Sherman Oaks Man Sentenced to 87 Months for $7M Ponzi Scheme in San Fernando

Sherman Oaks Man Sentenced to 87 Months for $7M Ponzi Scheme in San FernandoSource: Unsplash/ Wesley Tingey
Jake Rodriguez
Published on November 28, 2023

A swindling saga right out of the San Fernando Valley has landed Sherman Oaks' own Sassi Mizrahi in the slammer for 87 months, thanks to a $7 million Ponzi scheme so deviously crafted with his brother that they fleeced their own Jewish Israeli community. United States District Judge Cormac J. Carney didn't stop at just jail time; he hammered down a restitution order for a wallet-winner of $4,477,720.

According to the U.S. Attorney's Office, after a six-day trial that concluded on February 14, Mizrahi was found guilty on five counts of wire fraud. His sibling, Motty, who has already pleaded guilty to similar charges, awaits his own fate to be sealed on December 18. These brothers, bold enough to boldly run their sham MBIG Company straight out of their folks' homes, sold dreams of risk-free riches to their victims.

"For years...Sassi Mizrahi and his brother, co-defendant Motty Mizrahi... operated a Ponzi scheme that targeted victims they knew had reason to trust them: fellow members of the close-knit, Orthodox Jewish Israeli community of the San Fernando Valley," the prosecutors waxed in a sentencing memorandum. From around June 2012 to March 2019, the brothers peddled lies of "guaranteed" monthly returns as high as 3%, duping investors into believing their cash could be fluidly withdrawn after a holding period, as per the press release from the U.S. Attorney's Office, Central District of California.

The ruse unraveled as no funds were ever actually placed in MBIG's accounts. Motty had funneled the cash into E*TRADE and TD Ameritrade, where his trading acumen, or lack thereof, proceeded to spectacularly fail. Investors, beguiled by fabricated account statements, saw at least $3.3 million of their savings vanish. And when victims began clamoring for their money back, Sassi Mizrahi resorted to deliberately gaslighting them with a string of lies and threats, as per the prosecutors' arguments.

In October 2020, throwing the book at these fraudsters, the U.S. Securities and Exchange Commission muscled out a judgment eclipsing $3 million against Motty Mizrahi and their MBIG facade. This financial saga was unearthed thanks to the dogged work of the FBI, with Assistant United States Attorneys Morgan J. Cohen and David Y. Pi proving instrumental in the prosecution. Public Information Officer Ciaran McEvoy, at [email protected] or (213) 894-4465.