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A convicted Ponzi schemer, whose prison sentence President Donald J. Trump commuted in one of his last official White House acts, is facing new fraud federal charges of bilking investors in a series of phony deals.
The man, Eliyahu Weinstein, a former used car salesman from Lakewood, N.J., was serving a 24-year sentence in connection with two schemes, when Mr. Trump freed him from prison in January 2021. One involved defrauding members of his tight-knit Orthodox Jewish community out of more than $200 million.
On Wednesday, federal prosecutors in New Jersey charged Mr. Weinstein, 48, along with four other men, with defrauding at least 150 people out of $35 million. They are accused of luring people into supposedly lucrative investments in scarce Covid-19 supplies and baby formula and even in first-aid kits destined for war-torn Ukraine.
“These were brazen and sophisticated crimes that involved multiple conspirators and drew right from Weinstein’s playbook of fraud,” Philip R. Sellinger, the U.S. attorney for New Jersey, said at a news conference.
As The New York Times reported, Mr. Weinstein was one of many who received clemency from Mr. Trump by skipping the official process and relying on well-connected lobbyists and lawyers to obtain relief.
After Mr. Trump commuted his sentence, Mr. Weinstein pledged to turn over a new leaf in a video message to his supporters posted online by a local publication, The Lakewood Scoop.
“My goal is to make everybody proud of me and to live my life in the proper fashion,” he said.
On Wednesday, Mr. Weinstein and his fellow defendants were charged with wire fraud and conspiracy to obstruct justice. Mr. Weinstein was ordered detained after an initial appearance in federal court in Trenton, N.J., as was a co-defendant, Shlomo Erez, 55, an Israeli citizen.
A federal magistrate judge set bail at $500,000 for a third defendant, Aryeh L. Bromberg, 49, of Lakewood, N.J. Two other defendants, Joel L. Wittels, 57, of Lakewood, and Alaa M. Hattab, 34, of Ottawa, Canada, remained at large.
A lawyer for Mr. Weinstein, Eric M. Creizman, declined to comment. Ricardo Solano Jr., a lawyer for Mr. Bromberg, declined to comment. Information about lawyers for the other defendants was not immediately available.
Mr. Weinstein, Mr. Sellinger said, had “picked up right where he left off” after leaving prison, concocting a scheme to solicit investments through a company called Optimus Investments Inc., which he had operated with Mr. Bromberg and Mr. Wittels.
Acknowledging that investors would not give him “a penny” if they knew his true identity, according to what prosecutors said was a secretly recorded conversation, Mr. Weinstein ran Optimus using the pseudonym Mike Konig when dealing with lenders, potential investors and business partners.
“I finagled and Ponzied and lied to people to cover us,” Mr. Weinstein was also recorded as saying, according to the complaint.
Much of the money that flowed into Optimus came from a second company controlled by two unidentified co-conspirators, Tryon Management Group LLC, according to a criminal complaint.
Tryon promised its investors supposedly lucrative opportunities to invest in the bogus deals, and it funneled the money they collected to Mr. Weinstein through Optimus, the complaint says.
By February 2022, according to the complaint, Tryon could not pay its investors. Mr. Weinstein agreed with its owners to pool money from both firms’ existing investors to pay other investors in a Ponzi-like fashion, the complaint says.
Six months later, the complaint says, Mr. Weinstein revealed his true identity to the Tryon owners in a secretly recorded meeting. At a second meeting, the complaint says, he acknowledged that he had misappropriated Tryon investor money and had made false statements about the Optimus deals.
The prison sentence that Mr. Trump commuted was in connection to two schemes to which Mr. Weinstein had pleaded guilty. In the first, he admitted to defrauding investors out of $200 million by luring them into fake real estate investments and land deals.
The second scheme, which he hatched while awaiting trial on the first, involved what he claimed was access to Facebook shares around the time of the company’s initial public offering.
In announcing the commutation of Mr. Weinstein’s sentence, White House officials said the move was supported by, among others, Representative Jeff Van Drew, Republican of New Jersey, and the lawyer Alan Dershowitz.
A spokeswoman for Mr. Van Drew did not respond to a request for comment on Wednesday. Contacted by email, Mr. Dershowitz played down his role in winning Mr. Weinstein’s release.
“I had little or nothing to do with him personally,” Mr. Dershowitz said. “I gave legal advice to an organization that was advocating shortening sentences. If he’s found guilty a second time, he will get no mercy.”
Barry Wachsler, who had helped finance Mr. Weinstein’s court appeals and clemency push, continued to support him on Wednesday, saying in an interview that he had spoken to Mr. Weinstein and that his friend was in “total disbelief” about the new charges.
Mr. Wachsler asserted that they stemmed from prosecutors’ bitterness over the commutation of Mr. Weinstein’s sentence and that Mr. Weinstein’s activities since leaving prison were legal.
“They were out to get him, and they were looking for every possibility, and they got it,” Mr. Wachsler said. “They wanted to teach him a lesson — whether it be hating the fact that Trump commuted his sentence, whatever it may be.”
Kenneth P. Vogel contributed reporting.
Posted on 20 Jul 2023 05:06 link