Nearly four years after their arrest in March 2019, two brothers from San Fernando Valley were recently found guilty of a scheme that robbed people in the Israeli community of millions of dollars. Motty Mizrahi, 51 of Encino, pleaded guilty on January 6 to six counts of wire fraud and one count of aggravated identity theft. His brother, Sassi Mizrahi, 58, of Sherman Oaks, was found guilty on February 14 of five counts of wire fraud.
According to evidence presented at the six-day trial, Motty Mizrahi falsely portrayed himself as a licensed broker, a certified public accountant, and an experienced trader who employed sophisticated financial option and insurance-hedging strategies through the brothers’ business, MBIG Company. Both Mizrahi brothers operated MBIG out of their parents’ home in Encino.
During the trial, a few of their victims took the stand and testified that they lost their life-savings to the brothers who promised them “guaranteed” returns between 2% and 3% per month and annual rates of return ranging from 30% to 102%.
According to court documents, between November 2012 and until their arrest on March 2019, Motty and Sassi Mizrahi received millions of dollars from investors in the Israeli community. Many of them were members of the synagogue “Shuva Israel” in Encino, which the brothers previously attended with their family. Their father, Yehushua Mizrahi, who once served as a Consul in the Israeli Consulate in Los Angeles, was the cantor at the synagogue. It was there where they met many of their victims.
Neither of the Mizrahi brothers ever invested any victim-investor funds in an account under MBIG’s name. Instead, Motty Mizrahi transferred most of the victim-investor funds into his personal trading accounts at E*TRADE and TD Ameritrade, in which he accumulated persistent and extensive losses.
According to court documents, victim-investors sustained losses of at least $3.3 million. But their victims say the total amount should be much higher. “It wasn’t finalized yet” said R.C., who with her husband lost $235,000. “It doesn’t include funds from investors in Israel and investors who had paid them in cash.”
R.C., who gave a four-hour testimony in the Santa Ana court, told the jury how she started suspecting the brothers whom she had known for close to 30 years.
In an interview with The Jewish Journal, R.C. recounted the same story of how she began to suspect the brothers four years ago. “My husband met Motty and Sassi at a birthday party and they convinced him to invest with them. His friends from the synagogue vouched for them and he was told it was a risk free investment. When I first heard about it, I wasn’t happy and even called Motty telling him I would rather invest in real estate, but he reassured me that it was a safe investment and I shouldn’t worry about it.”
In March 2018 R.C. and her husband were expecting the birth of their first son and asked to withdraw their money from the E*TRADE account. “Motty came to the hospital and gave my husband a check for $25,000 and told him, “I’ll let you know when to cash it.” But when the day came and we tried cashing it, the check bounced. He gave us some other checks and they bounced. Meanwhile we had to prepare for the Brit of our son and because all of our money was invested and we couldn’t get it back, my mother-in-law said she’ll pay for it. She herself invested $120,000 with them. Motty promised her she’ll get her investment money when she comes to the States from Israel for the Brit. When she arrived, he avoided her, didn’t give her any money back. My mom ended up paying for the Brit.”
When the repeated requests for their money met with resistance and excuses, R.C. decided to call E*TRADE and inquire about her account. “I called them and asked them if there is such an account and gave them all the details. Two weeks later the manager called us and said, ‘You need to go to the authorities right now. There is no such account.’”
R.C. admitted she didn’t know who to turn to first. “I watched the series about Bernie Madoff and said to my husband, this is a Ponzi scheme. It was clear to me at that point what had happened. We started looking for an attorney to represent us and they asked for $110,000, which we didn’t have. Finally I found an attorney that served in the past as the head of the SEC [Securities and Exchange Commission] and he was willing to take the case on contingency.”
Other victims to whom The Jewish Journal spoke told similar stories: promises of huge returns, statements that indicated steady money growth. The brothers submitted phony monthly account statements that purported to show consistent monthly gains and falsely showed that MBIG’s account balances were between $6 million and $9 million. However, Motty Mizrahi instead lost the investors’ money—losses he and Sassi Mizrahi denied when confronted by victims who unsuccessfully demanded their money back.
Many of the victims to whom the Journal spoke said they invested all of their savings and now find it difficult to make ends meet. “My mother in-law lost all of her retirement money and my husband feels very guilty about it because he was the one who told her to invest,” said R.C.
One of the brothers’ relatives who declined to give her full name invested $100,000 and said that many members of the family in Israel had lost their money as well.
United States District Judge Cormac J. Carney scheduled a June 26 sentencing hearing for Sassi Mizrahi, who will face a statutory maximum sentence of 20 years in federal prison for each wire fraud count. Motty Mizrahi will have his sentencing hearing on Mary 15 and will face up to 20 years in federal prison for each wire fraud count and a mandatory two-year prison sentence consecutive to his wire fraud prison term for the aggravated identity theft count.
“These last few years had been very difficult for us,” said R.C. “We have been through hell, couldn’t pay our rent, had to deal with a sick child that spent a month at the hospital and all the while kept begging for Motty and Sassi for our money. When the verdict was read I cried, justice had prevailed at last. I’ve waited for this moment for four years.”
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