LOS ANGELES – Two brothers who allegedly operated an unlicensed investment advisory business out of their parents' Encino home were arrested today on federal wire fraud charges for an alleged scheme in which they used false account statements to hide multi-million dollar losses of their investors' funds.
Motty Mizrahi, 46, of Encino, and Sassi Mizrahi, 53, of Sherman Oaks, were arrested this morning and made their initial appearances today in United States District Court.
According to the criminal complaint filed in this case, Motty Mizrahi falsely portrayed himself as a licensed broker, certified public accountant, and experienced trader who employed sophisticated financial option- and insurance-hedging strategies through the brothers' business, MBIG Company. The Mizrahi brothers operated MBIG out of their parents' home in Encino, court documents state. From November 2012 until March 2019, Motty Mizrahi raised millions of dollars from investors, promised them “guaranteed” returns between 2 percent and 3 percent per month, and assured them that their funds could be withdrawn after an initial holding period on an on-demand basis. Motty Mizrahi allegedly submitted phony monthly account statements that purported to show consistent monthly gains and also falsely showed that MBIG's account balances were between $6 million and $9 million. However, Motty Mizrahi instead lost the investors' money – losses he and Sassi Mizrahi denied when confronted by victims who unsuccessfully demanded their money back, the affidavit states.
The complaint also alleges that Motty Mizrahi distributed to investors a financial prospectus that contained false and fraudulent representations concerning MBIG's past investment performance. The Mizrahi brothers also allegedly misled investors about their company's E*Trade brokerage account, which was supposed to be used for investors' money but in reality did not exist. Instead, Motty Mizrahi routed all victim-investor funds into his own personal trading account, the affidavit states. After E*Trade closed Motty Mizrahi's personal accounts, Motty and Sassi Mizrahi allegedly continued to mislead investors by assuring them that MBIG had an E*Trade account containing adequate balances to cover the victim-investors' initial investments.
If convicted on the wire fraud charges, the defendants would each face a statutory maximum sentence of 20 years in federal prison.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
In a related action, the U.S. Securities and Exchange Commission filed a civil fraud action against Motty Mizrahi and MBIG Company and obtained emergency relief including a temporary restraining order and an asset freeze order against the defendants.
There are no comments for this post. Be the first and Add your Comment below.
Leave a Comment