TRENTON — Convicted Ponzi schemer Eliyahu Weinstein pleaded guilty today to fleecing investors out of millions by convincing them he had the inside track on Facebook shares ahead of the company's 2012 initial public offering.
Weinstein, already serving a 22-year prison stretch for masterminding one of the state’s largest-ever investment frauds, now faces another 30-year term for a brazen scheme to con investors out of at least $8 million, prosecutors say.
New Jersey federal prosecutors say the onetime used-car salesman and several co-conspirators also duped investors into bankrolling bogus real estate deals in Florida and then laundered the proceeds.
Some of the stolen money went toward "lulling" payments so investors would think they were getting a return on their money and some went to cover Weinstein's mounting legal bills for the earlier $200 million investment fraud.
None of the money went to buy Facebook shares as Weinstein promised, they say.
“Even while facing federal charges that eventually netted him decades in prison, Weinstein couldn’t resist the buzz around the Facebook IPO and the opportunity to fleece unsuspecting investors,” said U.S. Attorney Paul Fishman. “Shamelessly, he even used the money he stole to pay the legal fees he accumulated from the previous scam.”
Weinstein, 39, of Lakewood, pleaded guilty to wire fraud and money laundering charges during an appearance today before U.S. District Court Judge Joel Pisano. His sentencing has been set for Dec. 15.
Prosecutors say Weinstein’s latest scheme worked like this:
In February 2012, Weinstein and two co-conspirators offered two investors the opportunity to purchase hard-to-get blocks of Facebook shares prior to the company’s highly anticipated IPO in May 2012. Weinstein and the others claimed they had buyers lined up willing to pay top-dollar prices for the shares.
During the coming months the unidentified investors wired millions of dollars from an account in the Channel Islands to an account controlled by Weinstein in New Jersey, according to an indictment.
Weinstein also convinced the same investors to turn over millions more that he said would go to buy a Florida apartment complex known as “Belle Glade Gardens” at a bargain price so he could immediately flip the property for a large profit, prosecutors say.
The investors wired $2.83 million to a Miami law firm, after Weinstein promised that they would be repaid within 60 days, the indictment states. The money was then redirected to accounts controlled by Weinstein and the others.
Some $1.8 million was returned to the investors, with Weinstein and the others claiming it was a return on their Facebook investment, prosecutors say.
At the time, Weinstein was already facing indictment for a $200 million Ponzi scheme whose victims included members of the Orthodox Jewish community in Lakewood where he lived, prosecutors say.
Weinstein plowed some of the money he took from investors into charities and religious organizations as a means to improve his standing in the Ocean County community.
He used some of the money he raised to pay off other investors and lured others with claims that he’d lined up buyers so he could quickly resell properties at a big profit, prosecutors say.
Weinstein spent the stolen money on cars, jewelry and gambling junkets, prosecutors say.
Weinstein pleaded guilty to his role in that scheme in January 2013 and a month later was sentenced to 22 years in prison. He is being held at a federal detention center in Philadelphia, according to federal prison records.
Two of his alleged co-conspirators in the Facebook scheme have already pleaded guilty to their roles and have been sentenced to prison terms.
On May 5, 2014, Aaron Glucksman, 41, of Brooklyn, was sentenced to four years and four months in prison and ordered to forfeit $1.2 million, prosecutors say. Alex Schleider, 48, of Lakewood is scheduled to be sentenced on Sept. 18 in Trenton.
The investigation was led by agents from the FBI with the help of the IRS’ criminal investigation division in New Jersey.
“Eliyahu Weinstein spent the greater part of a decade creating and executing a series of elaborate fraudulent investment schemes, ultimately defrauding victims of over $200 million by taking advantage of trusted relationships and innocent investors,” said Aaron Ford, the head of the FBI’s Newark office.