US prosecutors filed new criminal charges against a New Jersey man who was convicted in a $200 million real estate Ponzi scheme a decade ago and got 24 years in prison before his sentence was commuted by former President Donald Trump.
Eliyahu “Eli” Weinstein and four other men were charged with defrauding more than 150 investors of $35 million, falsely promising to invest their money in Covid-19 masks, scarce baby formula and first-aid kits bound for Ukraine, US authorities said Wednesday.
Weinstein, 48, allegedly began a new crime spree soon after serving less than eight years in prison. He called himself “Mike Konig” to hide his identity from friends and family of conspirators who invested in his bogus deals, officials said. As the fraud progressed, Weinstein was secretly recorded by co-conspirators who weren’t charged, according to an FBI arrest complaint.
In August 2022, Weinstein admitted to engaging in a Ponzi scheme, according to the complaint, which cited his recorded words: “I finagled, and Ponzied, and lied to people to cover us.” He told a conspirator he hid his identity because “no one would ever give you a penny if they knew who I was...because I have a bad reputation.”
Prosecutors charged Weinstein and the others with wire fraud conspiracy and conspiracy to obstruct justice. He’s accused of hiding his illicit business activities and his assets to avoid paying $228.7 million in restitution he still owes to his victims.
“These were brazen and sophisticated crimes that involved multiple co-conspirators and came from Weinstein’s playbook of fraud,” Philip Sellinger, the US attorney in New Jersey, said in a news conference. “This was ultimately just a classic Ponzi scheme unable to pay back investors.”
Weinstein’s conduct is unique, said James Dennehy, special agent in charge of the Federal Bureau of Investigation office in Newark.
“It’s a very rare day that we announce we’ve arrested a man who’s already been arrested, convicted, sentenced to federal prison, and then received a presidential commutation,” Dennehy said.
Weinstein, a resident of Lakewood, New Jersey, was charged Wednesday with two other Lakewood men, Aryeh Bromberg, 49, and Joel Wittels, 57. Shlomo Erez, 55, of Israel, and Alaa Hattab, 34, of Ottowa, were also charged. Wittels and Hattab remain at large. Weinstein, Bromberg and Erez were arrested and scheduled to appear Wednesday in federal court in Trenton, New Jersey.
In addition, the US Securities and Exchange Commission filed a lawsuit against Weinstein, Wittels, Bromberg, Hattab and two other men.
“Over and over, the defendants took money from unsuspecting investors for fake deals and shuffled funds around to pay out earlier investors to give the false impression that they were receiving real profits from those deals,” Antonia M. Apps, director of the SEC’s New York office, said in a statement.
The SEC’s enforcement director, Gurbir Grewal, used to work at the US Attorney’s Office in Newark and helped to prosecute Weinstein for his earlier crimes.
Weinstein pleaded guilty to the earlier Ponzi scheme in January 2013 and was sentenced to 22 years. In 2014 he got another two years for his role in a separate fraud involving the initial public offering of Facebook Inc., now Meta Platforms Inc.
Trump commuted his sentence when a group of congressmen, Harvard Law School professor Alan Dershowitz, former prosecutors, and other supporters, including members of the Orthodox Jewish community, campaigned for his release.
On Jan. 20, 2021, Trump’s last day in office, the White House released a statement saying Weinstein was “the father of seven children and a loving husband” who had “maintained an exemplary prison history.” It said that upon his release he would have “strong support from his community and members of his faith.”
--With assistance from Chris Dolmetsch.
This article was provided by Bloomberg News.