2 Charged in Multimillion Fraud

August 12, Chicago Tribune – (National)

The owners of the Chicago-based real estate investment firm, WexTrust Capital LLC, were arrested Monday on federal fraud charges, and U.S. regulators accused them of conducting a quarter-billion-dollar Ponzi scheme going back as far as 2005. Simultaneously, the Securities and Exchange Commission (SEC) alleged in a lawsuit that the two men had raised $255 million from about 1,200 people, many of them Orthodox Jews, and misappropriated the money. In affinity fraud, scammers target individuals with a common interest or belief, which may include a religious affiliation, to exploit their trust to obtain money. The SEC also won an order Monday freezing the company’s assets.

WexTrust owns at least 120 entities formed to acquire real-estate interests, and it has conducted at least 60 private placements since 2005, according to the SEC. Prosecutors with the Southern District of New York, where many of the victims reside, allege the suspects raised money in private placements for real estate investments. In one deal they solicited investors to buy seven commercial buildings leased to the U.S. General Services Administration. WexTrust also was involved with diamond mines in South Africa and Namibia, according to SEC documents.

Source: 2 charged in multimillion fraud -- chicagotribune.com