WexTrust CEO gets 13 years prison in Ponzi case

NEW YORK (Reuters) – A former private equity executive was sentenced to 13 years and four months in prison for his role in a real estate investment fraud that federal authorities have called a $255 million Ponzi scheme targeting Orthodox Jews.

Steven Byers, co-founder and chief executive of WexTrust Capital LLC, was sentenced on Monday by U.S. Circuit Judge Denny Chin in the federal court in Manhattan, after pleading guilty last April to one count each of securities fraud and conspiracy.

The defendant, 48, was also ordered to pay $7.7 million in restitution and forfeit $9.2 million. He will begin his sentence immediately.

Prosecutors said Byers falsely represented to investors that the $9.2 million would be used to buy seven commercial properties that would be leased to the U.S. government, and instead diverted the funds elsewhere.

Joseph Shereshevsky, 54, a former WexTrust chief operating officer, pleaded guilty in February to securities fraud, mail fraud and conspiracy in connection with the scheme.

Shereshevsky is being sentenced on May 13, and could face 17-1/2 to nearly 22 years in prison under his plea agreement.

Barry Zone, a lawyer for Byers, in an interview said his client expressed remorse at Monday’s sentencing.

“Words would never be enough to express his remorse and apologies for the loss sustained at the hands of his company,” Zone said. “I thought it was a very heavy sentence, considering that he wasn’t the prime figure in this fraud.”

In a 2008 civil complaint, the U.S. Securities and Exchange Commission said Chicago-based WexTrust raised $255 million from at least 1,196 investors, mainly between 2005 and 2008.

The SEC said Byers focused on real estate investments, while Shereshevsky oversaw real estate and diamond mining assets and used his contacts in the Orthodox Jewish community to solicit investors.

Chin was elevated last year to the federal appeals court in New York, but retained jurisdiction over the WexTrust case.

The case is U.S. v. Byers et al, U.S. District Court, Southern District of New York, No. 08-01092.

(Reporting by Jonathan Stempel in New York; Editing by Tim Dobbyn)

WexTrust CEO gets 13 years prison in Ponzi case