LAWFUEL – US Legal Newswire – MICHAEL J. GARCIA, the United States Attorney for the Southern District of New York, announced today the indictment of HAYIM REGENSBERG on securities and wire fraud charges stemming from an alleged $11 million “Ponzi” scheme involving purported
international initial public offering (“IPO”) and other
investment products he marketed to investors from New York City
and elsewhere. REGENSBERG was previously arrested on November
14, 2007 on a federal criminal Complaint. According to the
Indictment and Complaint filed in Manhattan federal court:
REGENSBERG engaged in a scheme to defraud multiple
investors by falsely promising to invest their money in one of
two ways. One method involved his claim that he had access to
IPO issuances on foreign stock exchanges before the general
public, and that he would invest money in international IPO stock
that would be sold in the public market at the earliest possible
moment thereafter, thereby obtaining for his investors quick
returns of between approximately 5 percent and 15 percent within
weeks of the IPO, with little or no risk to the invested capital.
REGENSBERG told investors that he had used the same international
IPO investment strategy successfully in the past, and had a
consistent and highly positive investment track record in such
investments. In fact, REGENSBERG did not invest the investor
funds as represented.
REGENSBERG also claimed to employ a second investment
strategy in which invested funds would be “loaned” to trading
firms, which would use those funds merely as collateral relating
to leveraged investments made by those trading firms (the
“Lending Product”). REGENSBERG also represented that these funds
would not be further invested by the trading firms, but rather
would remain in the trading firms’ accounts. REGENSBERG promised
each Lending Product investor a high, fixed annual rate of return
of up to 18 percent per year, and told investors that funds
invested in the Lending Product would be subject only to the low
risk that a trading firm might collapse. In fact, REGENSBERG
made no such investments.
Once victims had invested money with him, REGENSBERG
falsely represented to investors that their funds had been
successfully invested, and that those investments had generated
profits. To further the fraud, REGENSBERG also sent investors
money he claimed represented the proceeds of their investments.
In fact, REGENSBERG invested and lost large portions of
the money in highly speculative and risky trading, including
domestic options trading, unrelated to the investment strategies
he had promised to employ. Furthermore, REGENSBERG paid out to
earlier investors money he took in from new investors, thereby
perpetrating a “Ponzi” scheme. REGENSBERG also diverted
significant amounts of investor funds to himself and his
When certain investors confronted REGENSBERG about the
fact that they had stopped receiving regular payment of promised
investment returns, and asked him whether their invested proceeds
were safe, REGENSBERG provided the investors with a forged bank
document purporting to show he still maintained approximately $9
million in a bank account he controlled, when in fact that
account contained only approximately $9,000 at that time.
Between 2004 and September 2007, REGENSBERG’s scheme
caused investor losses totaling more than $11 million.
REGENSBERG is charged with one count of securities
fraud and three counts of wire fraud. REGENSBERG faces a maximum
sentence of 20 years in prison on each count. On the securities
fraud count, REGENSBERG faces a fine of the greatest of
$5,000,000 or twice the gross gain or loss from the offense, and
on each of the wire fraud counts he faces a fine of the greatest
of $250,000 or twice the gross gain or loss from the offense.
REGENSBERG, 43, lives in Manhattan.
Mr. GARCIA thanked the Federal Bureau of Investigation
for its assistance in the investigation, and said that the
investigation is continuing. The case was investigated by the
Criminal Investigators of the United States Attorney’s Office for
the Southern District of New York.
Assistant United States Attorneys DAVID M. SIEGAL and
MARC P. BERGER are in charge of the prosecution.