Encino man gets 9-year sentence for role in Ponzi scheme

Brothers Motty and Sassi Mizrahi ran the operation through their business

A 51-year-old Encino man was sentenced Monday to nine years in federal prison for a Ponzi scheme that defrauded 40 investors out of millions.

Motty Mizrahi pleaded

SANTA ANA »

guilty Jan. 6 to six counts of wire fraud and one count of aggravated identity theft. U.S. District Judge Cormac Carney will hold a restitution hearing at a later date.

The defendant’s brother, Sassi Mizrahi, 58, of Sherman Oaks, was convicted

Feb. 14 of five counts of wire fraud and was sentenced last month to 87 months in prison — more than seven years — and was ordered to pay $4.4 million in restitution.

The two “operated a Ponzi scheme that targeted victims they knew had reason to trust them — fellow members of the close-knit Orthodox Jewish Israeli community in the San Fernando Valley,” prosecutors said in a sentencing brief. “Exploiting the goodwill engendered by such affinity, defendants scammed millions of dollars from their victims with false promises of risk-free investments and guaranteed returns.”

The two ran their business, MBIG Company, out of their parents’ home in

Encino. They raised about $6 million from investors from June 2012 through March 2019 with guarantees of 2% to 3% returns monthly as well as annual returns on their investments from 30% to 102%, prosecutors said.

The two never invested the money under their company’s name and instead Motty Mizrahi held the investments in his personal trading accounts and lost a substantial amount, prosecutors said. The losses were estimated to be at least $3.3 million.

Sassi Mizrahi took in hundreds of thousands of dollars from investors and helped cover up the scheme by producing bogus accounts for investors showing phony gains, prosecutors said.