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CommittedBank Fraud While on Bail for Separate $2.25 Million Wire Fraud Scheme
NEWARK—A Teaneck, New Jersey man wassentenced today to 63 months in prison for two separate fraud schemes—swindlingMorgan Stanley Smith Barney LLC and two individuals out of more than $200,000while he was free on bail for the separate $2.25 million fraud, U.S. Attorneyfor the District of New Jersey Paul J. Fishman announced.
Moshe Butler, 33, previously pleadedguilty to an information charging him with committing bank fraud while he wason pre-trial release after pleading guilty to an information charging him withwire fraud. Butler entered his guilty pleas before U.S. District Judge WilliamH. Walls, who also imposed the sentence today in Newark, N.J., federal court.
According to documents filed in thiscase and statements made in court:
Butler admitted that in summer 2011 hedefrauded Morgan Stanley Smith Barney LLC (MSSB) out of approximately $37,417.In July 2011, Butler opened an investment account with Morgan Stanley in NewYork and was the sole signatory. The account allowed him to have immediateaccess to funds deposited by check. On August 12, 2011, Butler funded his MSSBaccount by depositing a $50,000 check and used the entire amount to cover thepurchases of various securities and commodities option contracts. The purchaseswere largely unsuccessful and within five days, Butler lost his entire $50,000investment as well as an additional $18,921.
On August 19, 2011, Butler deposited a$100,000 check into his MSSB account to cover the negative balance in theaccount. The $100,000 check Butler deposited was drawn against a bank accountthat Butler solely controlled, but which had been closed by the issuing bankmore than two months earlier because Butler had written checks returned forinsufficient funds. Butler took advantage of the fact that the funds wereimmediately available by withdrawing $7,000 in cash and purchasing numeroussecurities and commodities option contracts in his account. Those purchaseswere also unsuccessful and resulted in additional losses of $11,496. In October2011, Butler deposited a $30,000 check to cover the losses in his MSSB account,but that check was also returned for insufficient funds.
Butler also admitted that, betweenNovember 2011 and March 2012, he fraudulently obtained $170,755 in money andlegal services from two individuals, D.B. and C.W., and wrote them a series ofbad checks.
Butler committed these acts while onpretrial release in connection with a scheme he committed between approximately2008 and June 2009, defrauding multiple hotel and motel development companiesout of more than $2.25 million. At the start of the scheme, Butler worked at aNew Jersey-based company that sold mirrors and artwork to hotel and moteldevelopment companies. In this position, Butler was in regular contact with thepurchasing agents at various development companies and was familiar with theirpurchasing procedures. Butler contacted many of these purchasing agentsclaiming to be working for one of two shell companies he controlled—SBPurchasing Group LLC and NI Group—and offering to sell flat panel televisionsat a low cost with extended warranties, saying that his companies had been inbusiness for years and had delivered thousands of televisions. At times, Butlerclaimed to be “John Savoy” and would often follow up with a call from his realpersona, suggesting the customer buy from Savoy.
More often than not, customers receivedonly a portion or none of the televisions they purchased. And when theyrequested a refund of the money they had paid him, Butler often sent thecustomers checks that were returned for insufficient funds.
In addition to the prison term, JudgeWalls sentenced Butler to serve three years of supervised release and to payrestitution of $2,259,311.35 in the TV scheme and $207,375.25 in the checkscheme. He was also ordered to forfeit an additional $208,172.21.
U.S. Attorney Fishman credited specialagents of the FBI, under the direction of Special Agent in Charge Michael B.Ward in Newark, with the investigation leading to today’s sentence.
The government is represented byAssistant U.S. Attorney Matthew E. Beck, deputy chief of the U.S. Attorney’sOffice General Crimes Unit in Newark.
This law enforcement action is part ofefforts underway by President Obama’s Financial Fraud Enforcement Task Force(FFETF). President Obama established the interagency FFETF to wage an aggressive,coordinated, and proactive effort to investigate and prosecute financialcrimes. The task force includes representatives from a broad range of federalagencies, regulatory authorities, inspectors general and state and local lawenforcement who, working together, bring to bear a powerful array of criminaland civil enforcement resources. The task force is working to improve effortsacross the federal executive branch and, with state and local partners, toinvestigate and prosecute significant financial crimes, ensure just andeffective punishment for those who perpetrate financial crimes, combatdiscrimination in the lending and financial markets, and recover proceeds forvictims of financial crimes. For more information on the task force, visitwww.stopfraud.gov.
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