SEC Obtains Final Judgment Against Investment Adviser Who Defrauded Members of the Israeli-American Community

Litigation Release No. 24948 / October 19, 2020

Securities and Exchange Commission v. Motty Mizrahi et al., No. 19-02284 (C.D. Cal. filed Mar. 27, 2019)

On October 6, 2020, the Securities and Exchange Commission obtained a final judgment against Motty Mizrahi and his company MBIG for perpetrating an investment fraud that targeted members of the Israeli-American community in the Los Angeles area.

The SEC's complaint, filed on March 27, 2019 in federal court in California, alleged that Mizrahi and his company MBIG defrauded at least 15 advisory clients out of more than $3 million by falsely claiming that MBIG used sophisticated trading strategies to generate guaranteed returns, that the investments were risk-free, and that clients could withdraw their funds at any time. Instead, Mizrahi allegedly misappropriated client funds, including to pay for personal expenses, and concealed his misappropriation by providing clients with false account statements.

The final consent judgment permanently enjoins Mizrahi and MBIG from violating the antifraud provisions of Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 206(1) and (2) of the Investment Advisors Act of 1940. The judgment also orders Mizrahi to disgorge $2,408,351 in ill-gotten gains plus prejudgment interest of $519,077, and to pay a civil penalty of $192,768.

Mizrahi was charged with wire fraud in a parallel criminal action. Mizrahi's criminal trial is scheduled to begin on March 9, 2021.

The SEC's investigation was conducted by David S. Brown with assistance from Roberto J. Grasso and supervised by Marc J. Blau in the Los Angeles Regional Office. The litigation was led by Amy Jane Longo with assistance from Mr. Brown and Lorraine L. Pearson. The SEC appreciates the assistance of the U.S. Attorney's Office for the Central District of California and the Federal Bureau of Investigation.