TRENTON, NJ—An Ocean County, New Jersey man was sentenced today to 264 months in prison for running a real estate investment fraud scheme that caused $200 million in losses and laundering the proceeds of the scheme.

Eliyahu Weinstein, a/k/a “Eli Weinstein,” a/k/a “Edward Weinstein,” a/k/a “Eddie Weinstein,” 38, of Lakewood, New Jersey, previously pleaded guilty before U.S. District Judge Joel A. Pisano to two counts of an indictment charging him with conspiracy to commit wire fraud and money laundering. Weinstein’s co-defendant, Vladimir Siforov, is charged in the indictment with three counts of wire fraud and remains a fugitive. According to documents filed in this case and statements made in court:

From June 2004 through August 2011, Weinstein orchestrated—with the help of Siforov and others—a real estate investment fraud scheme headquartered in Lakewood that resulted in multi-million-dollar losses to victim investors.

To induce victims to invest, Weinstein and others made various types of materially false and misleading statements and omissions. Weinstein and others told victims that Weinstein’s inside access to certain real estate opportunities allowed him to buy a particular piece of property at a below-market price. Weinstein and others also told victims that their money would be used to purchase a specific property, and the property would be quickly resold—or “flipped”—to a third-party purchaser that Weinstein had lined up. Victims were also told that the victims’ money would be held in escrow until the closing of a purported real estate transaction.

Weinstein bolstered his lies by creating and causing to be created various types of fraudulent documents, including “show checks,” which Weinstein led victims to believe represented Weinstein’s investments in specific transactions but which in fact were never deposited; forged checks, which had actually been negotiated for small amounts but which Weinstein altered so as to appear worth millions of dollars; and various kinds of phony legal documents, including mortgages and deeds.

Weinstein and others initially targeted victims from the Orthodox Jewish community to which Weinstein belonged, exploiting his standing in and knowledge of the customs and practices of this community to further the scheme. Weinstein abused the Orthodox community’s practice of engaging in transactions based on trust, and without paperwork, to obtain money from his victims without substantial written records. He would then falsely represent that specific real estate transactions existed, that the victims’ monies were used to fund those transactions, or that the victims’ profits from those transactions were being “rolled” into new investments. Weinstein also used a portion of the fraud’s proceeds to fund “charitable and religious contributions,” which he used to elevate his reputation within the Orthodox Jewish community.

By 2010, Weinstein had tarnished his reputation in the Orthodox Jewish community due to the massive losses caused by his fraud scheme and found it difficult to obtain more money to further the scheme from within the community. In April 2010, Weinstein and others began soliciting victims from outside of the Orthodox Jewish community, whom they defrauded of additional millions of dollars.

Weinstein also used millions of dollars fraudulently obtained from his victims to fund his own lavish spending, including millions of dollars’ worth of antique Judaica and other artwork; a multi-million-dollar collection of jewelry and watches; gambling in Las Vegas and elsewhere; and Weinstein’s personal expenses, including millions of dollars in credit card bills, millions of dollars in legal bills, and luxury car lease payments.

In addition to the prison term, Judge Pisano sentenced Weinstein to three years of supervised release. Judge Pisano ordered Weinstein to pay restitution of $215.4 million and forfeiture of $215.4 million.

Special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, are credited for the investigation leading to today’s sentence. Agents of IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, were also credited for their important contributions to the investigation.

The charges and allegations against Siforov are merely accusations, and he is considered innocent unless and until proven guilty.   back...