Securities Industry Commentator by Bill Singer Esq

[M]otty Mizrahi falsely portrayed himself as a licensed broker, certified public accountant, and experienced trader who employed sophisticated financial option- and insurance-hedging strategies through the brothers' business, MBIG Company. The Mizrahi brothers operated MBIG out of their parents' home in Encino, court documents state. From November 2012 until March 2019, Motty Mizrahi raised millions of dollars from investors, promised them "guaranteed" returns between 2 percent and 3 percent per month, and assured them that their funds could be withdrawn after an initial holding period on an on-demand basis. Motty Mizrahi allegedly submitted phony monthly account statements that purported to show consistent monthly gains and also 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, the affidavit states.

The complaint also alleges that Motty Mizrahi distributed to investors a financial prospectus that contained false and fraudulent representations concerning MBIG's past investment performance. The Mizrahi brothers also allegedly misled investors about their company's E*Trade brokerage account, which was supposed to be used for investors' money but in reality did not exist. Instead, Motty Mizrahi routed all victim-investor funds into his own personal trading account, the affidavit states. After E*Trade closed Motty Mizrahi's personal accounts, Motty and Sassi Mizrahi allegedly continued to mislead investors by assuring them that MBIG had an E*Trade account containing adequate balances to cover the victim-investors' initial investments.

[M]usienko allegedly partnered with overseas cybercriminals who had hacked into, and stole funds from, online bank accounts belonging to a large number of individual and corporate victims in the United States.  One victim was a business based in the Western District of North Carolina.  Musienko operated a network of "money mules" throughout the United States.  According to the indictment, using aliases that included "Robert Davis" and phony front companies that included "Vita Finance AG" and "Hilpert AG," Musienko recruited money mules throughout the United States using a variety of fraudulent techniques, including by advertising bogus "employment" opportunities to work as "Financial Assistants."  He promised to pay the money mules a fee of approximately five percent for each overseas wire transfer they completed.

Once Musienko had his network of money mules in place, Musienko then offered his money mule services to his cybercriminal partners to assist them in transferring stolen funds.  He directed his "money mules" to use their own bank accounts to receive and then transfer proceeds from the compromised bank accounts overseas.  As alleged in the indictment, Musienko's criminal money mule operation effectuated the theft and laundering of at least $2.8 million from 2009 to 2012. 

• Securities Industry Commentator
• Bill Singer