Encino Man Gets 9 Years for Defrauding Investors of Millions in Ponzi Scheme

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Encino Man Gets 9 Years for Defrauding Investors of Millions in Ponzi Scheme

The Ronald Reagan Federal Building and U.S. Courthouse is seen in Santa Ana, Calif., on May 28, 2010. (Robyn Beck/AFP via Getty Images)

City News Service

City News Service

12/19/2023

Updated: 12/19/2023

SANTA ANA, Calif.—A 51-year-old Encino man was sentenced Dec. 18 to nine years in federal prison for a Ponzi scheme that defrauded 40 investors out of millions.
Motty Mizrahi pleaded guilty Jan. 6 to six counts of wire fraud and one count of aggravated identity theft. U.S. District Judge Cormac Carney will hold a restitution hearing at a later date.
The defendant’s brother, Sassi Mizrahi, 58, of Sherman Oaks, was convicted Feb. 14 of five counts of wire fraud and was sentenced last month to 87 months in prison and ordered to pay $4.4 million in restitution.
The two “operated a Ponzi scheme that targeted victims they knew had reason to trust them—fellow members of the close-knit Orthodox Jewish Israeli community in the San Fernando Valley,” prosecutors said in a sentencing brief. “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 two ran their business, MBIG Company, out of their parents’ home in Encino. They raised about $6 million from investors from June 2012 through March 2019 with guarantees of 2 percent to 3 percent returns monthly as well as annual returns on their investments from 30 percent to 102 percent, prosecutors said.
The two never invested the money under their company’s name and instead Motty Mizrahi held the investments in his personal trading accounts and lost a substantial amount, prosecutors said. The losses were estimated to be at least $3.3 million.
Sassi Mizrahi took in hundreds of thousands of dollars from investors and helped cover up the scheme by producing bogus accounts for investors showing phony gains, prosecutors said.
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