Corporate Lawyer Sentenced to 24 Months’ Imprisonment on Convictions for Money Laundering and Securities Fraud Conspiracy
| U.S. Attorney’s Office August 07, 2013 |
Earlier today, at the federal courthouse in Brooklyn, New York, Martin Weisberg, a former corporate partner in the New York office of the international law firm Baker & McKenzie LLP, was sentenced to 24 months’ imprisonment on his conviction for money laundering and for his conviction on conspiracy to commit securities fraud, to run concurrently. As a further part of his sentence, Weisberg was ordered to pay $297,500 in restitution, $250,000 in forfeiture, and a $200 special assessment, and is to serve three years of supervised release following the completion of his prison term. Weisberg must surrender to the Bureau of Prisons by November 6, 2013.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office. The sentence was imposed by United States District Judge Nicholas G. Garaufis.
“A license to practice law is not a license to violate it. As a noted attorney, Weisberg held a position of trust and had the respect of his peers. Instead of using his talents to provide wise counsel, he lied to and stole from his own clients, lied to the Securities and Exchange Commission, and betrayed the investing public. Weisberg’s unbridled greed has led him from the halls of an international law firm to a federal prison cell,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the Federal Bureau of Investigation, the agency that led the government’s investigation, and thanked the Securities and Exchange Commission for its assistance.
The securities fraud conspiracy conviction resulted from Weisberg’s involvement with a scheme in which he received kickback payments from co-conspirators in connection with the issuance of publicly traded securities by two of Weisberg’s former corporate clients. The money laundering conviction resulted from Weisberg’s theft of money from an escrow account established on behalf of one of his clients for which Weisberg served as escrow agent. The convictions relate to separate criminal acts committed by Weisberg and were charged in two separate indictments. Weisberg entered a guilty plea to both charges on May 21, 2013, on the morning that jury selection for his first trial was scheduled to begin.
In connection with the securities fraud conspiracy conviction, Weisberg engaged in a $55 million fraud scheme in which he agreed to conceal co-conspirators’ ownership and control of securities issued through a series of offerings by two public companies, Xybernaut Corporation and Ramp Corporation. During the course of the conspiracy, Weisberg acted as outside counsel to Xybernaut and Ramp, and was a member of Xybernaut’s Board of Directors. In return for his participation, the co-conspirators made kickback payments to Weisberg and others. The co-conspirators’ ownership and control over the Xybernaut and Ramp securities and the kickback payments were never disclosed in Ramp’s or Xybernaut’s corporate filings with the U.S. Securities and Exchange Commission.
In connection with the money laundering conviction, Weisberg was engaged by a corporate client to establish a $30 million escrow account. He advised the client that the account could not earn interest for the client’s benefit. In fact, Weisberg caused the $30 million to be placed into an interest-bearing account. During a 14-month period, the account earned approximately $1.6 million in interest, and Weisberg caused approximately $1.3 million to be wired out of the account to pay for his personal and business expenses without the client’s knowledge. Weisberg concealed the fraud by falsely convincing his client that the bank did not send monthly account statements; Weisberg instead sent the client letters on law firm letterhead stating false account balances.
The government’s case is being prosecuted by Assistant United States Attorneys Ilene Jaroslaw and John Nowak.
This prosecution was the result of efforts by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants. For more information on the task force, visit http://www.StopFraud.gov.
The Defendant:
MARTIN WEISBERG
Residence: Waccabuc, NY
Age: 62
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office. The sentence was imposed by United States District Judge Nicholas G. Garaufis.
“A license to practice law is not a license to violate it. As a noted attorney, Weisberg held a position of trust and had the respect of his peers. Instead of using his talents to provide wise counsel, he lied to and stole from his own clients, lied to the Securities and Exchange Commission, and betrayed the investing public. Weisberg’s unbridled greed has led him from the halls of an international law firm to a federal prison cell,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the Federal Bureau of Investigation, the agency that led the government’s investigation, and thanked the Securities and Exchange Commission for its assistance.
The securities fraud conspiracy conviction resulted from Weisberg’s involvement with a scheme in which he received kickback payments from co-conspirators in connection with the issuance of publicly traded securities by two of Weisberg’s former corporate clients. The money laundering conviction resulted from Weisberg’s theft of money from an escrow account established on behalf of one of his clients for which Weisberg served as escrow agent. The convictions relate to separate criminal acts committed by Weisberg and were charged in two separate indictments. Weisberg entered a guilty plea to both charges on May 21, 2013, on the morning that jury selection for his first trial was scheduled to begin.
In connection with the securities fraud conspiracy conviction, Weisberg engaged in a $55 million fraud scheme in which he agreed to conceal co-conspirators’ ownership and control of securities issued through a series of offerings by two public companies, Xybernaut Corporation and Ramp Corporation. During the course of the conspiracy, Weisberg acted as outside counsel to Xybernaut and Ramp, and was a member of Xybernaut’s Board of Directors. In return for his participation, the co-conspirators made kickback payments to Weisberg and others. The co-conspirators’ ownership and control over the Xybernaut and Ramp securities and the kickback payments were never disclosed in Ramp’s or Xybernaut’s corporate filings with the U.S. Securities and Exchange Commission.
In connection with the money laundering conviction, Weisberg was engaged by a corporate client to establish a $30 million escrow account. He advised the client that the account could not earn interest for the client’s benefit. In fact, Weisberg caused the $30 million to be placed into an interest-bearing account. During a 14-month period, the account earned approximately $1.6 million in interest, and Weisberg caused approximately $1.3 million to be wired out of the account to pay for his personal and business expenses without the client’s knowledge. Weisberg concealed the fraud by falsely convincing his client that the bank did not send monthly account statements; Weisberg instead sent the client letters on law firm letterhead stating false account balances.
The government’s case is being prosecuted by Assistant United States Attorneys Ilene Jaroslaw and John Nowak.
This prosecution was the result of efforts by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants. For more information on the task force, visit http://www.StopFraud.gov.
The Defendant:
MARTIN WEISBERG
Residence: Waccabuc, NY
Age: 62
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