Bergen County, New Jersey Man Charged in Alleged Investment Fraud Scheme
NEWARK, NJ—A North Arlington, New Jersey, man will appear in federal court today to face charges that he fraudulently obtained hundreds of thousands of dollars from investors prior to high-profile initial public offerings (IPOs) and then used the funds for lavish personal expenses, U.S. Attorney Paul J. Fishman announced.
Omar Hafez, 23, is charged by complaint with one count of conspiracy to commit wire fraud. FBI special agents and U.S. Postal inspectors arrested Hafez last night. He is scheduled to appear this afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court.
According to the complaint unsealed today:
From July 2014 to December 2015, Hafez and others solicited funds from victim investors, purportedly to be invested in shares of various companies prior to their IPOs. As a result, the victims provided Hafez and others with hundreds of thousands of dollars. However, instead of purchasing shares in those companies, Hafez and the other conspirators used the funds for their own benefit.
Hafez and others created a number of entities through which they operated the scheme, including but not limited to: Lotus Global Wealth Management, Lotus Wealth Management, Lotus Global Capital Investments Corporation, Lotus Global Capital Partners LLC, Lotus Global LLC, Lotus Global Property Management Corporation, Lotus Global Holdings LLC (collectively the “Lotus Global Entities”) and O.P.I. Wealth Management Corporation. Hafez held himself out to be the Chief Executive Officer (CEO) of the Lotus Global Entities.
For example, in February 2015, Hafez told an individual referred to in the complaint as “Victim 1” that he was CEO of Lotus Global and had access to pre-IPO shares of high-profile companies, including an entity referred to in the complaint as “Company A,” a cloud communications company that allowed software developers to integrate voice, text and other communications services into mobile and web applications. Hafez represented that following Company A’s IPO, the value of the shares would increase significantly, providing Victim 1 with significant profits after Hafez sold the shares. As a result, Victim 1 sent Hafez a $100,000 check to purchase shares of Company A.
In March 2015 and April 2015, Hafez represented to Victim 1 that he could sell Victim 1 pre-IPO shares of an entity referred to in the complaint as “Company B,” an Internet domain registrar and web hosting company. Again, Hafez represented that following the company’s IPO, the value of the shares would increase significantly. As a result, Victim 1 sent Hafez a wire in the amount of approximately $300,000 for shares of Company B.
None of the approximately $400,000 provided by Victim 1 was used to purchase shares of Company A, Company B or any other pre-IPO company. Instead, Hafez and other conspirators used Victim 1’s money for personal expenses, including an $87,000 purchase at Prestige Motors—a luxury car dealership—as well as approximately $100,000 in cash withdrawals.
The wire fraud conspiracy count carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, and postal inspectors with the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the investigation leading to today’s arrest.
The government is represented by Assistant U.S. Attorney Courtney A. Howard of the U.S. Attorney’s Office Criminal Division in Newark.
The charge and allegations contained in the complaint are merely accusations, and the defendant is considered innocent unless and until proven guilty.
If you believe you are a victim of or otherwise have information concerning this alleged scheme, you are encouraged to contact the FBI at 973-792-3000.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.