WexTrust Principals Indicted For Investor Scam
Posted on Wednesday, 12 of November , 2008 at 6:58 pm
NEW YORK—Steven Byers, the former president and chief executive officer of private equity firm WexTrust Capital LLC, and Joseph Shereshevsky, a former principal and chief operating officer of WexTrust Capital, LLC, were indicted Wednesday on charges stemming from a scheme to defraud WexTrust Capital investors by diverting funds that they raised through private placement offerings.
WexTrust Capital, LLC is a globally diversified private equity company specializing in investments in real estate and specialty finance opportunities. WexTrust Capital is headquartered in Chicago and has offices in New York City; Norfolk, Va; Atlanta, Ga; Boca Raton, Fla; Nashville, Tenn; Ramat Gan, Israel; and Johannesburg, South Africa.
WexTrust Capital was founded in 2003 and is affiliated with several companies of a similar name, including WexTrust Securities, LLC, a broker-dealer registered with the U.S. Securities and Exchange Commission.
Prosecutors said from at least May 2005, Byers, 46 of Oak Brook, Ill.; and Shereshevsky, 51, of Norfolk, Va., raised money from investors pursuant to private placement offerings, used material amounts of that money for other purposes, and did not disclose their diversion of funds to investors.
In one such private placement, the duo allegedly raised money over $9 million in investor funds by representing that the funds would be used to purchase and operate seven commercial properties that were leased to the U.S. General Services Administration.
According to the GSA private placement memorandum issued to investors by WexTrust Capital, the $9.2 million raised from investors, together with a mortgage of approximately $21 million, would be used to purchase the seven GSA properties and cover related acquisition expenses.
The seven GSA properties, however, were never purchased. Instead, virtually all of the funds raised from investors to purchase the properties were diverted by Byers, Shereshevsky and others to other purposes, but investors were never informed that the funds were used for any purpose other than to purchase and operate the seven GSA properties.
Byers and Shereshevsky allegedly subsequently agreed to fabricate a story that they would then tell the GSA investors regarding what happened to their investment. They also caused documents to be distributed to investors that failed to disclose Shereshevsky’s criminal history, notwithstanding the fact that many of WexTrust Capital’s offering documents touted Shereshevsky’s role in WexTrust Capital and his professional experience.
They are each charged with one count of securities fraud and one count of conspiracy to commit securities fraud and to commit mail fraud. If convicted, they each face a maximum of 25 years in prison and a fine of the greater of $250,000 or twice the gross gain or loss caused by their crime.
The indictment also seeks forfeiture of at least $9.2 million from the defendants.
Byers and Shereshevsky were arrested on Aug. 11. Both are scheduled to be arraigned on the indictment by U.S. District Judge Denny Chin on Nov. 14
If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact Wendy Olsen-Clancy, the victim witness coordinator at the U.S Attorney’s Office for the Southern District of New York, at (866) 874-8900 or Wendy.Olsen@usdoj.gov.
For additional information, go to: http://www.usdoj.gov/usao/nys/victimwitness.html on the Internet. 11-12-08
Category: Business, Consumers, Courts, Crime
- Add this post to
- Del.icio.us -
- Meneame -
- Digg
COPYRIGHT 2009 - NORTH COUNTRY GAZETTE All rights reserved. This material may not be published, broadcast, rewritten or redistributed without the express written permission of the publisher.
