- June 25, 2013
- Posted by: John Fischer
- Category: Accredited Investors
Three New Jersey men were busted last month for selling fake Facebook shares. Prior to Facebook going public last year they had a limited private placement. Very few people were able to invest in this highly sought after PPM. Scammers jumped in with both feet and people started claiming they could arrange, and did invest in the private placement. One of them was former Oregon GOP Chairman Craig Berkman, who was arrested in March for securities fraud as investors were lured in with promises of Facebook stock.
The latest arrest were on the East Coast last month as Eliyahu Weinstein, Alex Schleider, and Aaron Muschel were charged with stealing $6.7 million from an investor after claiming special access to Facebook shares (prior to the public offering). This is not their first brush with the law. Weinstein had a 45 count indictment returned against him in 20011 for operating a Ponzi scheme from 2004 – 2011. That scheme cost investors approximately $200 million. U.S. Attorney Fishman said, “Shamelessly, Eliyahu Weinstein allegedly committed these crimes while under federal indictment for another investment scheme, even using stolen money to pay his legal fees. Today’s arrest should put an end to his brazen conduct.” Talk about embarrassing.
The plot thickens when you look at the entire picture. Weinstein was working with an overseas investor from New Zealand, using offshore bank accounts, and getting funds for a Brooklyn Synagogue that was paying the life insurance premiums for members that named them as the beneficiary. The complaint state that while there were no Facebook shares Weinstein used the funds to get his house out of foreclosure, pay his other legal fees, send his kids to religious school, help the synagogue, and invest in African gold.
His other scams have included a real estate scheme where he raised money for properties he never actually owned. That scam ranged from New Jersey, Florida, California and Israel. I guess the real question is what was this guy not into?
Weinstein faces 25 years in prison for the Ponzi scheme and now is facing another 30. The big warning to investors is that Weinstein is not the only scammer out there. When someone promises to deliver something no one else has access to you better do your research. After all why would some guy from New Jersey get access to pre IPO Facebook shares when Silicon Valley was foaming at the mouth to get in? If it looks too good to be true it probably is. In the meantime Weinstein has stolen hundreds of millions from unsuspecting investors.
