SEC lawsuit alleges man defrauded Orthodox Jewish community members

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SEC lawsuit overview:

• Who: The U.S. Securities and Exchange Commission has filed a lawsuit against Yossi Engel.
• Why: Engel allegedly used his connections in the Orthodox Jewish community to defraud investors.
• Where: The SEC lawsuit was filed in California federal court.

The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against a former resident of California who allegedly targeted Orthodox Jewish community members with fraudulent securities and made improper distributions to investors.

According to the SEC lawsuit, defendant Yossi Engel’s scam resulted in $47 million in illegal gains.

Engel allegedly perpetrated the scam through his company iWitness Tech LLC from December 2018 through January 2021. He convinced investors he needed capital to fund his security camera installation business and promised them they would receive high rates of return for their investments, the SEC lawsuit alleges.

SEC lawsuit: Engel used Orthodox connections to gain trust and dupe investors

As an active member of an Orthodox synagogue in Los Angeles, Engel was reportedly able to make connections and convince members of his trustworthiness before targeting them with his allegedly fraudulent investment scheme.

“Engel cultivated a reputation in the Orthodox Jewish community as a studier of Torah and as a generous donor,” the SEC lawsuit states. “He opened his own small synagogue in a room next to his iWitness office and spent time teaching Torah to others. iWitness investors believed Engel to be trustworthy as well as charismatic.”

Despite knowing that iWitness was not profitable, he offered investments ranging from $15,000 to $1.3 million in short-term loans, the SEC lawsuit says. However, iWitness projects allegedly only earned a total of about $20,000 in five years.

Engel reportedly used the investor funds to make it appear that the business was successful even though it was not profitable, according to the SEC.

In 2020, Engel pursued a second scheme in which he allegedly duped investors into thinking he was developing property in Israel by sending them fake videos and pictures of apartment buildings and lying about having a special relationship with the mayor of Bnei Brak.

The SEC lawsuit alleges that both of Engel’s scams involved Ponzi-like distributions to investors and using some funds to pay for his personal expenses. His schemes reportedly began to fall apart in December 2020 when he was unable to obtain sufficient investments to pay for his financial obligations.

In 2021, Engel reportedly admitted to running a Ponzi scheme and engaging in securities fraud. He has reportedly fled to Israel.

PNC Bank is fighting to escape a lawsuit over its alleged participation in a $3 billion TelexFree Ponzi scheme, claiming there is no evidence it was aware of the alleged fraud.

What do you think about the allegations in this SEC lawsuit? Tell us your thoughts in the comments.

The SEC is represented by Daniel Blau and Tamar Braz of the Securities and Exchange Commission.

The SEC lawsuit is Securities and Exchange Commission v. Yossi Engel, Case No. 2:23-cv-00213, in the U.S. District Court for the Central District of California, Western Division.

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