SANTA ANA, California
Federal officials stated Wednesday that a jury found a San Fernando Valley man guilty of scheming with his brother to fraudulently obtain more than $6 million from at least 40 investors through an investment company.
They ran out of their parent’s house, officials stated.
Sassi Mizrahi, 58, of Sherman Oaks, was found guilty late Tuesday of five counts of wire fraud. The jury found Mizrahi not guilty of one wire fraud count.
His brother, Motty Mizrahi, 51, of Encino, pleaded guilty on January 6 to six counts of wire fraud and one count of aggravated identity theft.
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.
From June 2012 until March 2019, the Mizrahi brothers raised more than $6 million from investors, promised them “guaranteed” returns between 2% and 3% per month, promised annual rates of return ranging from 30% to 102%, and assured them that their funds could be withdrawn after an initial holding period on an on-demand basis.
Neither Mizrahi brother never 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.
As a result of their investments with MBIG, victim-investors sustained losses of at least $3.3 million.
Sassi Mizrahi received hundreds of thousands of dollars of investor money, and helped his brother conceal the truth about the scheme from MBIG’s investors.
Sassi Mizrahi and his brother submitted phony monthly account statements 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.
U.S. District Judge Cormac J. Carney scheduled a June 26 sentencing hearing for Sassi Mizrahi. He faces up to 20 years in federal prison for each wire fraud count.
Mizrahi’s sentencing hearing that is scheduled for May 15. He faces up to 20 years in federal prison for each wire fraud count and a mandatory two-year sentence consecutive to his wire fraud prison term for the aggravated identity theft count.
In October 2020, the U.S. Securities and Exchange Commission obtained a judgment of more than $3 million against Motty Mizrahi and MBIG for fraud.
The FBI investigated this matter.
Assistant U.S. Attorneys Morgan J. Cohen and David Y. Pi of the Major Frauds Section are prosecuting this case.