A convicted Ponzi scheme, whose prison term President Donald J. Trump turned into one of his last White House official acts, is facing new federal fraud charges of defrauding investors in a series of bogus deals.
The man, Eliyahu Weinstein, a former used car salesman from Lakewood, NJ, was serving a 24-year sentence related to two schemes when Mr. Trump released him from prison in January 2021. One involved defrauding members of his close-knit Orthodox Jewish community out of more than $200 million.
On Wednesday, federal prosecutors in New Jersey charged Mr. Weinstein, 48, along with four other men with defrauding at least 150 people of $35 million. They are accused of luring people into supposedly lucrative investments in scarce Covid-19 supplies and baby food and even first aid kits destined for war-torn Ukraine.
“These were brutal and sophisticated crimes involving multiple conspirators that came straight out of Weinstein’s playbook of fraud,” Philip R. Sellinger, U.S. Attorney for New Jersey, said at a news conference.
As DailyExpertNews reported, Mr. Weinstein was one of many who received a pardon from Mr. Trump by skipping the official process and relying on well-connected lobbyists and lawyers to get help.
After Mr. Trump commuted his sentence, Mr. Weinstein pledged to turn over a new leaf in a video message to his supporters posted online by a local publication, The Lakewood Scoop.
“My goal is to make everyone proud of me and live my life the right way,” he said.
On Wednesday, Mr. Weinstein and his co-defendants were charged with wire fraud and conspiracy to obstruct justice. Mr. Weinstein was served a warrant of arrest after an initial appearance in federal court in Trenton, NJ, as was a co-defendant, Shlomo Erez, 55, an Israeli citizen.
A federal magistrate judge set bail at $500,000 for a third defendant, Aryeh L. Bromberg, 49, of Lakewood, NJ. Two other defendants, Joel L. Wittels, 57, of Lakewood, and Alaa M. Hattab, 34, of Ottawa, Canada, remained at large.
An attorney for Mr. Weinstein, Eric M. Creizman, declined to comment. Ricardo Solano Jr., an attorney for Mr. Bromberg, declined to comment. Information about lawyers for the other defendants was not readily available.
Mr. Weinstein, Mr. Sellinger said, had “resumed where he left off” after leaving prison and devised a plan to raise investment through a company called Optimus Investments Inc., which he had led with Mr. Bromberg and Mr. Wittels.
Acknowledging that investors would not give him a dime if they knew his true identity, according to what prosecutors said was a secretly taped conversation, Mr. Weinstein Optimus under the pseudonym Mike Konig when dealing with lenders, potential investors and business partners.
“I have feigned and posited and lied to people to cover for us,” Mr. Weinstein also said, according to the indictment.
Much of the money flowing into Optimus came from a second company controlled by two unidentified co-conspirators, Tryon Management Group LLC, according to a criminal indictment.
Tryon supposedly promised his investors lucrative opportunities to invest in the bogus deals, and the money they raised funneled it through Optimus to Mr. Weinstein, the indictment said.
According to the complaint, Tryon was unable to pay its investors in February 2022. Mr. Weinstein agreed with the owners to pool money from both firms’ existing investors to pay other investors in a Ponzi-style manner, the complaint said.
Six months later, the complaint says, Mr. Weinstein revealed his true identity to the Tryon owners in a secretly taped meeting. At a second meeting, the prosecution says, he admitted embezzling money from Tryon investors and making false statements about the Optimus deals.
The prison sentence that Mr. Trump commuted was related to two schemes to which Mr. Weinstein pleaded guilty. In the first, he admitted to defrauding investors out of $200 million by tricking them into false real estate investments and land deals.
The second plan, which he devised while awaiting trial on the first, he says involved access to Facebook stock around the time of the company’s IPO.
In announcing the commutation of Mr. Weinstein’s sentence, White House officials said the move was supported by New Jersey Republican Representative Jeff Van Drew and attorney Alan Dershowitz, among others.
A spokeswoman for Mr Van Drew did not respond to a request for comment on Wednesday. Contacted by email, Mr. Dershowitz’s role in getting Mr. Weinstein’s release.
“I personally had little or nothing to do with him,” Mr Dershowitz said. “I gave legal advice to an organization that advocated for a reduced sentence. If he is found guilty a second time, he will not be pardoned.”
Barry Wachsler, who had helped fund Mr Weinstein’s appeal and clemency, continued to support him on Wednesday, saying in an interview that he had spoken to Mr Weinstein and that his friend was in “utter disbelief” about the new charges.
Mr Wachsler claimed they stemmed from prosecutors’ bitterness over the commutation of Mr Weinstein’s sentence and that Mr Weinstein’s activities since leaving prison were legal.
“They were out to get him, and they looked for every opportunity, and they got it,” said Mr. Wachsler. “They wanted to teach him a lesson — whether it be about hating the fact that Trump commuted his sentence, whatever it may be.”
Kenneth P. Vogel contributed reporting.