New Jersey: The US Securities and Exchange Commission (SEC) has filed a federal court case against three New Jersey residents over an alleged large-scale investment fraud scheme that raised approximately ₹440 crore from more than 87 investors. According to the regulator, Leor Moshe operated the investment scheme through Capital Funding ASAP LLC and told investors that their money would be used to provide short-term loans to small businesses in return for substantial fixed profits. However, the SEC alleges that a significant portion of the money was diverted for purposes unrelated to the stated investment plan.
Affinity Fraud Mechanics and Small Business Loan Promises
According to the SEC, the alleged scheme operated from November 2019 to June 2023. Moshe allegedly persuaded investors to provide funds for short-term business loans, claiming that the arrangement would generate attractive and consistent returns. The scheme ultimately raised about ₹440 crore from more than 87 investors. The regulator alleges that Moshe diverted more than ₹103 crore for personal use.
The transition from legitimate commercial lending pools to unregistered private investment schemes represents a major risk vector in affinity-based financial fraud. By exploiting established religious and social ties within Orthodox Jewish communities, the primary promoter established a high-trust solicitation vector, inducing victims to commit capital without conducting independent institutional due diligence.
Ponzi Distribution Dynamics and Unregistered Brokers
The SEC further alleges that Moshe used more than ₹7.9 crore of the funds to make payments to earlier investors. Such payments allegedly created the appearance that the investment programme was generating returns, while funds from newer investors were being used to satisfy obligations to previous participants. The regulator has described the alleged arrangement as having Ponzi-like characteristics.
The alleged scheme primarily affected investors connected with Orthodox Jewish communities in New Jersey and New York, according to the SEC. However, the financial impact extended across several US states. Investors in Arizona, Connecticut, Florida, Illinois, New Jersey, New York and Ohio allegedly suffered combined losses exceeding ₹234 crore.
Jacob Goldman and Isaac Odes have also been named in the SEC action. The regulator alleges that the two men were paid to recruit investors for the scheme even though they were not registered as broker-dealers or associated with any registered broker-dealer. According to the complaint, they solicited more than ₹215 crore from at least 25 investors, negotiated investment terms and assisted in collecting funds.
Federal Enforcement Actions and Regulatory Warnings
The SEC alleges that Goldman and Odes actively approached potential investors and encouraged them to place money into the investment programme. They allegedly participated in discussions concerning investment terms and helped collect funds from investors. The regulator has therefore alleged that their involvement went beyond simply introducing prospective investors to Moshe.
The SEC is seeking permanent injunctive relief against the defendants, disgorgement of allegedly ill-gotten gains along with prejudgment interest and civil monetary penalties. The agency is also seeking a conduct-based injunction against Moshe that could restrict his future activities. A senior official from the SEC’s New York Regional Office said that promises of returns exceeding 30% should have served as a warning sign for investors. Regulators have repeatedly cautioned that unusually high and fixed returns can be a major red flag, particularly when they are presented as being virtually guaranteed despite the risks normally associated with investments.
A parallel criminal case has also been initiated against Moshe. The US Attorney’s Office for the District of New Jersey announced criminal charges against him over conduct similar to that described in the SEC’s civil complaint. This means the allegations are being pursued through both regulatory civil proceedings and a separate federal criminal action.
Investor Protection Controls and Risk Audit Safeguards
The case highlights the risks associated with private investment schemes that promise unusually high or fixed returns. Investors should independently verify the registration and regulatory status of an investment company, its promoters and anyone soliciting funds on its behalf.
According to renowned cybercrime expert and former IPS officer Prof. Triveni Singh, affinity investment scams leverage social trust to bypass standard financial skepticism. He emphasized that preventing large-scale private fund siphoning requires investors to verify broker-dealer registrations on official regulatory portals, conduct independent escrow audits, and treat any guaranteed return exceeding market benchmarks as a primary indicator of financial fraud.
The SEC’s allegations have not yet been established as facts in a final judgment. The case will now proceed through the federal legal process, where the defendants will have an opportunity to respond to the allegations.
