Authorities in the US have charged an Israeli man with defrauding investors, primarily Orthodox Jews, of at least $47 million before fleeing to Israel in 2021.
According to an indictment filed last week by the US Securities and Exchange Commission, Yossi Engel used his company iWitness Tech to target potential investors from Orthodox Jewish communities in Los Angeles and New Jersey.
The investors were looking to purchase security camera equipment and invest in real estate in Israel, said the indictment, which was filed in the federal court in California.
Between December 2018 and January 2021 Engel presented himself as a businessman seeking capital to purchase and install security cameras in Los Angeles as antisemitic incidents climbed in the US.
Engel, 35, also bilked investors by telling them he would use their funds to purchase property in Israel, which he promised to then renovate and sell for profit. He duped at least 29 members of the Orthodox Jewish community across the US.
“Both of these claims were false,” the indictment said. “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.”
Engel is accused of violating several sections of the US Securities Exchange Act. If found guilty, he could be sentenced with up to 10 years in prison.
According to the indictment, he used the money to fund a lavish lifestyle, spending $56,880 at casinos and flying on private jets at least twice. He also wired more than $2.5 million to currency exchangers in Israel and withdrew over $861,000 in cash.
A member of an Orthodox synagogue in Los Angeles, Engel met his victims at the synagogue or through introductions from other members of the community.
The indictment said he gradually developed a reputation as a serious Torah scholar and a generous donor and even opened a small synagogue adjacent to his business.
This allowed Engel to exploit “the goodwill he engendered through his community activities to engage in a fraudulent securities offering scheme,” the indictment said.
Engel presented potential investors with property deeds, pictures and videos of the apartments he claimed to be investing in, all of which turned out to be fake or unrelated to any actual deal.
In several cases, he mentioned to investors his special relationship with the mayor of the ultra-Orthodox city of Bnei Brak, which he said allowed him to expedite the process of developing apartments in the city. To support his claim, he allegedly showed investors a video of him sitting in the mayor’s office, which later turned out to be a video of a simple greeting between himself and the mayor.
Toward the end of 2020, Engel was unable to find enough new investors to cover his expenses and began to run short of cash. Realizing that his scheme was about to collapse, he fled to Israel, the indictment said.
During his time in Israel, he apologized to investors in a number of emails for ruining their lives and blamed “sickness” for his actions. He then returned to the US for a short period, during which he met with some of the defrauded investors, confessed to running a Ponzi scheme and promised to pay back the stolen money.
However, he then fled the US again in March 2021 and appears to still be in Israel. The indictment does not make any mention of extradition.
The SEC said it had cooperated with the Israel Securities Authority on the case.