The Securities and Exchange Commission has filed charges against Wextrust Capital LLC, its principals and four entities affiliated with the investment banking firm for an alleged Ponzi-type scheme going back to at least 2005.
The scheme, which raised roughly $255 million from about 1,200 investors, primarily targeted members of the Orthodox Jewish community, according to the SEC complaint filed yesterday in U.S. District Court for the Southern District of New York in Manhattan.
The SEC’s complaint charges that Chicago-based Wextrust, principals Steven Byers and Joseph Shereshevsky and four affiliated entities made at least 60 securities offerings that were supposed to be used for investments such as real estate but were instead diverted to pay previous investors’ returns or to fund the brokers’ own expenses.
Mr. Shereshevsky, who pleaded guilty to one felony count of bank fraud in June 2003, is well-known in Orthodox Jewish circles in Norfolk, Va., and he used his influence in the religious community to solicit many of the investors, the SEC complaint stated.
The affiliated Wextrust entities named in the suit include Wextrust Equity Partners LLC, Wextrust Development Group LLC and Axela Hospitality LLC, all based in Chicago, and Norfolk, Va.-based Wextrust Securities LLC.
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