YOU READ IT HERE FIRST: A former hedge fund manager from Teaneck was sentenced to 63 months in federal prison for scamming Morgan Stanley Smith Barney out of more than $200,000 while he was free on bail for defrauding several hotel and motel development companies out of more than $1.7 million.
Moshe Butler, 33, admitted depositing bum checks and quickly withdrawing cash — this while he was facing charges for collecting large payments for flat-panel TVs that were never delivered.
Butler said he obtained orders from hospitality industry developers in the South by promising televisions supplied through a pair of Bergenfield companies.
Although some were delivered, most of them weren’t, federal authorities said.
The Yeshiva University graduate founded a rehab center for Jews in Florida, where he was a part-time resident.
“I was leading a double life, and gambling was my mistress,” he reportedly told the Palm Beach Post.
While free on bail, he said, he opened an investment account in July 2011 that allowed him immediate access to funds deposited by check.
No sooner were the rubber checks deposited than he withdrew large sums of cash — even after the account was closed, the government said.
Unlike state convicts, federal inmates must serve just about all of their sentences. Even with credits, Butler is all but guaranteed a full five years in federal custody.
But that’s not all.
In addition to the prison term, U.S. District Judge William H. Walls sentenced Butler to three years of supervised release and ordered him to pay restitution of $2.26 million in the TV scheme and $207,375 in the check scam.
Walls also ordered him to forfeit an additional $208,172.
A release from U.S. Attorney Paul Fishman details the extent of the schemes:
“Butler admitted that in the summer of 2011 he defrauded Morgan Stanley Smith Barney LLC (MSSB) out of approximately $37,417.
“In July 2011, Butler opened an investment account with Morgan Stanley in New York and was the sole signatory. The account allowed him to have immediate access to funds deposited by check.
“On August 12, 2011, Butler funded his MSSB account by depositing a $50,000 check and used the entire $50,000 to cover the purchases of various securities and commodities option contracts. The purchases were largely unsuccessful and within five days, Butler lost his entire $50,000 investment as well as an additional $18,921.
“On August 19, 2011, Butler deposited a $100,000 check into his MSSB account to cover the negative balance in the account. The $100,000 check Butler deposited was drawn against a bank account that Butler solely controlled, but which had been closed by the issuing bank more than two months earlier because Butler had written checks returned for insufficient funds.
“Butler took advantage of the fact that the funds were immediately available by withdrawing $7,000 in cash and purchasing numerous securities and commodities option contracts in his account.
“Those purchases were also unsuccessful and resulted in additional losses of $11,496.
“In October 2011, Butler deposited a $30,000 check to cover the losses in his MSSB account, but that check was also returned for insufficient funds.
“Butler also admitted that between November 2011 and March 2012, he fraudulently obtained $170,755 in money and legal services from two individuals, D.B. and C.W., and wrote them a series of bad checks.
“Butler committed these acts while on pretrial release in connection with a scheme he committed between approximately 2008 and June 2009, defrauding multiple hotel and motel development companies out of more than $2.25 million.
“At the start of the scheme, Butler worked at a New Jersey-based company that sold mirrors and artwork to hotel and motel development companies. In this position, Butler was in regular contact with the purchasing agents at various development companies and was familiar with their purchasing procedures.
“Butler contacted many of these purchasing agents claiming to be working for one of two shell companies he controlled – SB Purchasing Group, LLC and NI Group – and offering to sell flat-panel televisions at low cost with extended warranties, saying that his companies had been in business for years and had delivered thousands of televisions.
“At times, Butler claimed to be ‘John Savoy,’ and would often follow up with a call from his real persona, suggesting the customer buy from ‘Savoy.’
“More often than not, customers received only a portion or none of the televisions they purchased. And when they requested a refund of the money they had paid him, Butler often sent the customers checks that were returned for insufficient funds.”
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