Two Men Plead Guilty For Long-Running Advance-Fee Scheme
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that MICHAEL SOLOMON MARKOWITZ, a/k/a “Sol Markowitz,” and DAVID BINET pled guilty to conspiring to steal hundreds of thousands of dollars in advance fees from victims seeking standby letters of credit (“SBLCs”). BINET pled guilty today, while MARKOWITZ pled guilty on February 26, 2020. Both defendants pled guilty before U.S. District Judge Paul A. Engelmayer.
U.S. Attorney Geoffrey S. Berman said: “As they admitted in court, Michael Solomon Markowitz and David Binet perpetrated an advance fee scheme whose victims paid hundreds of thousands of dollars for phantom letters of credit. Now they both face the very real possibility of being sentenced to prison for their crimes.”
According to the Complaint, the Informations to which MARKOWITZ and BINET pled guilty, and court filings and statements made in public court proceedings:
SBLCs are financial instruments that provide a bank’s commitment to pay a third party in the event that the bank’s client defaults on an agreement with the third party. An SBLC is a “standby” agreement because the bank will have to pay only in a worst-case scenario where the client defaults on an ongoing agreement. Fraudulent SBLCs are frequently used in advance-fee schemes so that victims provide funds up front in exchange for the promise of an SBLC. In reality, and in fact, the victim never receives the SBLC or receives a fake SBLC.
Since at least 2012 through 2019, MARKOWITZ and BINET engaged in a scheme to defraud victims by inducing them to pay six-figure advance fees in exchange for an SBLC. MARKOWITZ and BINET purported to be able to help companies and individuals obtain financing for international projects, such as oil and gas projects in Africa. In fact, MARKOWTIZ and BINET stole the advance fees and never obtained SBLCs.
MARKOWITZ further admitted that he conspired to commit bank fraud by providing fraudulent proof-of-funds letters and SBLCs worth more than $25 million to financial institutions. On some occasions, MARKOWITZ used fake financial institutions incorporated in Switzerland to provide a veneer of legitimacy for the transactions.
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MARKOWITZ, 71, of Brooklyn, New York, pled guilty to one count of conspiracy to commit wire fraud and bank fraud, which carries a maximum sentence of five years in prison. He is scheduled to be sentenced by Judge Engelmayer on June 8, 2020.
BINET, 62, of New Jersey, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of five years in prison. He is scheduled to be sentenced by Judge Engelmayer on June 15, 2020.
Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the special agents for the United States Attorney’s Office for the Southern District of New York.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys David Abramowicz, Jilan Kamal, and Michael McGinnis are in charge of the prosecution.