A Brooklyn rabbi has recently filed a civil lawsuit after falling victim to a scam perpetrated by a major Lakewood area ponzi scammer.
The scammer has answered the complaint by simply waiving his hands in the air and telling the judge that his victims are guilty for trusting him!
According to the complaint filed in New Jersey Superior Court in Ocean County by Florham Park Attorney Paul H. Schafhauser:
Back in August 2022, the scammer entered into a $19 million contract to purchase various real properties located in Essex County, Passaic County and elsewhere. The contract required the scammer to deposit $950,000 with Universal Abstract Title Company (“Universal”).
One day after entering into this contract, the scammer got to work. He contacted the rabbi to state that he had a “good flip,” and that he needed to “fund today the deposit" or the investment deal would be lost. He told the rabbi that if he (the rabbi) invested $750,000 in the investment deal, he (the scammer) was ready, willing and able to close on the investment deal.
The rabbi wanted assurance that the funds that they would invest would be secured, dedicated to the purposes of the investment deal and used for no other purpose, so he replied that he was interested to participate in the investment deal but only if the funds were held in escrow. The scammer agreed to this condition, specifically representing that that the money funded “will be in a title company,” thereby assuring the rabbi that the money would be used for the stated purpose – i.e., the Investment Deal – and for no other purpose.
Specifically, the scammer represented that Universal was the “title company” that would hold the money funded, and that they would hold the funds in “escrow.” Toward that end, he forwarded wire instructions regarding an “Escrow Account” allegedly maintained by Universal. In these and other ways, he further assured the rabbi that the funds to be invested would be held in escrow and use for the investment deal and no other purpose.
The scammer further promised and represented that when the investment deal closed or sold on a “flip,” the rabbi would obtain 50% share of the profits plus an additional $30,000. Specifically, the scammer promised and represented that when the deal closed, the profits obtained with respect would total approximately $1,000,00, of which $500,000 would be his share, which meant that the rabbi would obtain $250,000 of those profits, plus an additional $30,000.
In addition, the scammer further promised and represented that the rabbi would get all this "get rich quick" money within 45 days, and if the investment return was not timely paid because of any extensions for due diligence or other delays in closing on the investment deal, he would pay an additional $30,000 for each month of the delay.
Additionally, the scammer promised and represented that repayment would be secured by all of his liquid and non-liquid assets as “collateral.”
Importantly, he promised that Universal would act, and in fact was acting, as an escrow agent and/or fiduciary with respect to the Investment and the deal; and (ii) Universal would not release the Investment for any purpose, without the rabbi's authorization, except only in connection with the closing of the deal.
Finally, he further promised, represented and agreed that if the investment deal did not close within forty-five days, the rabbi's funds be returned without delay.
In these and other ways, the scammer induced the rabbi to invest $750,000 in the deal.
The rabbi wired the funds to Universal. Representatives of Universal confirmed by phone that they received the wired funds. The scammer also wrote to (i) confirm the receipt of the investment; and (ii) confirm the terms and conditions of the Partnership Agreement, which advised the rabbi that the investment was “[f]or partnership in the 125 unit portfolio.”
However, this get rich quick deal never materialized. The scammer got Universal to release the funds, and then he ran off and misappropriated them. The rabbi has not seen a single dime in return.
The ten count complaint seeks judgment awarding damages (including but not limited to compensatory, exemplary and/or punitive damages), plus pre- and post-judgment interest thereof, in an amount to be determined at trial; awarding treble damages and attorneys’ fees under the Consumer Fraud Act; granting attorneys’ fees, costs of suit, and interest; and granting such other relief as the Court deems just and proper.
The scammer, represented by Morristown Attorney Michael C. Salvo, Esq. has answered the complaint, stating that he "denies the allegations and leaves Plaintiff to its proofs."
Furthermore, he stated an affirmative defense that "plaintiff’s claims are barred, in whole or in part, based on Plaintiff’s own culpable conduct."
Hmm... seems he's simply waving his hands in the air and saying "you were wrong for trusting me!"
As previously reported here on FAA News, this is not the first time this scammer has claimed in court that his victims are guilty for trusting him.
This $750,000 claim is only a small portion of the full claim from this matter. FAA News has learned that additional complaints in this matter are being filed this week in New York.
A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. (In other words, the money gets misappropriated for their personal use, such as to pay off investors of previous non-existent "investments."
Sometimes, one or two unfortunate wrong moves can lead to a bottomless ponzi scheme in order to keep finding funds to cover the mishaps.
A number of ponzi scandals have recently come to light regarding Brooklyn and Lakewood community members.
These scandals highlight why it's important, not only to be very careful prior to investing money, but also, prior to agreeing whom to partner with.
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