The BizOp News

In an unsurprising move, the SEC amended its Complaint against Wextrust Capital

"its principals, and four affiliated Wextrust entities, to add defendant Joseph Shereshevsky's wife, Elka Shereshevsky, as a relief defendant, alleging that Joseph Shereshevsky attempted to hide more than $900 thousand in investor funds by placing them in accounts putatively in her name.

The amended complaint also adds broker-dealer fraud charges against defendant Steven Byers.

The Commission's original complaint alleged that defendants conducted a massive Ponzi-type scheme from 2005 or earlier that raised approximately $255 million from approximately 1,200 investors.

The targets of the fraudulent offerings are primarily members of the Orthodox Jewish community...

The Amended Complaint alleges that defendant Joseph Shereshevsky routinely placed his own assets - residential real estate, bank accounts, and a share in the ownership of Wextrust - in his wife's name.

The Amended Complaint further alleges that Elka Shereshevsky had a "no show" job at Wextrust and received improper transaction-based compensation and bonuses for sales of securities her husband made through Wextrust Securities while he was not registered as an associated person with it.

Although Elka Shereshevsky purportedly holds twenty percent ownership of Wextrust Securities as General Partner of the Shereshevsky Family Partnership, the Amended Complaint alleges that defendant Joseph Shereshevsky controls that interest.

The Amended Complaint further alleges that in early August 2008, when numerous Wextrust accounts had been frozen, defendant Joseph Shereshevsky directed his wife to open an account with a bank in Norfolk, Virginia, into which he diverted at least $75,000 of his own or Wextrust investment vehicle assets.

In addition, the court-appointed receiver in this matter has identified other accounts putatively controlled by Elka Shereshevsky that contain more than $825,000 of her husband's or the Wextrust Defendants' assets.

One wire transfer report showing a $100,000 transfer into such an account states, "per Joe's phone call," indicating Shereshevsky directed the transfer.

One thing that investors must realize is that the SEC and the federal appointed receiver are not their friends, lawyers or even care very much about their problems.

Don't wait on the SEC and its receiver, find some good attorneys who have experience in recovering funds.

(Sorry, I cannot help - little problem with not being licensed in the US to practise law!)

Comments

I will be following this story using the legal documents filed, but if you have something I should be looking at please tell me.

Posted by: michael webster | August 31, 2008 9:23 PM

The receiver will not sue everyone.

This is important for you to understand. The receiver is not interested in anything but recovering their fees from the bankrupt estate. Although, you pay nothing for the receiver, that is exactly what you will get from their legal efforts - 5 cents on the dollar.

If, and this is a big if, your attorney has a good plan to recover 25-30 cents on the dollar, has advised you accurately on how to file with the IRS on fraud claims, then it is worthwhile for a group to fund this attorney and their firm.

Posted by: michael webster | August 31, 2008 9:21 PM

Pls explain why you think investors hiring lawyers will be better in the long run for investors than everyone waiting it out. I understand why the lawyers would benefit but how would the investors benefit. Either there are assets sufficient to provide a significant % of capital returned or not - how does adding more lawyers help?
I'm assuming, of course, that the receiver will sue everyone that an individual lawyer would sue - accts, etc. Thanks.

Posted by: G-Man | August 31, 2008 8:39 PM

please continue sending to above e mail i am retired as receiver trustee in canada with national acounting firm and family involved in this matter

Posted by: marvshore | August 31, 2008 3:51 PM