A 36-year-old man who defrauded more than two dozen Orthodox Jewish investors out of $25 million in a Ponzi-like scheme to fund gambling and private jet flights was sentenced Friday, Dec. 15, to 6½ years in federal prison.
Yossi Engel, who previously lived in the Fairfax District of Los Angeles before moving to Israel in 2021, also was ordered by U.S. District Court Judge Maame Ewusi-Mensah Frimpong to pay $11.7 million in restitution.
“We respect the Court’s decision but believe the sentence is excessive,” Engel’s attorney, Jan Lawrence Handzlik, said in an email Friday. “It exceeds even what the government was seeking and is way above the Federal Sentencing Guidelines. Mr. Engel is very disappointed and intends to appeal to the Ninth Circuit.”
Engel was arrested by FBI agents at Los Angeles International Airport on March 8, and two months later pleaded guilty to one count of wire fraud.
In a letter sent to Ewusi-Mensah Frimpong before his sentencing, Engel apologized for swindling investors.
“I have wronged others and I am now paying for my actions,” he said. “Some of my victims were extremely close friends, in some cases closer than family to me, and I know I have caused them harm and to lose trust, not only in me but perhaps in others as well. Not a day goes by where I don’t painfully regret the loss of money and trust I have caused them.”
The U.S. Securities and Exchange Commission alleged in a lawsuit that from December 2018 to January 2021, Engel persuaded at least 29 individuals to invest in his company, iWitness Tech, LLC by claiming their funds would be used to purchase and install security camera equipment.
Engel told victims that iWitness was a large company with many clients, but, in reality, it didn’t have much business. Work was so scarce at times that company employees sat around waiting for work while Engel slept on a couch.
IWitness was never profitable, and over five years worked for only 20 to 30 customers on projects worth $10,000 to $20,000, says the SEC suit.
In another scheme, Engel promised that investor funds would be used to purchase property in Israel that would be developed and sold.
“Both of these claims were false,” the SEC said in the suit seeking sanctions and civil penalties against Engel. “Rather than use investor money to purchase cameras or develop property, 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.”
Engle told investors he had a special relationship with the mayor of Bnei Brak, a town in Israel with a high concentration of Orthodox residents, that enabled him to fast-track the development of units in apartment buildings that would be sold slightly below market value, generating a quick profit.
As part of the pitch, Engel sent investors and potential investors videos and pictures of an apartment building in Israel, a video of him sitting in the office of Bnei Brak’s mayor, and copies of land registrar documents, the suit states.
However, Engel later admitted there were no investment properties and that he knew the real estate scheme was “based on lies,” adding that the videos he sent investors were of apartments where he had once lived, according to the SEC.
Additionally, the video of Beni Brak’s mayor, with whom he did not share a special relationship, was taken when he simply stopped by the mayor’s office to say hello, the suit says.
Engel cultivated a reputation in the Orthodox Jewish community as trustworthy, charismatic and generous to engage in the affinity fraud schemes, according to the SEC. Additionally, he opened a small synagogue in a room next to his iWitness office where he taught from the Torah, which is the compilation of the first five books of the Hebrew Bible.
“The consequences of (Engel’s) dishonesty are not only financial but his victims endured an emotional cost,” prosecutors argued in a sentencing memorandum. “(Engel’s) greed hurt reputations and broke relationships in the communities he solicited money.”
Investors typically sent money to Engel and iWitness by wire or check. In some instances, Engel told investors to wire funds to another investor, who would provide them with payments, according to the SEC.
A group of investors was brought into the scheme by a person identified in the suit as “Individual A,” who was unaware of the fraud and believed the investments would be beneficial to his friends, said the SEC.
As of January, Individual A, who ultimately lost more than $700,000 of his own money, was repaying investors more than $5.7 million because of the guarantees that he signed with them, says the suit.
Engel allegedly sent more than $2.5 million to currency exchangers in Israel, and withdrew $861,000 in cash. He also spent $56,880 to gamble at casinos and to fly on private jets at least twice, according to the SEC.
Source: Orange County Register
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