A man has pleaded guilty to conspiring with Eliyahu “Eli” Weinstein, the convicted Ponzi schemer who was let out of prison early by former President Donald Trump in 2021.
Joel Wittels, 57, of Lakewood, pleaded guilty to conspiracy to commit securities fraud, conspiracy to engage in the unlicensed wholesale distribution of prescription drugs and conspiracy to obstruct justice in Trenton federal court on Wednesday, the U.S. Attorney’s Office District of New Jersey said.
The charges accused Wittels of helping Weinstein with a $35 million Ponzi-like scam while the convicted fraudster was on supervised release. The scheme tricked investors into thinking that their money would be invested in COVID-19 masks, first aid kits for the Russia-Ukraine war and baby formula, which was scarce at the time due to supply chain issues.
Weinstein, 48, of Lakewood, was indicted by a grand jury in February of this year for allegedly running the scam. He was indicted on four counts of wire fraud as well as securities fraud, conspiracy to commit securities fraud, conspiracy to commit wire fraud and conspiracy to obstruct justice.
Weinstein was one of 140 people who were granted clemency by Trump on Jan. 19, 2021, the last day of his presidency. Weinstein, who had served eight years of his 24-year sentence, was required to serve three years of parole upon his release.
He had been convicted in two separate cases — a $200 million Ponzi scheme involving a portfolio of fake real estate investments and a second scam in which he duped a single investor out of $6.7 million after tricking the victim into thinking that he had an inside track on hard-to-get shares of the Facebook initial public offering.
Shortly after his release, Weinstein set up a company called Optimus Investments Inc., which he used to solicit money from prospective investors, prosecutors alleged. Weinstein then enlisted the help of his co-conspirators, including Wittels, and a third-party company called Tryon Management Group LLC, to garner millions in investor money, authorities said.
Federal prosecutors have also accused Weinstein of using the fake name “Mike Konig” to hide his criminal past from prospective investors.
By February 2022, Optimus and Tryon did not have enough funds to pay back investors and started paying them back with new investor money in a Ponzi-like fashion, authorities alleged.
“Wittels scammed innocent victims into handing over their money by hiding a twice-convicted fraudster’s identity and capitalizing on the COVID pandemic, the war in Ukraine, and even shortages of baby formula,” U.S. Attorney Philip R. Sellinger said. “Instead of investing the money in legitimate ventures, Wittels and his conspirators took it and used some of it to pay off other investors in a classic Ponzi scheme.”
Wittels also helped Weinstein hide his business activities from law enforcement and hide his assets that were supposed to be used to pay $230 million in restitution, officials said.
In a separate scam, Wittels and others distributed wholesale quantities of insulin and other prescription drugs on the secondary market without a wholesale license, authorities said.
Three of Weinstein’s other co-conspirators — Christopher Anderson, Richard Curry and Alaa Mohamed Hattab — have pleaded guilty to conspiracy to commit securities fraud. Criminal cases are still pending for Weinstein and another alleged participant, Shlomo Erez.
Wittels will be sentenced on August 20.
Stories by Nicolas Fernandes
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Nicolas Fernandes may be reached at nfernandes@njadvancemedia.com.