Convicted of vast Ponzi scheme, Gregory Lerner given 10 years
Gregory Lerner, who defrauded some 2,500 investors of a combined NIS 62 million in a massive Ponzi scheme, was sentenced yesterday to 10 years in prison and a NIS 200,000 fine.
He was also ordered to compensate each investor to the tune of 40 percent of what he stole from them, up to the maximum of NIS 220,000 set by law.
In his ruling, Tel Aviv District Court Judge Chaled Kabub noted that most of Lerner's victims were elderly new immigrants from the former Soviet Union, and Lerner "cynically exploited" their lack of knowledge to rob them of "the money that was meant to give them security in their old age."
Such a person, he added, is a "plague," and "should not expect consideration from the court."
Lerner, himself an immigrant from the former Soviet Union, published advertisements in Israel's Russian-language media between 2004 and 2006 seeking investors in his oil-trading company. Billing himself as an expert in the international oil trade, he promised investors risk-free returns of 2 percent a month, or 29 percent a year compounded. Some 2,500 people ultimately invested with him.
In reality, however, the company's sole business activity was collecting the victims' money and smuggling it abroad. The money has never been recovered.
The scam, Kabub wrote, was carefully planned and executed: Lerner "set up straw companies, hired public relations and advertising agents, rented luxurious offices."
Lerner tried to present himself as "a hero caring for the needs of those elderly immigrants who put their faith in him," even as he planned "to flee the country and smuggle out most of the money," Kabub added.
The verdict described some of the victims, such as Yuri Zaitsev, a Holocaust survivor who invested his entire savings - NIS 650,000 in German reparation payments - with Lerner. Zaitsev planned to use the money and the promised profits to buy an apartment in an assisted living facility for his autistic son.
Lerner visited Zaitsev's home, heard about the source of his money and its intended use, and even met his son - "and nevertheless, this did not deter him from his course," Kabub wrote.
Moreover, this is not Lerner's first conviction for fraud. His previous offenses similarly entailed preying on "weak populations" by falsely promising quick and easy profits.
Lerner "is a clear and present danger to the public," the judge concluded. "He has no fear of the law, and systemically, time after time, commits similar acts. Therefore, there is a public interest in distancing him from society and the public for a lengthy period."
Nevertheless, Kabub sentenced him to far less time than the 17 years the prosecution requested - both because he still has three years to serve on his last sentence, and because of his physical and psychological state. Lerner's lawyers said he suffered from manic depression, and Kabub was "willing to accept the defense attorneys' claims that this disease made some contribution to his criminal acts."
Lerner was convicted of aggravated fraud, theft, falsifying corporate documents and violating the law against money laundering. His partner in crime, Aryeh Smolaniansky, was sentenced to four years in jail, a NIS 100,000 fine and NIS 1 million in compensation, to be divided proportionally among the victims based on how much they lost.