Real Estate Investor Jailed for Duping Victims in $5M Fraud Scam

Allison Tussey —  April 3, 2015 — Leave a comment

Abbe Edelman, 51, Livingston, New Jersey, was sentenced to 135 months in prison for running a real estate investment scheme that bilked victims out of more than $5 million.

The defendant previously pleaded guilty before U.S. District Judge Susan Wigenton to an information charging him with one count of wire fraud. Judge Wigenton imposed the sentence in Newark federal court.

According to documents filed in this case and statements made in court:

For roughly a decade, Edelman conducted an elaborate real estate investment fraud Ponzi scheme, duping victim-investors to provide him with money purportedly to buy and sell real estate and earn large returns on their investments. Beginning in 2004, Edelman operated through several companies alleged to be in the business of buying and selling real estate. Edelman told investors that he had significant past real estate experience, including a purported history of successfully buying and selling numerous bank foreclosed properties, and an MBA degree from NYU in real estate finance. Edelman claimed that he had longstanding relationships with banks that provided him with unique access to purchase foreclosed properties at below market prices and, in fact, already had negotiated with the banks to purchase certain properties at agreed-upon prices that would guarantee an easy resale and profit for investors.

Edelman promised investors that any investment would be used solely for the purchase, renovation or sale of specific investment properties in, among other places, New York, New Jersey, California, and Florida. Edelman told his investors that he could obtain extraordinary returns – as much as 25 percent – in as little as eight to 12 months. He purportedly told some victims that he had received from other investors, including professional athletes and celebrities, the majority of the capital needed to purchase the investment properties. He also said he had provided cash deposits to the financial institutions to secure the right to purchase the investment properties and invested his own money in the deals.

In reality, neither Edelman nor any of his real estate companies had a history of purchasing any bank foreclosed properties. Edelman also did not possess even an undergraduate degree. He did not have any deals lined up involving any investment properties, did not have his own money invested in any such deals, and did not have any money from celebrity investors.  Edelman induced investors to give him more than $5 million; none of it was used to fund any real estate acquisitions or renovations, but was instead diverted for his own use.

Edelman used his victims’ money for his home mortgage and day-to-day living expenses, such as restaurants, telephone, and gas bills. He purchased merchandise from high-end retailers, such as Gucci and Neiman Marcus, repaid existing investors in Ponzi-scheme fashion, and paid his legal expenses in connection with victims seeking repayment of their investment.

When investors later inquired about the status of their investments, Edelman offered additional misrepresentations, including emails sent from a fake email account that he had created, falsely assuring investors that he and his company had closed on the foreclosed properties, sometimes telling them buyers for the properties already had been identified.

In some cases, to allow the scheme to continue undetected, Edelman made “lulling” payments to investors, ranging from $100 to tens of thousands of dollars, to permit the scheme to continue. When payments were made to any investors, Edelman generally represented that the money was from the sale of investment properties, when, in fact, it came from a new investor.

In addition to the prison term, Judge Wigenton sentenced Edelman to serve three years of supervised release and pay $3,121,279 in restitution to his victims. Judge Wigenton also ordered a money judgment against Edelman in the amount of $3,121,279, representing the proceeds of Edelman’s fraudulent scheme, and forfeiture of Edelman’s interest in certain assets previously seized by the government, including approximately $79,000 and a 2014 Audi.

U.S. Attorney Paul J. Fishman announced the sentence.

U.S. Attorney Fishman credited criminal investigators with the U.S. Attorney’s Office and postal inspectors of the U.S. Postal Inspection Service, under the direction of Postal Inspector in Charge Maria L. Kelokates, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Joseph B. Shumofsky of the Economic Crimes Unit.

Be Sociable, Share!

Allison Tussey

Posts Google+

No Comments

Be the first to start the conversation.

Leave a Reply

Text formatting is available via select HTML.

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong> 

*