Man sentenced in $7M scam targeting local Orthodox Jewish community

A 58-year-old Sherman Oaks man was sentenced to nearly seven and a half years in federal prison Monday for scamming fellow members of a San Fernando Orthodox Jewish Israeli community out more than $7 million through investment company he ran with his brother out of their parents’ home, authorities announced.  

Sassi Mizrahi was found guilty on five counts of wire fraud and, along with the 87 months of prison time, was ordered to pay some $4.47 million in restitution.  

His brother, 51-year-old Encino resident Motty Mizrahi, pleaded guilty in January of this year to six counts of wire fraud and one count of aggravated identity theft.  

From June 2012 to March 2019, the Mizrahi brothers fraudulently raised millions of dollars from at least 40 investors in their community, promising them “guaranteed” returns of 2% and 3% a month and annual rates between 30% and 102%, according to a news release from the United States Department of Justice, Central District of California.  

The brothers also assured their victims that their money could be withdrawn on an on-demand basis after an initial holding period.  

Portraying himself falsely as a licensed broker, a certified public accountant and an experienced trader, Motty told victims that he and his brother’s business, MBIG Company, used “sophisticated financial option-and-insurance-hedging strategies” to get returns on their clients’ investments.  

However, neither brother ever invested their victims’ money in accounts under MBIG’s name. Motty transferred most of the victims’ funds into personal trading accounts at E*TRADE and TD Ameritrade where he sustained losses of more than $3 million.  

Prosecutors said Sassi also received hundreds of thousands of dollars in investor money and then helped his brother keep the truth from community members that invested with MBIG.  

“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,” prosecutors argued in a sentencing memorandum. “Exploiting the goodwill engendered by such affinity, defendants scammed millions of dollars from their victims with false promises of risk-free investments and guaranteed returns.” 

The Mizrahi brothers also filed fake monthly account statements meant to trick victims into believing MBIG had consistent monthly financial gains and had balances between $6 million and $9 million.  

When confronted by community members they took advantage of, the brothers denied their financial losses and never returned the money they stole.  

“When victims asked for their money back, [Sassi Mizrahi] gaslit them with lies about the safety of their investments, promises of repayment he knew could not be honored, threats of retaliation, and forged documents meant to corroborate his increasingly baroque excuses for why the money was unavailable,” prosecutors argued in a sentencing memorandum. 

The U.S. Securities and Exchange Commission also obtained a judgement of more than $3 million against Motty and MBIG for fraud in Oct. 2020. 

Motty’s sentence hearing is scheduled for Dec. 18.