CORPORATE LAWYER PLEADS GUILTY TO MONEY LAUNDERING AND CONSPIRACY TO COMMIT SECURITIES FRAUD
Martin Weisberg, a former corporate partner in the New York office of an international law firm, pleaded guilty today to one charge of money laundering and one charge of conspiracy to commit securities fraud. The money laundering charge is based on Weisberg’s theft of money from an escrow account established on behalf of one of his clients for which Weisberg served as escrow agent. The securities fraud conspiracy charge is based on Weisberg’s involvement with a fraudulent scheme in which he received kickback payments from co-conspirators in connection with the issuance of publicly-traded securities by two of Weisberg’s former corporate clients. The guilty pleas arise from unrelated criminal schemes committed by Weisberg as alleged in two separate indictments. The proceedings were held before United States District Judge Nicholas G. Garaufis at the United States Courthouse in Brooklyn, New York.
The guilty pleas were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Janice K. Fedarcyk, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.
With respect to the money laundering charge, Weisberg was engaged by a corporate client to establish a $30 million escrow account. He advised the client that the account could not earn interest for the client’s benefit. In fact, Weisberg caused the $30 million to be placed into an interest-bearing account. During a fourteen-month period, the account earned approximately $1.6 million in interest, and Weisberg spent approximately $1.3 million of it without the client’s knowledge. Weisberg concealed the fraud by telling his client that the bank did not send monthly account statements; Weisberg instead sent the client letters on law firm letterhead stating false account balances.
With respect to the securities fraud conspiracy charge, Weisberg agreed with others to conceal his co-conspirators’ ownership and control of securities issued by two public companies, Xybernaut Corporation and Ramp Corporation. Weisberg was the outside counsel to Xybernaut and Ramp, and was a member of Xybernaut’s Board of Directors. The conspirators secretly issued shares in Xybernaut and Ramp at a discounted share price to co-conspirators located in Israel. Those conspirators sold the shares and used the proceeds to pay kickbacks to the defendant and others in exchange for making false statements in filings with the Securities & Exchange Commission regarding the conspirators’ ownership and control over the securities.
Weisberg faces up to ten years in prison on the money laundering charge and five years in prison on the securities fraud conspiracy charge.
The government’s case is being prosecuted by Assistant U.S. Attorneys Ilene Jaroslaw and John P. Nowak.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The Task Force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
The Defendant:
MARTIN WEISBERG
Age: 61
The guilty pleas were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Janice K. Fedarcyk, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.
With respect to the money laundering charge, Weisberg was engaged by a corporate client to establish a $30 million escrow account. He advised the client that the account could not earn interest for the client’s benefit. In fact, Weisberg caused the $30 million to be placed into an interest-bearing account. During a fourteen-month period, the account earned approximately $1.6 million in interest, and Weisberg spent approximately $1.3 million of it without the client’s knowledge. Weisberg concealed the fraud by telling his client that the bank did not send monthly account statements; Weisberg instead sent the client letters on law firm letterhead stating false account balances.
With respect to the securities fraud conspiracy charge, Weisberg agreed with others to conceal his co-conspirators’ ownership and control of securities issued by two public companies, Xybernaut Corporation and Ramp Corporation. Weisberg was the outside counsel to Xybernaut and Ramp, and was a member of Xybernaut’s Board of Directors. The conspirators secretly issued shares in Xybernaut and Ramp at a discounted share price to co-conspirators located in Israel. Those conspirators sold the shares and used the proceeds to pay kickbacks to the defendant and others in exchange for making false statements in filings with the Securities & Exchange Commission regarding the conspirators’ ownership and control over the securities.
Weisberg faces up to ten years in prison on the money laundering charge and five years in prison on the securities fraud conspiracy charge.
The government’s case is being prosecuted by Assistant U.S. Attorneys Ilene Jaroslaw and John P. Nowak.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The Task Force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
The Defendant:
MARTIN WEISBERG
Age: 61
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