Two former residents of the Fairfax District have been indicted by a federal grand jury for committing more than $33 million in fraud, following an investigation during which the FBI says they fled to Israel.
The Jan. 30 indictment against Aviv Mizrahi (aka Aviv Shoham Schwartz), 53, and Rabbi Aryeh Greenes, 58, details 34 counts of fraud. It states that the two knowingly falsified financial documents when applying for loans from three banks: TomatoBank, United Commercial Bank (UCB) and Security Pacific Bank (SPB).
The Justice Department alleges that the two men’s scheme cost the three banks a total of $33,183,000 , with UCB, SPB and TomatoBank losing $28 million, $5 million and $183,000 respectively.
Mizrahi, who was born in Israel, is charged on all 34 counts, and Greenes accompanies him on 10. The FBI believes that Mizrahi fled to Israel in 2009, followed by Greenes in 2012.
All three banks were headquartered in California, and two of them — UCB and SPB — failed during the course of the 2008-2009 financial crisis and were closed by state and federal regulators. The Securities and Exchange Commission (SEC) said that UCB’s failure was one of the 10 largest during the crisis, and cost the Federal Deposit Insurance Commission (FDIC) $2.5 billion.
The alleged fraud was committed through use of three of Mizrahi’s companies: two wholesalers, Tech Club and New Electronic, and one retailer, Star Club. The indictment states that Tech Club and New Electronic “purported to be electronic wholesalers of televisions, DVD players, etc.” Greenes, reads the indictment, was the CFO of Tech Club and New Electronic.
From February 2004 until June 2008, the government alleges, Mizrahi knowingly falsified loan documents that the banks requested before issuing, increasing or extending lines of credit.
On Feb. 23, 2004, for example, Mizrahi and Greenes allegedly lied to UCB, submitting documents that claimed Wal-Mart was a customer and that New Electronic was owed $13 million by customers as of late 2003. In reality, the indictment states, New Electronic’s accounts receivable were “significantly less” and Wal-Mart was not a customer — two key claims that, if false, would have made New Electronic less creditworthy.
A Los Angeles Times piece from 1990 details a dispute between Star Club, which was located on Sepulveda Boulevard in Culver City, and Canon USA, the American distributor of the Japanese company’s products. Canon USA alleged that Star Club was advertising refurbished goods as new.
Laura Eimiller, an FBI spokeswoman in its Los Angeles office, said that both Mizrahi and Greenes knew about the investigations when they fled.
“Now that they are charged, we would like to take them into custody,” Eimiller said. “We will seek extradition if they don't turn themselves in.”
If convicted, Mizrahi and Greenes could be imprisoned for the remainder of their lives, with Mizrahi facing a maximum sentence of 1,020 years and Greene of 330 years, according to the FBI.
According to dintorah.net, Greenes’ Web site, the rabbi has served as a quasi- arbitrator, helping parties in a legal dispute settle their case in a Jewish court of law. Additionally, for 25 years, the site says, he served as a business consultant and a lecturer in halacha and Jewish ethics.
If you have any information concerning Mizrahi or Greenes, please contact your local FBI office or the nearest American embassy or consulate.