federal agents, accused of defrauding investors of tens of millions of dollars as part of a Ponzi scheme, according to sources.
Lakewood NJ developer Eliyahu Weinstein arrested in alleged Ponzi scheme
By ZACK PATBERG • and BILL BOWMAN • APP
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."
Update 3:00 pm CDT – Here's the entire criminal complaint as a PDF file:
Download Eliyahu Weinstein Indictment
[Hat Tips: Seymour, Burich, Anna, CS, EF, Dr. Rofeh-Filosof.]