SANTA ANA, California – A San Fernando Valley man was sentenced today to 87 months in federal prison for scheming with his brother to fraudulently obtain more than $7 million from at least 40 investors – their fellow members of the Valley’s Orthodox Jewish Israeli community – through an investment company they ran out of their parents’ house.
Sassi Mizrahi, 58, of Sherman Oaks, was sentenced by United States District Judge Cormac J. Carney, who also ordered him to pay $4,477,720 in restitution.
At the conclusion of six-day trial, a jury on February 14 found Mizrahi guilty of five counts of wire fraud.
His brother, Motty Mizrahi, 51, of Encino, pleaded guilty on January 6 to six counts of wire fraud and one count of aggravated identity theft. Motty Mizrahi is scheduled to be sentenced on December 18.
Motty Mizrahi falsely portrayed himself as a licensed broker, a certified public accountant, and an experienced trader who employed sophisticated financial option- and insurance-hedging strategies through the brothers’ business, MBIG Company. Both Mizrahi brothers operated MBIG out of their parents’ home in Encino.
“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.”
From June 2012 until March 2019, the Mizrahi brothers raised more than $7 million from investors, promised them “guaranteed” returns between 2% and 3% per month, promised annual rates of return ranging from 30% to 102%, and assured them that their funds could be withdrawn after an initial holding period on an on-demand basis.
Neither Mizrahi brother ever invested any victim-investor funds in an account under MBIG’s name. Instead, Motty Mizrahi transferred most of the victim-investor funds into his personal trading accounts at E*TRADE and TD Ameritrade, in which he accumulated persistent and extensive losses. As a result of their investments with MBIG, victim-investors sustained losses of at least $3.3 million. Sassi Mizrahi received hundreds of thousands of dollars of investor money, and helped his brother conceal the truth about the scheme from MBIG’s investors.
Sassi Mizrahi and his brother submitted phony monthly account statements that purported to show consistent monthly gains and 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.
“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.
In October 2020, the U.S. Securities and Exchange Commission obtained a judgment of more than $3 million against Motty Mizrahi and MBIG for perpetuating the fraud.
The FBI investigated this matter.
Assistant United States Attorneys Morgan J. Cohen and David Y. Pi of the Major Frauds Section are prosecuting this case.