Three Men Arrested for Facebook IPO Scam (So At Least Somebody Made Money Off of It)

Good lesson in how not to handle your money.

(Photo: Smedio)
(Photo: Smedio)

Three men in New Jersey were arrested yesterday for allegedly swindling nearly $7 million from an investor by claiming that they had “special access” to shares of Facebook (META) prior to it going public last May.

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Federal prosecutors arrested Aaron Muschel, 63, of Brooklyn, and Alex Schleider, 47 and Eliyahu Weinstein, 37, of Lakewood, N.J. and charged them with wire fraud conspiracy. Bloomberg reports that they offered a New Zealand investor “blocks of Facebook shares” even though the men had no access to them. They preyed off the near deafening buzz, that seemed to promise Great Gatsby-like riches, to those who cash in on the site’s IPO.

The investor wired $6.7 million dollars, with nearly half of that involved in the Facebook deal. However, Mr. Weinstein used the investor’s money for personal things, like extending a loan to a Brooklyn rabbi’s congregation in exchange for life insurance policies. He also used the money to make a gold deal in Africa, another undoubtedly legitimate transaction.

It gets better, or worse, depending on how you look at this bizarre case:

“Shamelessly, Eliyahu Weinstein allegedly committed these crimes while under federal indictment for another investment scheme, even using stolen money to pay his legal fees,” said U.S. Attorney Paul Fishman

The government is seeking the return of the millions of dollars in funds that were fraudulently obtained by the men.

Three Men Arrested for Facebook IPO Scam (So At Least Somebody Made Money Off of It)