SEC sues WexTrust, alleging fraud (Orthodox Jews targeted)

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By DAVID GLOVIN
Bloomberg News

The U.S. Securities and Exchange Commission sued Chicago-based Wextrust Capital LLC and two of its owners, saying they used a Ponzi scheme to cheat investors, many in the orthodox Jewish community, of more than $100 million.

The co-owners, Steven Byers, of Oakbrook, Ill., and Joseph Shereshevsky, of Norfolk, Va., were arrested Monday on charges of defrauding investors by stealing funds they raised through private placements.

"Defendants have been fraudulently raising money in the various offerings, each of which purportedly is for a particular investment, without disclosing that funds raised were actually being used to pay prior investors in unrelated offerings," the SEC said in a complaint that sought to freeze the fund's assets.

WexTrust has raised at least $255 million from at least 1,196 investors in the U.S. and abroad, the SEC said. WexTrust said in a January news release that it is a private-equity company specializing in real estate and investment banking, with offices worldwide, including in Nashville, Atlanta and New York.

The firm also owns industrial property in the Middle Tennessee region, including a distribution and tech center at 530 Myatt Drive in Goodlettsville and a warehouse at 1136 Dunlop Lane in Clarksville. It isn't known whether the federal probe has any direct ties to Tennessee.