A Toronto man was charged with operating a $9 million Ponzi scheme, marking the second time he has been charged with operating a multi-million diollar Ponzi scheme in the past three years. Tzvi Erez, 44, was charged with ten counts of fraud after police alleged that that he bilked investors through the sale of fraudulent investments. Erez was originally charged in 2009 with operating a $27 million Ponzi scheme based on the same fraudulent printing contracts. However, prosecutors dropped the charges last year, claiming that the court lacked resources to further pursue the case. According to authorities, new information received in the past several months led to the filing of new charges. Coincidentally, Erez is also an accomplished pianist, whose latest album, "Tzvi Erez Plays Chopin", is available here at Amazon.
According to authorities, Erez ran a small print shop in Richmond Hill called E Graphix Ltd. ("E Graphix"). Erez would tell potential investors that he had secured printing contracts for several high-profile clients, including Tommy Hilfiger, Movado, Colgate-Palmolive, Loblaw and Subway, for whom he would produce catalogues, brochures and other promotional material Investors were offered the opportunity to invest in those contracts and promised annual returns on their investment ranging from 20% to 36%. However, according to prosecutors, no such high-profile printing contracts existed. Instead, Erez operated a Ponzi scheme, using funds from new investors to pay returns to existing investors. The scheme was uncovered when E Graphix filed for bankruptcy in 2009.
Erez was first charged in 2009 with operating a scheme based on similar fraudulent printing contracts. That scheme, which ran from 2003 to 2009, allegedly defrauded investors out of $27 million. As a result of E Graphix filing for bankruptcy, a receiver was appointed to investigate the alleged fraud. The receiver filed a 295-page report concluding that, of the nearly $39 million that moved through Erez-controlled bank accounts, the majority was paid out to investors, a classic hallmark of a Ponzi scheme. The remainder was apparently wired to casino accounts and withdrawn as cash. The receiver also concluded that, while the scheme was a Ponzi scheme, its true size was smaller than the amount alleged. However, prosecutors subsequently dropped criminal charges in September 2010 due to insufficient resources to proceed with the case. Investors also pursued civil claims against Erez, but his financial state of affairs remains doubtful in light of his recent bankruptcy.
Erez is scheduled to make a court appearance on December 6.