A St. Louis broker pleaded guilty to embezzling $3.9 million from members of his own orthodox Jewish community and spending some of the cash at strip clubs.
A large portion of the money, $1.5 million, was taken by Joshua Gould from a retired St. Louis man, supposedly to invest in a mortgage company. But the money was actually used by Gould to pay for personal expenses that included trips to "gentlemen's clubs." The rest was taken from other people to try to make up for the original amount defrauded, but the money was again diverted for other uses, according to Gould's attorney, Albert S. Watkins of St. Louis.
Some of the embezzled money came from the family trust of Gould's parents and from people Gould worked with at his father-in-law's insurance firm, according to the U.S. attorney's office. "He was robbing Moishe to pay Saul," Watkins said.
Gould, of University City, Mo., pleaded guilty on Friday, in U.S. District Court in St. Louis, to one count of wire fraud and one count of mail fraud. His partner in the scheme, David Rubin, of Chesterfield, Mo., pleaded guilty to one count of wire fraud. Both will be sentenced July 22. Gould, who is in his early 30s, faces 20 years in prison and a fine of $250,000 on each count. He will be ordered to make restitution, which he has already started to do, Watkins says.
Gould was an employee of his father-in-law's insurance firm when he became a broker for Woodbury Financial. At Woodbury, he became involved with Rubin, who was operator of Coral Mortgage Bankers Corporation, a mortgage company in St. Louis. When the mortgage company had financial problems, he solicited $1.5 million from the retiree, falsely claiming it would be used to help capitalize Coral Mortgage.
Instead, the money was used to pay personal credit card bills, and for entertainment, jewelry, home renovations and other personal expenses, according to the U.S. Attorney's office for the Eastern District of Missouri. The expenses included visits to adult entertainment establishments, where Gould took prospective investors, Watkins said.
Gould used some of the money for start-up costs for several business ventures. He told clients he was investing their money in investment securities that were actually shell companies that he controlled. He used client funds to pay off other clients' trade requests after he had liquidated their securities without their knowledge, according to the U.S. attorney.