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Feds: $200M mortgage fraud took fellow Orthodox

Photo Credit: Cliffview Pilot

YOU READ IT HERE FIRST: One man was arrested and another sought in connection with a $200 million investment fraud scheme that U.S. Attorney Paul Fishman called “especially galling” because it preyed on fellow members of the Orthodox community.

Federal authorities also asked that anyone who may have been victimized in the alleged scheme to contact them — not only to help strengthen the government’s case but to help them recover their losses.

Federal agents arrested 35-year-old Elijah “Eli” Weinstein at his Lakewood home this morning and were still looking for Vladimir Siforov, 43, of Manalapan, as of 2 this afternoon.

Beginning nearly five years ago, Weinstein, Siforov and others targeted fellow members of the Orthodox Jewish community in New Jersey, New York, Florida, California and abroad “using the social and business customs and practices of the community,” said U.S. Attorney Paul Fishman.

They then sold real or fake interests in a single property to several different buyers; used co-conspirators to act as buyers; and altered checks for small amounts to look like they were worth millions, federal authorities said.

Weinstein also “drew up fraudulent leases to make it seem that a property had substantial rental income, when in fact there was no tenant and no income, and hid material information from his victims – such as profound zoning changes that would dramatically reduce the value of certain
Properties,” New Jersey’s top federal prosecutor said.

Weinstein used some of the investment money to amass what Fishman said was “a substantial collection of art, jewelry and Judaica.”

The collection included:

  • $6.2 million worth of manuscripts and antique Judaica;
  • $7.6 million in clocks and jewelry;
  • $6.2 million worth of watches and jewelry from, among others, Breguet, Bulgari, Cartier, Omega, Patek Phillippe and Harry Winston.

If you believe you are a victim of or otherwise have information concerning this alleged scheme, the FBI urges you to call 973.792.3000

American Express records show that from Christmas Eve 2004 right up to this week, Weinstein charged an additional $1.7 million in transactions with jewelers, art dealers and Judaica dealers, federal authorities said. The goods have been stored in New Jersey, Florida, Israel and elsewhere, he said.

“It is always offensive when someone steals from others to finance his own luxurious lifestyle,” Fishman said, “but it is especially galling to exploit a community with whom one shares an inherent trust.”

“At its most basic level, this is a case about greed and the abuse of trust,” said Michael B. Ward, who heads the state’s FBI office. “The subjects in this case
did not utilize overly sophisticated fraud schemes, but rather took advantage of trusted relationships to persuade victims to invest in their staged real estate ventures, which were often supported by false and forged documents.”

Ward said the case underscores the need for people “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.”

As one example, authorities sited a Brooklyn property targeted by Weinstein, who they said created an LLC that applied for, and received, a $6 million loan based on faxed copies of $2.1 million in bogus checks intended to represent him and an unnamed partner putting up a quarter of the purchase price.

Weinstein also approached an investor in the United Kingdom, claiming that “Siforov, Inc.,” headed by Siforov, was ready to buy the Brooklyn property for $16.2 million, federal authorities said. As proof, Weinstein had a bogus “Share Sale Agreement” sent to the victim that claimed Siforov Inc would put $1 million down on the home, they said.

Siforov then got the investor on the phone, pretending to be the buyer, and the victim, in turn, wired roughly $4.8 million to an account controlled by Weinstein, a complaint alleges.

To make it look on the up-and-up, authorities said, Weinstein had nearly $1 million moved from one account to the other — then, a few days later, directed his attorney to withdraw it and make the proceeds “payable to the discretion of Eli Weinstein.”

As if that weren’t harsh enough, Weinstein faked a closing on the house, sending a copy of a bogus $9.9 million check, federal investigators said. The victim then sent him $1.7 million more, they said.

The actual check “was doctored was for a different amount, issued on a different date, and payable to a different person,” Fishman said.

The U.S. Attorney praised Wards’s investigators in leading the investigation, as well as agents of the Internal Revenue Service’s Criminal Investigation unit “for their important contributions to the investigation.”

Handling the case for the government are Assistant U.S. Attorneys Mark E. Coyne and Zach Intrater of the Fisman’s Economic Crimes Unit.

The case represents one of the biggest brought under a new federal financial fraud initiative, established by President Obama, to wage what Fishman called “an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes.”

A special task force “is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes,” Fishman said.

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