June 25, 2024

This week, Shlomo Erez, an Israeli citizen, pleaded guilty in connection with a conspiracy. He worked with Eliyahu “Eli” Weinstein, a notorious player from Lakewood. Together, they swindled people out of millions of dollars. They sold investments supposedly funding first-aid supplies for Ukraine amidst its conflict with Russia. This information comes from U.S. Attorney Philip R. Sellinger.

Weinstein is a two-time convicted fraudster, known for his con job in 2014. He was sentenced to 24 years in federal prison for wire fraud conspiracy and money laundering. The funding was said to be part of a real estate Ponzi scheme. During his pretrial release, he committed additional fraud resulting in $230 million losses for his investors. His sentence was later commuted in 2021 by then-President Donald Trump.

Erez is 56 and admitted his part in the fraudulent scheme. He pleaded guilty before US District Judge Michael A. Shipp in Trenton on Tuesday. His charges include conspiracy to commit securities fraud, money laundering, and obstructing justice. This information is according to an official statement from the U.S. Attorney’s Office for the District of New Jersey.

Following Erez’s receipt of investor money, he conducted financial transactions under Weinstein’s direction. These transactions had nothing to do with what investors were initially promised. They included investing in a Miami penthouse apartment and apparent land sales in Morocco.

Erez was instrumental in aiding Weinstein’s subterfuge and stealing millions from investors. He also approved the evasion of hundreds of millions of dollars Weinstein owed his past fraud victims. These dishonest operations deployed fake identities and deceptive promises about providing access to medical supplies, baby formula, and first-aid kits supposedly meant for Ukraine used as bait for their fraud.

It has been reported that the fraudulent activities resumed soon after Weinstein was released from prison. Under an alias “Mike Konig”, he started a new operation to wrangle money from investors using a company called Optimus Investments Inc.

Four of Erez’s confederates, namely Christopher Anderson, Richard Curry, Alaa Hattab, and Joel Wittels, have also pleaded guilty to similar securities fraud charges. Charges are still ongoing for Weinstein and Aryeh “Ari” Bromberg.

Erez’s crimes involved conspiring with Weinstein and others to launder the proceeds of their fraudulent activities. He opened bank accounts with knowledge that they would hold unlawfully obtained funds, and transferred them to further Weinstein and his conspirators gains. He also constructed entities to invest ill-gotten funds in real estate companies for the benefit of Weinstein and his associates.

In addition, Erez conspired with Weinstein, Bromberg, and others to obstruct justice. They did this by hiding Weinstein’s assets that should have been used to repay his previous victims. They also concealed Weinstein’s numerous business activities which were expressively prohibited by the terms of his supervised release.

Conspiracy to commit securities fraud and obstruction of justice carries a maximum of five years imprisonment and a maximum fine of either $250,000 or twice the gain or loss from the offense. Money laundering can lead to up to 20 years imprisonment and a maximum fine of $500,000 or twice the value of the transaction. Erez is tentatively expected to be sentenced on Nov. 5, as per Sellinger’s statement.

#### FAQ 1: Just What is a Ponzi Scheme?

A Ponzi scheme is a sort of investment scam promising high rates of return with little risk to investors. Ponzi scheme organizers often entice new investors by offering short term returns that are either unusually high or remarkably consistent.

#### FAQ 2: What were Some Detrimental Effects of Weinstein’s Actions?

Weinstein’s Ponzi scheme greatly impacted the Orthodox Jewish community which he was supposedly a part of. Based on his fraudulent activities, he managed to accrue $230 million worth of debt to his investors. His actions resulted in substantial financial loss and harm to the community.

#### FAQ 3: What led to the Arrest of Shlomo Erez?

The arrest of Shlomo Erez is directly connected to his role in aiding double-convicted fraudster, Eliyahu “Eli” Weinstein. Erez opened bank accounts to hold funds he knew were unlawfully obtained, and transferred them for the benefit of Weinstein and his associates. He also conspired with Weinstein and others to obstruct justice and conceal illicit businesses.