NEWARK, N.J. (CBSNewYork/AP) — Three men have been charged in New Jersey with stealing $6.7 million from an investor, in part by claiming they had special access to Facebook shares before the company went public.
Aaron Muschel, 63, of Brooklyn; and Alex Schleider, 47 and Eliyahu Weinstein, 37, both of Lakewood, N.J., were charged with stealing approximately $6.7 million from the investor.
“According to the charges, the defendants took advantage of the buzz around the Facebook IPO to fleece unsuspecting investors,” New Jersey U.S. Attorney Paul Fishman said in a news 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.”
In February of last year, the three men allegedly offered investors the opportunity to buy large blocks of Facebook shares before the company’s initial public offering the following May. But the men did not really have access to the shares, prosecutors said.
An investor victim, described in a complaint as “G.C.,” gave the men millions of dollars between February and March 2012. The suspects supplied the victim with false documents claiming that companies owned by various conspirators held assets that would secure the victim’s investment, prosecutors said.
Muschel, Schleider and Weinstein did not buy any Facebook shares with the victim’s money, prosecutors said. Instead, they put it to their own personal use, and Weinstein even used some of it to pay his attorneys in another criminal case already pending against him, prosecutors said.
In the earlier case, Weinstein was charged in 2010 with operating a real estate investment scheme that defrauded investors of at least $200 million.
Weinstein was in pre-trial release at the time of the alleged Facebook shares scam, and was not allowed to engage in any money transaction of more than $1,000 without permission from a court-appointed special counselor, prosecutors said.
All three suspects are charged with wire fraud and conspiracy. Weinstein is also charged with wire fraud while on pretrial release, and Weinstein and Muschel are charged with transacting in criminal proceeds.
The defendants could be sentenced to 20 years in prison or more if convicted.
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