodox Jewish community, no single ostensibly frum individual has caused as much pain and suffering on the Jewish people since Shabbetai Tzvi – maybe even earlier. Eli Weinstein was a terrible and evil human being since he was a young child. He has stolen money, lived with prostitutes and maligned innocent people since I knew him at the age of eight. It is terrible that he can only get up to twenty five years. He will always hurt people; that’s just who he is.”

 

 

 

 

 

 

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