Eliyahu Weinstein, 38, was arraigned alongside Alex Schleider, 48, also of Lakewood, and Aaron Glucksman, 41, of Brooklyn, N.Y., on charges relating to an alleged scheme to defraud victims regarding purported investments in Facebook stock and Florida real estate, U.S. Attorney Paul J. Fishman announced.Eliyahu Weinstein, 38, was arraigned alongside Alex Schleider, 48, also of Lakewood, and Aaron Glucksman, 41, of Brooklyn, N.Y., on charges relating to an alleged scheme to defraud victims regarding purported investments in Facebook stock and Florida real estate, U.S. Attorney Paul J. Fishman announced.
Weinstein was arraigned before U.S. District Judge Joel A. Pisano, in Trenton federal court on an indictment returned April 17, by a federal grand jury sitting in Newark and entered a plea of not guilty. The indictment charged Weinstein with defrauding victims through three investment schemes: pre-IPO shares of Facebook stock; the purchase of an apartment complex in Florida; and the purchase of the mortgage notes on seven Florida condominiums.
Weinstein, Schleider, and a third defendant, Aaron Muschel, 64, were originally charged by criminal complaint with the Facebook fraud in May 2013.
According to court documents, in February of 2012, Weinstein and his fellow conspirators allegedly offered a pair of investors the opportunity to purchase large blocks of Facebook shares prior to the company’s initial public offering, or IPO, in May 2012. The offer was particularly attractive because large blocks of the shares were extremely difficult to get, and they were expected to increase in value at the time of the IPO.
Weinstein and his conspirators, in reality, did not actually have access to the shares, the criminal complaint says.
The scheme led to millions of dollars allegedly being wired to the group in exchange for the phony shares of stock. The conspirators did not use any of the Facebook victims’ money to purchase Facebook shares, instead misappropriating it for their own use and benefit by moving it through various accounts. Weinstein used some of the money to pay lawyers and experts representing him in his earlier – and at that time, still pending – criminal case and in related civil matters as well as to make loans.
Around the same time, Weinstein and his conspirators also persuaded the Facebook victims to invest in the purported purchase of an apartment complex, “Belle Glade Gardens,” in Florida. They falsely told the Facebook victims that Weinstein had the opportunity to purchase Belle Glade Gardens at a discounted price and immediately flip it at a substantial profit, it is alleged.
Weinstein and his conspirators further are accused of telling the Facebook victims that Weinstein had already placed $2.5 million in the trust account of a Miami law firm for the transaction; that if the Facebook victims contributed another $2.5 million toward the transaction, those funds would remain in escrow at the Miami law firm until the deal closed; and that the Facebook victims would be repaid within 60 days. In reliance on these representations, the Facebook victims wired 2 approximately $2.83 million to the Miami law firm in order to complete the Belle Glades Gardens transaction. Weinstein and his conspirators, however, did not use the money to purchase Belle Glades Gardens. Instead, they allegedly redirected the money from the law firm to accounts that they controlled, returned $1.8 million to the Facebook victims as a purported return on their Facebook investment, and used the remaining money for their own purposes.
In July 2012, Weinstein allegedly approached another group of investor victims (referred to in the indictment as the “Florida condominium victims”) and told them that he had the opportunity to purchase the notes on seven condominiums in Florida at a discounted price of $3 million. Weinstein and his conspirators falsely represented that they had already paid $1.5 million toward the deal, and that they needed only $1.5 million to complete the transaction. They claimed that the properties had an annual rental income of approximately $780,000, and provided to the Florida condominium victims fraudulent documentation purporting to verify this fact. The Florida condominium victims transferred approximately $1.5 million to Weinstein and his conspirators between August 2012 and December 2012. Weinstein did not use this money to purchase the notes on the Florida condominiums – many of which he himself had previously owned and lost to foreclosure. Instead, Weinstein and his conspirators converted the money to their own use and benefit.
Throughout the scheme, Weinstein was already under indictment and on pretrial release, and was prohibited from engaging in any monetary transaction for more than $1,000 without the approval of court-appointed special counsel. Weinstein pleaded guilty on Jan. 3, 2013, before U.S. District Judge Joel A. Pisano in Trenton, N.J., to two counts of that indictment, admitting he ran a Ponzi-style real estate investment fraud scheme that caused $200 million in losses and then laundered the proceeds of the scheme. Judge Pisano sentenced Weinstein on Feb. 25, 2014, to 264 months in prison and ordered him to pay more than $200 million in restitution and forfeiture to the victims of his scheme.
The conspiracy count with which Weinstein is charged carries a maximum potential penalty of 20 years in prison; the wire fraud counts carry a maximum potential penalty of 30 years in prison (20 years on the wire fraud plus 10 years for commission while on pretrial release); and the transacting in criminal proceeds counts carry a maximum potential penalty of 10 years in prison. All the counts are also punishable by a $250,000 fine.
Charges against Muschel, who was charged in the criminal complaint filed against Weinstein and Schleider in May 2013, remain pending.Glucksman pleaded guilty today before Judge Pisano to an information charging him with one count of conspiracy to commit wire fraud and one count of transacting in criminal proceeds. He was sentenced to 52 months in prison and ordered to pay $612,300 in restitution to the victims of the scheme..
Schleider also pleaded guilty today to an information charging him with one count of wire fraud and is scheduled to be sentenced in September.