Bloomberg Law®, an integrated legal research and business intelligence solution, combines trusted news and analysis with cutting-edge technology to provide legal professionals tools to be...
Three men were arrested May 14 and charged in the U.S. District Court for the District of New Jersey with defrauding an investor of approximately $6.7 million by falsely claiming to have special access to shares in Facebook Inc. (FB) prior to the entity's initial public offering (United States v. Weinstein, D. N.J., Mag. No. 13-8148, 5/14/13).
In a release, U.S. Attorney Paul J. Fishman said one of the men--defendant Eliyahu Weinstein--faces additional charges for allegedly committing the fraud while under indictment in New Jersey for a separate, unrelated scheme.
Counsel to Weinstein and his co-defendants Alex Schleider and Aaron Muschel could not be reached immediately for comment.
“According to the charges, the defendants took advantage of the buzz around the Facebook IPO to fleece unsuspecting investors," Fishman said in the release. "Shamelessly, Eliyahu Weinstein allegedly committed these crimes while under federal indictment for another investment scheme, even using stolen money to pay his legal fees. Today's arrest should put an end to his brazen conduct."
Allegedly, in February 2012, the defendants offered investors the opportunity to purchase large blocks of Facebook shares prior to the company's May 2012 IPO. “The offer was particularly attractive because large blocks of the shares were extremely difficult to get, and they were expected to increase in value at the time of the IPO.” However, prosecutors alleged, “Weinstein, Schleider and Muschel did not actually have access to the shares.”
According to the charges, based on the defendants' misrepresentations, an investor victim--identified only as G.C.-- “wired millions of dollars … to an account Weinstein and a conspirator controlled. … The conspirators did not use any of G.C.'s money to purchase Facebook shares, instead misappropriating it for their own use and benefit by moving it through various accounts.”
Prosecutors also noted that throughout the alleged scheme, Weinstein, who was under indictment and on pretrial release, was barred from engaging in any monetary transaction for more than $1,000 without the approval of a court-appointed special counsel. Earlier this year, he pleaded guilty to charges he ran a real estate investment scheme that caused $200 million in losses.
In this case, each of the defendants faces decades in prison and hefty money penalties. The government also is seeking forfeiture of all fraudulently obtained funds, “including three pieces of real property allegedly maintained with the proceeds of the scheme.”
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)