It’s a common saying in the investment world that something that sounds too good to true is probably not. What happens when the lure of quick profits and the promise a gold goose blinds investors from the harsh reality that lies beneath the surface of the investment? Six men, including one who has been convicted twice, were charged by the Securities and Exchange Commission for their involvement in an investment fraud scheme. The SEC claims that at least $150 investors contributed at least $38million to this complex scheme.
Like a Russian nesting doll, the story unfolds in layers of deceit. The SEC claims that the scheme started in November 2021 with three men, Weinstein, Bromberg and Wittels. The men raised money for alleged deals via Optimus Investments, Inc. while hiding Weinstein’s criminal background, identity, and involvement.
Does the name Weinstein sound familiar? It should. Weinstein has been convicted twice of felonies, including money laundering and wire fraud in a real-estate business. Ponzi The scheme resulted in $200 million of losses. In 2014 he was charged with fraud, money laundering, conspiracy and fraud in connection with an $6.7 million fraudulent security offering.
Weinstein, despite his criminal record, found himself back on the field in 2021, when President Donald J. Trump, then in office, commuted his prison sentence to time already served. Weinstein continued to deceive, and allegedly defraud investors with the freedom of operation.
We meet Anderson and Curry as the plot intensifies. They allegedly started raising money through Tryon Management Group LLC for Optimus in January of 2022. In August 2022 they had joined the other defendants to actively hide Weinstein’s involvement in the venture.
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What happens if the golden goose suddenly stops laying eggs? The SEC alleges, by April 2022, after some purported Optimus Deals proved unprofitable and the defendants began a fraudulent scheme, they used funds raised from investors in order to make Ponzi-like payouts to earlier investors under the false pretense that these payments were investment returns.
The house of cards metaphor was going to fall. The SEC was prepared for when the metaphorical house of cards collapsed. The Commission filed a complaint with the U.S. District Court for the District of New Jersey alleging that the defendants had violated or aided and abetted the violations of the Securities Act of 1933, and the Securities Exchange Act of 1974. The SEC is seeking permanent injunctive remedies, disgorgement, prejudgment interests, a civil fine, an officer or director bar and a conduct based injunction.
What can we take away from this web of lies, fraud and betrayal, then? This serves as a reminder that investing is not a random game, but rather a calculated risk. Investors need to remain vigilant. They must do their homework and not be swayed away by promises of quick returns. The golden goose is not always real, and the house on cards may be a ticking-time bomb.
One can only hope, as the SEC, along with the U.S. Attorney’s Office for the District of New Jersey, and the FBI continue their investigation, that justice will be done and the victims of the alleged scam will receive some sort of restitution. Will this be sufficient to restore confidence in the investment industry? Time will tell.
