A 58-year-old Sherman Oaks man was sentenced Monday to more than seven years in federal prison for a Ponzi scheme that defrauded 40 investors out of millions.
Sassi Mizrahi was convicted Feb. 14 of five counts of wire fraud. His brother, Motty Mizrahi, 51, of Encino, pleaded guilty Jan. 6 to six counts of wire fraud and one count of aggravated identity theft and is scheduled to be sentenced Dec. 18.
U.S. District Judge Cormac Carney sentenced Sassi Mizrahi to 87 months in prison and ordered him to pay $4.4 million in restitution.
The two “operated a Ponzi scheme that targeted victims they knew had reason to trust them — fellow members of the close-knit Orthodox Jewish Israeli community in the San Fernando Valley,” prosecutors said in a sentencing brief. “Exploiting the goodwill engendered by such affinity, defendants scammed millions of dollars from their victims with false promises of risk-free investments and guaranteed returns.”
The two ran their business, MBIG Company, out of their parents’ home in Encino. They raised about $6 million from investors from June 2012 through March 2019 with guarantees of 2% to 3% returns monthly as well as annual returns on their investments from 30% to 102%, prosecutors said.
The two never invested the money under their company’s name and instead Motty Mizrahi held the investments in his personal trading accounts and lost a substantial amount, prosecutors said. The losses were estimated to be at least $3.3 million.
Sassi Mizrahi took in hundreds of thousands of dollars from investors and helped cover up the scheme by producing bogus accounts for investors showing phony gains, prosecutors said.