Lakewood, N.J., real estate investor accused of far-reaching scheme; may have laundered money through charities; grand jury empaneled.
(Posted Tuesday, Dec. 29, 5:45 p.m.) In an alleged financial fraud that has ensnared Orthodox Jewish investors from New York to Florida to London, a Lakewood, N.J., businessman is accused of bilking them out of more than $200 million through phony real estate deals, according to complaints made in multiple lawsuits across the country.
In court papers obtained by The Jewish Week, plaintiffs claim that real estate investor Eliyahu Weinstein, 35, "orchestrated a fraudulent scheme" in which he made false representations - supported by counterfeit and false documents - about where and how their money would be invested, and misappropriated the funds for his own use.
At least one of the complaints alleges that Weinstein, described by some who know him as charismatic, friendly and charming, andhailing from a "yeshivish" family, may have laundered money through New York-area Jewish charities.
Some of the filings also assert that Weinstein, a member of Lakewood's Orthodox community, specifically targeted other Orthodox Jews in what is described as an "affinity fraud."
According to one of the complaints, Weinstein is said to have exploited the "belief that the tight-knit nature of the [Orthodox] community assures that people within the community will deal with honesty and good faith towards each other." That often results, according to the complaint, in "business [often being] transacted without documentation, or through informal letter agreements prepared by the parties."
The Jewish Week has obtained a copy of a New Jersey federal grand jury subpoena, evidence of an ongoing criminal investigation dating back to last May. To date, Weinstein has not been charged with any crimes.
Weinstein's alleged fraud, which began around 2005, hit investors in New York, New Jersey, Florida, California and London, and involved properties throughout the United States.
One of the complaints claims that Weinstein and his co-defendants "engaged in a criminal enterprise designed to steal sums of money ... by offering knowingly false representations ... relating to the identity of various alleged investment properties, property values, ownership, debt, mortgage positions, and development status of property."
The same complaint notes that in many of the cases, plaintiffs allege that "Weinstein and his co-conspirators transferred the same property to multiple victims, diverted the substantial payments and left the victims to litigate ownership."
In other cases, the co-defendants allegedly "'transferred' property that they did not in fact own and in which [they] had no ownership interests."
In all, The Jewish Week has documents pertaining to 14 cases against Weinstein, almost all of them involving Orthodox Jews.
According to Gary Ginsburg, an attorney who is not representing Weinstein in any of these matters but to whom The Jewish Week was referred by Weinstein's counsel of record, Weinstein "denies all wrongdoing."
Ginsburg also told The Jewish Week that "these were legitimate transactions" and that the plaintiffs lost money as a result of the market downturn. When asked for documentation of this, Ginsburg said only that "this litigation has produced thousands of documents" that are for "a court of law and not a newspaper."
He argued that this is a "classic case," in which plaintiffs use "innuendos to try create pressure upon the defendant ... in order to force him into a settlement."
Among those allegedly defrauded out of the most money are Berish Berger, a prominent member of London's Orthodox community, and Harvey Wolinetz, a resident of Florida. Both men were wealthy, and one had suffered recent losses of close family members, making them particularly vulnerable in that they were "taken up with personal issues," according to an attorney involved.
Berger, who alleges he was defrauded out of $36.5 million, claims that Weinstein and his co-defendants, business partners Ravinder Chawla and Mark Sahaya, specifically targeted him "as a wealthy member of the Orthodox community" who "was involved in the real estate industry and had access to capital through corporations closely associated with his family."
Berger alleges that Weinstein and his co-defendants "fraudulently induced [him] to believe he was purchasing two parcels of Philadelphia real estate" but misappropriated his money for other uses.
(Chawla submitted a motion to exclude Berger's allegations that he targeted Orthodox Jews, asserting that they are "entirely unsupported by any evidence" and calling them "so inflammatory and so prejudicial that the Court would be justified in excluding [them].")
Wolinetz alleges that Weinstein and several co-conspirators conspired to defraud him "of at least $79 million by making false representations that Plaintiffs would be provided with an interest in at least 12 different properties located in New Jersey, Florida, New York, Tennessee, Georgia and Pennsylvania."
According to Wolinetz's amended complaint, his funds were "improperly misappropriated, diverted, and converted for Defendants' own gain leaving Plaintiffs out more than $79 million without any meaningful interest in the properties."
Other plaintiffs allege a similar pattern of fraud, with losses ranging from the mid-six figures to $40 million.
The documents also allege that Weinstein counterfeited checks to further his scheme. In one example, court papers claim that Weinstein forged a bank check in the amount of $9,964,000 to represent that there were proceeds from a sale that the plaintiff claims never occurred. In support of the plaintiff's claim is a letter from the U.S. Secret Service, which states that Provident Bank confirmed that the check was a fake.
Claims are also made that Weinstein diverted millions of dollars to corporations and religious charities. Indeed, despite providing records of the latter transactions, Weinstein, who worked as a used and new car salesman before getting into the real estate business about five years ago, has apparently been unable to account for the funds given to him to invest by the plaintiffs. In depositions and statements alluded to in the court papers, Weinstein has claimed only that the money was lost as a result of "market conditions."
In a letter to the court, an attorney representing one of the plaintiffs claims that "there is substantial evidence that missing money was laundered through various 'charities' and ultimately ended up being used for Defendant's personal wealth."
For example, a detailed summary of Weinstein's personal and corporate bank accounts attached to the letter indicates that, over the course of several days, payments of millions of dollars were made by Weinstein to Vaad Lehakomas Kollelim, an alleged religious charity with offices in Manhattan.
Bank records show that equivalent sums were paid out to Weinstein, sometimes on the same day or within a few days.
A similar pattern is evident in transactions between Weinstein and Yeshiva Gedolah of Seagate, in Brooklyn. Checks from both charities were signed by an individual who appears on Weinstein's payroll records.
Neither organization could be reached for comment.
Asked about the allegations of money laundering, Weinstein's spokesman, Gary Ginsburg, noted that the transactions documented in court papers "were loans or purchases," though he declined to elaborate.
According to a source close to the case, Weinstein has recently claimed that the transfers were connected to loans between himself and the alleged charities, but he did not provide any loan records or other documents to support these claims.
Sources familiar with Weinstein's background say he has rabbinic ordination from the Talmudical College in Jerusalem. After his time at the Talmudical College, he claims to have worked for a company called Mitnick Realty. He then launched a company of his own, Tower, in 2000, which was a used car business. He then opened a new car business before going into real estate.
According to Heshy Friedman, a professor of business and director of business programs at Brooklyn College, "it is human nature to trust people from one's own religious community. ... Many Orthodox Jews are shocked when someone who studies Torah and is strict about rituals has no problem committing fraud."
Further, Friedman notes that the cultural taboo against "mesira," or informing to the authorities, makes it "easy for a swindler to take advantage of his co-religionists. Some Orthodox Jews," continued Friedman, "are reluctant to go to authorities when cheated because they are under the mistaken belief that this constitutes mesira. So they go to a Jewish bet din [religious court], which has little power."
Indeed, sources close to the case have expressed the belief that there are likely many more victims who are reluctant to come forward for just this reason.
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