International Law

Wextrust Ponzi Expands

Image via Wikipedia

In an unsurprising move, the SEC amended its Complaint against Wextrust Capital

"its principals, and four affiliated Wextrust entities, to add defendant Joseph Shereshevsky's wife, Elka Shereshevsky, as a relief defendant, alleging that Joseph Shereshevsky attempted to hide more than $900 thousand in investor funds by placing them in accounts putatively in her name.

The amended complaint also adds broker-dealer fraud charges against defendant Steven Byers.

The Commission's original complaint alleged that defendants conducted a massive Ponzi-type scheme from 2005 or earlier that raised approximately $255 million from approximately 1,200 investors.

The targets of the fraudulent offerings are primarily members of the Orthodox Jewish community...

The Amended Complaint alleges that defendant Joseph Shereshevsky routinely placed his own assets - residential real estate, bank accounts, and a share in the ownership of Wextrust - in his wife's name.

The Amended Complaint further alleges that Elka Shereshevsky had a "no show" job at Wextrust and received improper transaction-based compensation and bonuses for sales of securities her husband made through Wextrust Securities while he was not registered as an associated person with it.

Although Elka Shereshevsky purportedly holds twenty percent ownership of Wextrust Securities as General Partner of the Shereshevsky Family Partnership, the Amended Complaint alleges that defendant Joseph Shereshevsky controls that interest.

The Amended Complaint further alleges that in early August 2008, when numerous Wextrust accounts had been frozen, defendant Joseph Shereshevsky directed his wife to open an account with a bank in Norfolk, Virginia, into which he diverted at least $75,000 of his own or Wextrust investment vehicle assets.

In addition, the court-appointed receiver in this matter has identified other accounts putatively controlled by Elka Shereshevsky that contain more than $825,000 of her husband's or the Wextrust Defendants' assets.

One wire transfer report showing a $100,000 transfer into such an account states, "per Joe's phone call," indicating Shereshevsky directed the transfer.

One thing that investors must realize is that the SEC and the federal appointed receiver are not their friends, lawyers or even care very much about their problems.

Don't wait on the SEC and its receiver, find some good attorneys who have experience in recovering funds.

(Sorry, I cannot help - little problem with not being licensed in the US to practise law!)

Full post as published by Misleading Advertising Law on August 29, 2008 (boomark / email).