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

By   /   March 11, 2014  /   No Comments

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Eli Weinstein also transferred the same property to several “investors” without their knowledge. When the investors would discover the multiple ownership, Weinstein would assume they didn’t have the time nor resources to get tied up in litigation. He would just blow them off.

Weinstein was able to fool his victims by drawing up fraudulent documents, including fake rental leases, operating agreements, and legal contracts. In a real estate transaction for a rental property, for example, Weinstein might show a prospective buyer lease documents showing substantial rental income, when the fact was that no tenants occupied the building.

As a practice, Weinstein would often fail to disclose important information about the transaction, such as changing zoning regulations that would substantially de-value the property. By the time the discovery was made, Eli had the investor’s money and he was not giving it back.

Weinstein sometimes told victims that their money would be held in an escrow account until the closing of a supposed real estate transaction. But Weinstein would be working with the escrow attorney, and the funds would be controlled, and released, by Weinstein, with the “investor” again losing his money.

One of Weinstein’s most reliable ruses was his use of “show checks.” In order to demonstrate to potential victims he had a vested interest in the transaction, Weinstein would have a check drawn from one of his accounts and show it to the victim. Weinstein never deposited the check.

Weinstein also used forged checks, previous versions of which had been negotiated for small amounts, but which Weinstein altered to appear worth millions of dollars.

Another way Weinstein kept his scams going was by making small ‘lulling payments’ to his victims. This is classic Ponzi strategy, where the scam artist, Weinstein, will accept substantial funds for an investment with a high promised interest rate. After receiving the funds, Weinstein would then send a token amount back to the investor as “interest” in his investment. The funds, of course, were never invested in what the investor thought, and the payment was from another victim.

Weinstein faked mortgages and deeds that he claimed served as “collateral” for victims. They were worthless, however, because Weinstein either did not own any interests in the properties, or because because he had already “sold” the interests in the properties to other “investors.”

Weinstein often used the forged documents of a sale to induce his victims to “rollover” their investments into a new scheme. The phony paperwork would show a profit on the “flip,” and the investor naturally wanted to keep it going with Eli’s next “deal.”

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