A Chicago man was handed a prison sentence of 21 years and 10 months for his role in orchestrating a Ponzi scheme that resulted in millions of dollars of losses to investors. Joseph Shereshevsky, 54, was sentenced following a previous guilty plea in February to charges of mail fraud, conspiracy, and securities fraud in connection with the scheme that prosecutors initially valued at over $200 million. United States District Judge Denny Chin stated in the sentencing hearing today that investor losses may exceed $20 million.
Shereshevsky founded WexTrust Capital LLC along with co-founder Steven Byers. Byers was sentenced in April to thirteen years in prison for his role in the scheme. WexTrust advertised itself as being involved in the purchase and of residential and commercial properties in several states, including Illinois, North Carolina, and New York. According to the SEC, over $250 million was raised from 1,200 investors, many of whom were members of the Orthodox Jewish community. Investors believed that WexTrust conducted many private placements in association with real-estate interests. However, in reality, investor funds were used to pay returns to older investors to create the appearance of a successful enterprise.
Incidentally, the Judge presiding over this case, Judge Chin, was also the judge that sentenced Bernard Madoff to 150 years in federal prison for orchestrating the largest Ponzi scheme to date. Judge Chin was appointed to the Second Circuit court of appeals last year but continues to preside over the proceedings involving Shereshevsky and a related civil case.