Posted to Jewish News on
|

Ponzi Scheme Targeted Orthodox Jews

Eliyahu Weinstein is led away by investigators Aug. 12, 2010

The criminal complaint filed against Weinstein and a co-defendant, Vladimir Siforov of New York, alleges that Weinstein played off his connections to the Orthodox Jewish community, exploiting the community’s “social and business customs and practices,” in order to bilk numerous clients out of millions of dollars.

LAKEWOOD — Real estate developer Eliyahu Weinstein was arrested early this morning by federal agents, accused of defrauding investors of tens of millions of dollars as part of a Ponzi scheme, according to sources.

The raid on his home and business comes just days after he and some business associates were hit with a $34 million civil judgment.

Weinstein, 34, of Seton Circle, was taken from his home in handcuffs and is expected to appear today in U.S. District Court in Newark, according to sources.

About a dozen FBI and IRS agents also descended on a commercial building on Cross Street believed to be Weinstein’s place of business. They were later seen carrying items out of the building.

Weinstein has been charged in lawsuits with bilking investors on two continents out of nearly $300 million.

Just last week a U.S. District Court judge in Pennsylvania issued a $34 million judgment against Weinstein and some associates.

The schemes, the investors claim, involved a series of land deals, a charity for
children and religious organizations.

The criminal complaint filed against Weinstein and a co-defendant, Vladimir Siforov of New York, alleges that Weinstein played off his connections to the Orthodox Jewish community, exploiting the community’s “social and business customs and practices,” in order to bilk numerous clients out of millions of dollars.

Specific transactions mentioned in the complaint include a property on DeKalb Avenue in Brooklyn. Weinstein and a partner, identified only as M.G. in the complaint, bilked an unidentified victim out of $6 million with a phony purchase agreement.

According to the complaint, when that victim later confronted Weinstein about the purchase, Weinstein at one point said, “You’re right, we (expletive) you. Get over it. Don’t you wanna solve the problem?”

The complaint also stated that Weinstein used some of his victims’ money to buy a large collection of jewelry, art and Judaica, including a manuscripts and antiques worth more than $6 million. Weinstein also had a jewelry and clock collections worth $7.6 million and more jewelry and watches — from jewelers such as Breguet, Bulgari and Cartier — worth $6.2 million.

One investor likened Weinstein to the next Bernie Madoff. Others say in court
documents that Weinstein left them and their families broke. And one lawyer claimed in federal court that Weinstein funneled about $140 million to charities and unrelated corporations.

Weinstein has claimed in court papers that he lost the investors’ money when the real estate market tumbled.

Not so, say investors such as London, England-based Moshe Meisels. Meisels claims he lost tens of millions of dollars investing with Weinstein. In a March 15, 2008, telephone call to attorney Howard Kleinhendler — which Meisels recorded — the rabbi claimed he lost “everything” to Weinstein.

Investors said they gave Weinstein their millions over the past five years after he
promised to return huge profits to them through real estate sales. But the returns,
investors say, never came. Some investors sued, saying that Weinstein never bought the properties in the first place.

One of the plaintiff’s attorneys, Hackensack lawyer Ari Weisbrot, has claimed that
Weinstein used a network of 69 Jewish charities and several corporations to “filter”
at least $140 million, much of which found its way back to Weinstein, entities he
controls or his creditors, according to court papers.

For example, Weisbrot said, some of his client Wolinetz’s money was repaid via the Lakewood-based Kars 4 Kids charity.

‘While my client was bugging him to get his money back, he got a wire transfer one day from Kars 4 Kids for $320,000,“ Weisbrot said. ”That was very strange. Why are they giving $320,000 at the direction of Eli Weinstein, who should have no control over their bank accounts?“

Weisbrot said that there could be ”legitimate explanations“ for the transactions,
but, he said, ”in my opinion, the transfers seem to indicate a pattern of laundering
money.“

Ron Coleman, an attorney for JOY For Our Youth — which is affiliated with Kars 4 Kids — said the group did not know the money was sent to Wolinetz.

‘JOY For Our Youth gave a mortgage to a third party as part of a favorable and
legitimate opportunity meant to enhance its endowment,” Coleman said. ‘Unbeknownst to JOY, the borrower used those proceeds in connection with a transaction with Mr. Weinstein that had no relation to JOY or to the original investment.“

Coleman said the check to Wolinetz may have been made as one of many disbursements during the mortgage closing process.

The criminal complaint closes by saying that Weinstein maintained multiple passports. Weinstein, the complaint concludes, showed a passport to one of his ”victim-investors“ and said, ”if I want to run away, I can.”

28 Comments

  • 3. >>>>>>>>>>>>> wrote:

    I was robbed too by a member from our community. he is still at it and thinks he wont get caught one day.

  • 4. rally togeather wrote:

    We should rally togeather in unity and support Eli Weinstein just like we did for Rubashkin. Oy vey, we must be there for him in his time of need. All klal yisroel togeather.

  • 5. ohis vorrff wrote:

    mendy kats from alef has enough customers .. now another one ,, hashem yeracaim

  • 6. shocked wrote:

    another frum jew in the news for scamming and stealing. what a CHILLUL HASHEM.

  • 7. Nice one #2 wrote:

    I was thinking the same thing as you.

    Just to clarify, I do agree with standing up for SMR but we’ve got to stop this standing up for every criminal just because he wears a yarmulka in public!

  • 9. To #4 wrote:

    I’m afraid you’re not the only one around here – tragically, just because someone has a long beard, never misses minyan, or even gives a lot of tzedaka is no guarantee that he won’t harm you. As for “getting caught” we can be sure that HaShem sees EVERYTHING – I doven that these people should do tshuvah and return everything BEFORE they are taken away in handcuffs.

  • 10. John M wrote:

    Most money scandals are from the frum people. It is a big Chillul H-shem. He should rot in jail, I am sorry to say.

  • 11. To #4 wrote:

    Don’t you think you should warn other people about him so that they don’t get scammed just like you? Have you talked to Rabbis?

  • 12. Yossel wrote:

    To live a frum life u need a lot of money . It’s a lot of presure .I went to oheli Torah & know . With kids in yeshiva . I can t keep up . And my wife she needs money too. With no education . The only thing to do is hussel. U realy can’t blame eli wiensten . He just went to far . Like dweck and sheik and madofe. May g- d help them

  • 14. Pidyon Shovuyim. wrote:

    While we are raising funds for the defense of Ezaqui, let’s also have a committee to raise funds to defend Madoff and Eli Weinstein too.

  • 15. Frum but Simple wrote:

    To live a frum life, you do not need a lot of money. There is no commandment about yeshiva tuition, camp, materialism, etc.

    Humans created societal rules which created pressure to spend money on institutions and industries created by those rules.

  • 16. BF wrote:

    come on! lets cut the…there is no excuses for stealing money from our own. Hes obv. a sicko. My husband works longer hours now that the economy is stiffer but hes not stealing from his fellow jews to look rich. perhaps everyone should stop trying to look rich and drive fancy cars to show off when at home they are ripping there hair out cuz they cant make the payments .Be real to both yourself and your family and work hard and hashem will do the rest.

  • 17. mr. wrote:

    In the month of Ellul we have to be careful about judging people it is not right to steal but the same Torah that taught us that also said no loshe haroah. To wish another jew rots in jail is very dangerous because you don’t want to be put to a nisoyan that maybe you wont pass. I had $30,000.00 stolen from me by a Jew but i never hated him for it, i feel bad that he had the need to steal. Please lets not say things that we will have to answer for or chas veshalom be put to a test. May G-d grant everyone a kesiva vechasima Tova with all that you need for good for the upcoming year

  • 18. Troubled Sabre wrote:

    Just Awful behavior … they say the prayers but don’t follow them …

  • 19. Chana wrote:

    The goyim have a feast when this happens. What a shame it’s one of our own.

  • 21. A BIG QUESTION FOR #15 wrote:

    Unlimited chesed is NOT recommended by the Torah!! What do you mean that this thief had a “need” to steal ??? Do the Aseres HaDibros say “Oh – Don’t steal unless you NEED to”? And in our community B“H, there is enormous chesed for families in real need. So, no one is telling you to hate, but how do you know that the next person he stole from truly didn’t have any ”extra“ money to lose & may be suffering terribly until today ?? Trust me, these guys sleep just fine at night while the ”little guys” who lost everything toss and turn – But Hashem keeps the books, and what goes round comes round ( maybe even in THIS world !! )

  • 23. To #12 wrote:

    What on earth? Don’t tell me that all your years in the Rebbe’s moisad have taught you that it’s fine to steal because, nebbach, you didn’t have a (secular) education?

    What about those thousands of erliche ba’ale batim who are managing b’simcha even while financially stretched and don’t resort to your krumme ideas? Hustle? Maybe someeone should come along and arrest you before your sick attitude lands YOU in the newspapers?

    What do the thousands of shluchim tell their people when one of “us” becomes famous for all the wrong reasons and they rightfully ask questions?

    How much damage this does to the Rebbe’s work!!!

    Get off your rear end, stop wallowing in your own misery and poor-me attitude, stop blaming your parents who probably were moiser nefesh themselves by placing you in the Rebbe’s moisad, and get a life.

    Look around yourself. Look for a real dugma chaya who you can look up to rather than this lowlife whose yetzer hora has strangled him in all this shtus! Work hard, go see a careers counsellor, decide on a (KOSHER) profession, study a course in the evenings and start turning your life around before it’s too late.

    Teach yourself and your family that happiness doesn’t mean you have to have “lots of money”.

    Happiness is going to bed at night knowing you’ve done an honest day’s work and that your family, the Rebbe and the Aibershter can be proud of you.

  • 24. What #10 said about MOST is inaccurate wrote:

    TO #10:

    The ENRON and MADOFF scandals were not by frum people. And MOST money scandals are NOT from frum people, despite your irresponsible statement to the contrary!

    It is an horrific chillul hashem when something like this happens involving frum people.

    But please don’t make it worse by your false statement that, according to you (WRONG!), “Most money scandals are from the frum people.”

    But I do agree with you, that he should be punished to the fullest extent of the law, if the charges against him are found to be completely accurate.

    Words have power. Please be careful in the future. THANK YOU!

  • 25. Sickened wrote:

    Why are you all assuming what you have read is true?Did we not all learn that accusations are not always founded.

    Moshe Rabbenu understood when there was fighting amongst the yidden maybe they will never get out of Mitzrayim!

    Let us see each other in better light.

  • 26. criminal with a yarmulkah wrote:

    if it were a goy that stole from yidden, we would be in an uproar to punish him!!

  • 27. its just a shame... wrote:

    if the police are looking 4 a terrorist theyll look in gaza and if their looking 4 bank fraud theyll look in the frum orthodox communities its just a chillul hashem we all have to be responsible 4 ourselves remember THE MOST IMPORTANT THING IN BUSINESS IS HONESTY hashem already decided how much $ ull make

  • 28. Alex wrote:

    It is unfortunate that we still believe in and trust people purely because they display a beard or Yarmulka or even a broad smile. It is even more unfortunate that since such sentiments are innate in us, after all, we were brought up with such values, this perhaps innocent feeling is being abused again and again in a most brutal manner, be it abuse and exploitation of a financial or immoral manner.
    It is not true, as has been pointed out, that all swindlers are frum; it is the frum ones and to the larger audience in the outside non-Jewish world, the Jewish ones, that tend to make the headlines, precisely for the reasons described above.
    But, again already mentioned earlier, it is a fact of life that to be frum costs money, a lot of money, there is no point denying it. Unless you are prepared to eat treifa meat (or better still – no meat at all) patronise McDonalds, are prepared to send your son and daughter (presumably you are only having one or at the most one each + a dog) to public school, you can assume or at least hope to be reasonably OK.
    But if you don’t fit into the above stereotype, have more than 1.7 kids, supporting some or all of them and have no entrepreneurial or merchant skills, no rich parents to fall back on, apart from some notable exceptions, you will need to look for income. When the Madoffs or Weinsteins of the world then offer you returns, unbelievably good returns (that in itself should make a cool thinking man think twice) you go for it. Or you turn into a Madoff yourself.

    I am not that old (mid fifties) and have known, sometimes even personally, quite a few men from within our various frum communites, all of them, without exception, have given nicely to the various Tsedukes and Moisdois Hatoiro, have rubbed shoulders with Rebbes and R Hayeshivos etc., with hindsight probably all as a build up to their unsavoury “business”, an “investment” or advertisemtn so to say.

    We encourage Torah learning and discourage an honest pursuit of parnosse, but we shut our ears and eyes, in true ostrich mannerism, to the realities of the world. Whilst some genuinely deserve to be supported for the sake of Torah, many don’t, some don’t even fit into the parameters other than by name or background.

    There is a lot more to say than can be communicated here but these isolated (perhaps not all that isolated any more) headline grabbing cases are not actually the end results, they are merely symptoms of a latent illness of the – sometimes pretend – world we live in. It is our society, more precisely the “system” created by society, and the many demands, some or many even genuine, thereof that put pressure on us, ALL of us, and we need specialists to treat and rid the society of these symptoms before the spread of the illness gets uncontrollably out of hand. Any denying of these demands and societal forces is merely window dressing at its worst, a wishful thinking mentality and another carpet sweeping mentality (“vus vet yener sugen”) that plagues our very society just described.

    We need a lot of S”D (Tefilla) AND a cool head.

×

Comments are closed.