The world of investments can be quite alluring, promising high returns and the prospect of financial freedom.
However, it is essential to remain cautious and vigilant, as not all investment opportunities are legitimate.
A recent investment fraud case in Santa Ana, California, involving two brothers and their fraudulent investment firm, MBIG Company, demonstrates the importance of diligence in investment decisions.
Details of the Fraud Scheme
Motty Mizrahi, one of the two brothers, falsely presented himself as a licensed broker, a certified public accountant, and an experienced trader.
He claimed to employ sophisticated financial option and insurance-hedging strategies through their business, MBIG Company.
Together with his brother, Sassi Mizrahi, they operated the firm from their parents’ home in Encino.
The Mizrahi brothers made enticing promises to their investors, including “guaranteed” monthly returns between 2% and 3%, and annual rates of return ranging from 30% to 102%.
They also assured investors that their funds could be withdrawn after an initial holding period on an on-demand basis.
In reality, neither brother ever invested any of the victims’ funds in an account under MBIG’s name.
Motty Mizrahi primarily transferred the funds to his personal trading accounts, where he experienced continuous and significant losses. As a result, investors lost at least $3.3 million through their investments with MBIG.
Sassi Mizrahi received hundreds of thousands of dollars from investors and aided his brother in hiding the scheme from MBIG investors.
Legal Proceedings and Convictions
Sassi Mizrahi stood trial and was found guilty of five wire fraud charges. The jury, however, cleared Mizrahi of one wire fraud count.
On the other hand, Motty Mizrahi pleaded guilty to six wire fraud counts and one count of aggravated identity theft.
Sentencing hearings have been scheduled for both brothers, with Sassi Mizrahi facing a maximum of 20 years in federal prison for each wire fraud count, while Motty Mizrahi could receive up to 20 years in federal prison for each wire fraud count, plus a mandatory two-year sentence for the aggravated identity theft count.
Financial Repercussions and Judgments
The investors who placed their trust in the Mizrahi brothers and MBIG Company suffered significant financial losses.
In October 2020, the U.S. Securities and Exchange Commission secured a judgment exceeding $3 million against Motty Mizrahi and MBIG for their fraudulent activities.
Investigation and Prosecution
The FBI conducted a thorough investigation into the case, uncovering the truth behind the brothers’ scheme.
Assistant United States Attorneys Morgan J. Cohen and David Y. Pi of the Major Frauds Section led the prosecution, ensuring that justice was served for the victims.
The Mizrahi brothers’ investment fraud case serves as a cautionary tale for investors. It highlights the importance of vigilance in investment decisions and the need to be aware of potential fraud schemes.
Always conduct thorough research, verify credentials, and ask questions before entrusting your hard-earned money to any investment firm or individual. Remember, if an investment opportunity seems too good to be true, it probably is.