Fraudster set free by Trump charged with running new $38-million Ponzi scheme

Eliyahu Weinstein, a 48-year-old, former used-car salesman from Lakewood, N.J., has been accused along with five others of stealing $38 million from 150 investors since he was set free two-and-a-half years ago, according to charges brought by federal prosecutors in New Jersey and the Securities and Exchange Commission.     

Weinstein had been convicted in 2014 of running a real estate Ponzi scheme that duped investors out of $200 million and sentenced to 24 years in federal prison. But he was set free 17 years early after his sentence was commuted by Trump on his last day in office in January 2021. 

Weinsten was one of 140 convicted felons who were pardoned or had their sentences commuted on Trump’s final day as president.

“Mr. Weinstein is the father of seven children and a loving husband. He is currently serving his eighth year of a 24-year sentence for a real estate investment fraud and has maintained an exemplary prison history. Upon his release, he will have strong support from his community and members of his faith,” Trump wrote at the time.

Alan Dershowitz, the law professor who represented Trump during his impeachment trial, represented Weinstein in his bid for clemency.

Messages left with Dershowitz and a spokesman for Trump weren’t immediately returned.

By November 2021, investigators allege that Weinstein and his co-conspirators began raising money to purportedly buy, distribute and sell healthcare products through a company called Optimus Investments Inc. The company purported to be making deals involving COVID-19 masks, baby formula during a nationwide shortage, and first-aid kits supposedly bound for Ukraine. 

Prosecutors say the scheme was set up to conceal Weinstein’s involvement, with his co-conpsiartors referring to him as Mike Konig.

“They kept Weinstein’s true name and identity hidden because, as Weinstein acknowledged in a secretly recorded conversation, investors wouldn’t give them ‘a penny’ if they learned of Weinstein’s involvement,” prosecutors said.

In April 2022, investigators say it was clear that the scheme wouldn’t be able to turn a profit, so the men began raising more money in order to pay out earlier investors, a classic method used in Ponzi schemes. In all, the men raised $38 million, investigators said.

“Over and over, the defendants took money from unsuspecting investors for fake deals and shuffled funds around to pay out earlier investors to give the false impression that they were receiving real profits from those deals, sometimes even concealing Weinstein’s criminal history and involvement in the deals,” said Antonia Apps of the SEC.

All the men face over 20 years in prison on wire fraud and conspiracy charges.

Weinstein was arrested on Wednesday and it wasn’t immediately clear if he had retained an attorney. A message left with attorneys who had represented Weinstein in earlier legal cases wasn’t immediately returned.

Weinstein is a twice-convicted felon. In 2013, he pleaded guilty to wire fraud and money laundering for the $200 million real estate Ponzi fraud and was sentenced to 22 years in prison.

While awaiting trial, federal prosecutors say he struck again, ripping off investors to the tune of $6.7 million in a scam that purported to give advanced access to shares of Facebook’s initial public offering. In 2014, he pleaded guilty to fraud, conspiracy, and money laundering charges for that scam and was sentenced to an additional two years in prison.

Many of Weinstein’s victims were from New Jersey’s tight-knit, ultra-Orthodox Jewish community.

Gurbir Grewal, who is the director of the SEC’s enforcement division, brought the original federal case against Weinstein when he was the  U.S. attorney for New Jersey.

At the time Weinstein’s sentence was commuted, Grewal issued a statement to the Newark Star-Ledger expressing his disgust at the move.

“It’s no surprise that President Trump granted clemency to Eli Weinstein: it’s one huckster commuting the sentence of another,” he said.