SEC Charges Additional Defendant in $38 Million Ponzi-Like Scheme to Defraud Investors
The U.S. Securities and Exchange Commission filed an amended complaint adding Shlomo Erez, a citizen of Israel, as a defendant in its previously filed action reported on by The DI Wire in July 2023, which alleges a multimillion-dollar Ponzi-like fraud scheme orchestrated by “criminal recidivist” Eliyahu Weinstein of Lakewood, N.J.
The defendants – Aryeh L. Bromberg, Joel L. Wittels, Richard M. Curry, Christopher J. Anderson, and Alaa Mohamed Hattab and now, Erez – allegedly raised money from investors to fund purported deals through Optimus Investments Inc. to purchase, distribute, and sell in-demand healthcare products.
According to the original complaint, by at least April 2022, when some of the purported Optimus deals proved to be unprofitable, Weinstein, Bromberg, Wittels, Curry, and Anderson allegedly undertook a fraudulent scheme to use funds raised from investors to make Ponzi-like payments to earlier investors while mischaracterizing them as investment returns. The SEC alleges that, collectively, the defendants’ fraudulent scheme raised at least $38 million from at least 150 investors.
According to the SEC’s amended complaint, filed in the U.S. District Court for the District of New Jersey, Erez aided and abetted the fraudulent scheme-orchestrated by Weinstein and other co-defendants-by diverting investor funds for Weinstein’s benefit, providing false assurances to existing investors to assuage their concerns, and assisting the other defendants in concealing Weinstein’s identity from investors.
“Over and over, the defendants took money from unsuspecting investors for fake deals and shuffled funds around to pay out earlier investors to give the false impression that they were receiving real profits from those deals, sometimes even concealing Weinstein’s criminal history and involvement in the deals,” said Antonia M. Apps, director of the SEC’s New York Regional Office, at the time of the SEC’s initial complaint.
The SEC’s amended complaint charges defendants Weinstein, Bromberg, Wittels, Curry, and Anderson with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and charges Erez and Alaa Mohamed Hattab with aiding and abetting these violations.
Weinstein is a twice-convicted felon. In 2013, he pleaded guilty to wire fraud and money laundering in a real estate Ponzi scheme that caused $200 million in losses and then pleaded guilty again in 2014 to fraud, conspiracy, and money laundering charges in connection with a $6.7 million fraudulent securities offering. In 2014, Weinstein was sentenced to 24 years in prison in connection with both schemes.
On Jan. 20, 2021, then-President Donald J. Trump commuted Weinstein’s sentence to time served.
The SEC seeks against all defendants permanent injunctive relief, disgorgement and prejudgment interest, civil penalties, officer-and director-bars, and conduct-based injunctions.
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