{"id":8718018,"date":"2023-01-17T06:32:08","date_gmt":"2023-01-17T14:32:08","guid":{"rendered":"https:\/\/www.eastbaytimes.com\/?p=8718018&preview=true&preview_id=8718018"},"modified":"2023-01-17T06:35:27","modified_gmt":"2023-01-17T14:35:27","slug":"la-man-swindled-47-million-from-orthodox-jews-in-ponzi-scheme-sec-alleges","status":"publish","type":"post","link":"https:\/\/www.eastbaytimes.com\/2023\/01\/17\/la-man-swindled-47-million-from-orthodox-jews-in-ponzi-scheme-sec-alleges\/","title":{"rendered":"California man swindled $47 million from Orthodox Jews in Ponzi scheme, SEC alleges"},"content":{"rendered":"

A 35-year-old man who allegedly bilked Orthodox Jewish investors in Los Angeles and New Jersey out of $47 million and then fled to Israel has been charged by the U.S. Securities and Exchange Commission with using the proceeds to fund a lavish lifestyle.<\/p>\n

The SEC alleged in a lawsuit filed Thursday, Jan. 12, in U.S. District Court that from December 2018 to January 2021, Yossi Engel induced at least 29 individuals to invest in his company, iWitness Tech, LLC by claiming their funds would be used to purchase and install security camera equipment.<\/p>\n

Additionally, Engel also allegedly promised that investor funds would be used to purchase property in Israel that would be developed and sold.<\/p>\n

\u201cBoth of these claims were false,\u201d the SEC said in the suit seeking sanctions and undisclosed civil penalties against Engel. \u201cRather than use investor money to purchase cameras or develop property, Engel misappropriated the funds by spending investor money for his personal benefit and making Ponzi-like payments to earlier investors in an attempt to keep the scheme going.\u201d<\/p>\n

Engel cultivated a reputation in the Orthodox Jewish community as trustworthy, charismatic and generous. According to the SEC, he opened a small synagogue in a room next to his iWitness office where he taught from the Torah, which is the compilation of the first five books of the Hebrew Bible.<\/p>\n

\u201cEngel, however, exploited the goodwill he engendered through his community activities to engage in a fraudulent securities offering scheme,\u201d says the suit.<\/p>\n

When investors asked Engel why he didn\u2019t obtain bank loans for iWitness at a lower interest rate, he allegedly replied that because he was from Israel, he did not have sufficient credit in the United States.<\/p>\n

\u201cThis was false, and the reason Engel could not obtain bank financing was because his businesses were not real,\u201d states the suit.<\/p>\n

Investors typically sent money to Engel and iWitness by wire or check. In some instances, Engel told investors to wire funds to another investor, who would provide them with payments, according to the SEC.<\/p>\n

\u201cMost iWitness investors did not question this flow of funds, but the ones who did were told that they needed to send money via the third party because the third party was capable of changing money in Israel at lower rates than the banks,\u201d the suit says. \u201cThis was another falsehood.\u201d<\/p>\n

A group of investors allegedly was brought into the scheme by a person identified in the suit as \u201cIndividual A,\u201d who was unaware of the fraud and believed the investments would be beneficial to his friends.<\/p>\n

Individual A, who ultimately lost more than $700,000 of his own money, is now repaying investors more than $5.7 million because of the guarantees that he signed with them, says the suit.<\/p>\n

Beginning in December 2018, Engel allegedly represented to existing and potential investors that he needed capital to purchase cameras and other equipment for iWitness, and would pay their investment returns from installation fees.<\/p>\n

He allegedly offered at least one investor multiple variations on this deal, for different camera installation jobs, with investments ranging from $50,000 to $180,000, and rates of return of 10% to 20%.<\/p>\n

However, in reality, iWitness\u2019 camera installation business was never profitable and over five years worked on projects worth $10,000 to $20,000 for only 20 to 30 customers, says the suit.<\/p>\n

The SEC alleges Engel also created an illusion of profitability by using investor funds to pay for office rent, cars and payroll.<\/p>\n

\u201cEngel\u2019s representations about iWitness\u2019 operations and the source of investor returns, and the appearance of iWitness as a profitable, ongoing business, were all material to investors\u2019 decisions to invest in iWitness,\u201d the suit says.<\/p>\n

In April 2020, Engel allegedly began pitching a new investment scheme.<\/p>\n

He allegedly told investors he had a special relationship with the mayor of Bnei Brak, a town in Israel with a high concentration of Orthodox residents, that enabled him to fast-track the development of units in apartment buildings that would be sold slightly below market, generating a quick profit.<\/p>\n

In connection with this pitch, Engel sent investors and potential investors videos and pictures of an apartment building in Israel, a video of him sitting in the office of Bnei Brak\u2019s mayor, and copies of land registrar documents, the suit states.<\/p>\n

However, Engel later admitted there were no investment properties and he knew the land investment scheme was \u201cbased on lies,\u201d the SEC said. The videos Engel sent investors were allegedly of apartments where he had once lived. Additionally, the video of Beni Brak\u2019s mayor, with whom he did not share a special relationship, was taken when he simply stopped by the mayor\u2019s office to say hello, the suit says.<\/p>\n

Engel allegedly sent more than $2.5 million to currency exchangers in Israel, and he withdrew $861,000 in cash. Engel also spent $56,880 at casinos and to fly on private jets at least twice.<\/p>\n