BULLETIN: Steven Byers, Figure In $255 Million WexTrust Ponzi And Fraud Scheme, Sentenced To More Than 13 Years In Federal Prison

BULLETIN: UPDATED 8:48 A.M. EDT (U.S.A.) Steven Byers, the president and chief executive officer of WexTrust Capital LLC, has been sentenced to 160 months in federal prison for his role in an alleged $255 million Ponzi and fraud scheme that cost investors millions of dollars.

Byers, 48, of Oakbrook, Ill., was sentenced by Judge Denny Chin of the U.S. Court of Appeals for the Second Circuit. Chin, formerly a U.S. district judge, was nominated to the appeals court by President Obama and received unanimous approval (98-0) in the U.S. Senate in the months after he sentenced Bernard Madoff in June 2009 to 150 years in federal prison for his $65 billion Ponzi scheme.

Chin also ordered Byers to make $7.7 million in restitution to victims and ordered the forfeiture of $9.2 million. Byers also will be on supervised probation for three years after he serves his prison sentence. The scheme largely was targeted at Orthodox Jews, according to court filings.

U.S. Attorney Preet Bharara described the sentence imposed by Chin against Byers as properly severe.

“Steven Byers used smoke and mirrors to defraud his investors out of millions of dollars,” Bharara said. “But his scheme was ultimately exposed for the sham that it was, and now he will be punished severely for his crimes.”

Prosecutors specifically charged Byers with fleecing investors in a $9.2 million, private-placement offering that claimed the money would be used to “purchase and operate seven commercial properties that were leased to the United States General Services Administration (GSA).”

“The seven GSA properties, however, were never purchased,” prosecutors said. “Instead, funds raised from investors were diverted for other purposes.”

Chin is scheduled to sentence Joseph Shereshevsky, Byers’ co-defendant, on May 13. The SEC said in August 2008 that Shereshevsky was a convicted felon who had been arrested for bank fraud in the 1990s.

It is common in the Ponzi universe for securities swindlers to start new schemes. Some fraudsters have hatched new schemes while on probation for previous swindles. Others have hatched new schemes from their jail cells.

See earlier story that references Byers.

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