24 May – LAWFUEL – The Law News Network – A Bell Canyon man was sentenced today to 135 months in federal prison for running a commodities futures trading firm that defrauded hundreds of investors out of more than $95 million through fraudulent foreign currency trades.
Zvi Leichner, 33, was sentenced this morning by United States District Judge John F. Walter. In addition to the prison term, Judge Walter ordered Leichner to pay $94,796,530 in restitution to 296 victims.
Zvi Leichner’s father, Moshe Leichner, 56, of Northridge, was sentenced by Judge Walter to 240 months in federal prison February.
The Leichners, who have been held without bond for the past two years, each pleaded guilty in July 2003 to two counts of wire fraud and one count of money laundering.
The Leichners’ foreign exchange currency trading operation was called Midland Euro and was located in Sherman Oaks. According to court documents, between July 1998 and February 2003, the Leichners obtained more than $130 million from investors located in the United States, Canada, Saudi Arabia and Israel for investments in foreign currency. The Leichners often solicited their investors through the Internet and through online bulletin boards. The Leichners told their investors that Midland Euro would invest their funds in foreign currencies which Midland Euro would then trade on the international currency market for profit. Although the terms of the investments tended to vary slightly among victims, the Leichners typically claimed that Midland Euro would generate guaranteed monthly profits of between 2 percent and 4 percent, and that a percentage of the initial investment (between 40 percent and 85 percent) was guaranteed against loss.
In reality, less than 20 percent of investor funds were actually invested in foreign currency. The remainder of investor funds went to the Leichners, who used the money to pay themselves large salaries and to purchase personal assets including planes, boats, automobiles and houses. The Leichners covered up their misappropriation of investor funds by, among other things, providing victims with false documents purporting to show that investors’ money was on deposit with certain financial institutions.
The National Futures Association, which regulates commodity brokers, audited Midland Euro in October 2001, and afterwards barred Midland Euro from the commodities and foreign currency exchange business. Even though Zvi Leichner was suspended by the California Department of Corporations from the securities and futures business in March 2000, Midland Euro continued to solicit business and trade foreign currency for clients.
This case is the result of an investigation by the Federal Bureau of Investigation.