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Norfolk, VA - NY Judge Allows $10 Million Bail For WexTrust CEO With Strict Conditions

Published on: September 4, 2008 10:54 PM
By: hamptonroads.com
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Norfolk, VA - A federal judge in Manhattan ruled Thursday that a Norfolk businessman arrested last month on fraud charges and detained by the government can be released on a $10 million bond.

Ten relatives and friends of the defendant, Joseph Shereshevsky, agreed to sign the bond, Martin J. Siegel, a New York attorney who is representing Shereshevsky, said after the bail hearing. Each of the 10 will have to be interviewed by the U.S. attorney’s office in Manhattan to determine that they are financially responsible, Siegel said. Only five of the 10 can be family members, he said.

The U.S. attorney for the Southern District of New York and the Securities and Exchange Commission contend in separate complaints that Shereshevsky and others defrauded almost 1,200 investors in WexTrust Capital by diverting $100 million to unauthorized purposes. Shereshevsky is part owner of the Chicago-based investment company and until recently had been its chief operating officer.

The U.S. attorney and the SEC also named WexTrust’s majority owner and chairman, Steven Byers of Oak Brook, Ill., as a defendant in their suits. Byers, who was arrested in the Chicago area, was released last month after posting a $4 million bond.

Shortly after Shereshevsky was apprehended in Norfolk, a federal magistrate in Norfolk ordered that he remain in custody. Because of his frequent overseas travel and his foreign contacts, Shereshevsky presented a risk of fleeing the country to avoid prosecution, Magistrate Tommy Miller said in his order.

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Shereshevsky, who has been held at a federal detention facility in Brooklyn, appealed Miller’s order, which is why the bail hearing was conducted Thursday, Siegel said.

Earlier this week, Shereshevsky’s attorneys asked that he be released on a $5 million bond. As part of their proposed bond, Shereshevsky’s father-in-law, Alan Verschleisser, agreed to put up two properties that he owns in Baltimore, including his primary home, as security. Shereshevsky’s gardener, Lisa Handke, also agreed to put up her Norfolk home as security, according to the court filing.

Shereshevsky’s family is in the process of working out certain details for his release with his attorneys and the U.S. attorney’s office, Siegel said. The conditions for his release require that Shereshevsky be confined to his home and be subject to electronic monitoring. He is allowed to leave home under certain conditions but must be accompanied by a security guard, Siegel said.

About 30 people attended the bail hearing, which lasted about an hour and 15 minutes, the attorney said.

Also on Thursday, the court-appointed receiver for WexTrust and its affiliates said he plans to hold “town hall” meetings with investors in Norfolk and Chicago next week or shortly afterward.

Timothy Coleman, the receiver, said he has checked on the condition of several WexTrust real estate holdings in the United States and its diamond-mining operations in southern Africa. These assets have “substantial value,” but WexTrust, he said, has almost no cash on hand to adequately protect its properties.

“There is barely enough cash to keep the lights on,” so investors shouldn’t expect any dividend payments in 2008, Coleman said during a meeting of WexTrust investors in Manhattan.

“I cannot tell you how much will be distributed or how long the case will last,” he told the gathering of 30 or so people and 88 others who listened in by phone.

Coleman said he believed he had located WexTrust’s assets in the United States but said he still was trying to determine the locations of certain assets in southern Africa. To do that, he replaced Shereshevsky and Byers by appointing two new directors to the board of WexTrust affiliate Pure Africa Minerals Ltd. in South Africa. Coleman plans to hold an emergency meeting of the affiliate’s board next week to preserve Pure Africa Minerals’ assets, he said.

Coleman, who was appointed by the U.S. District Court in Manhattan to track down and protect WexTrust assets, reminded investors that he cannot dispose of any assets without the court’s approval. It might be appropriate to sell some of WexTrust’s real estate holdings quickly, but he has no plans to recommend the disposition of properties at “fire-sale” prices, Coleman said.



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Read Comments (8)  —  Post Yours »

1

 Sep 05, 2008 at 09:59 AM Anonymous Says:

you are a ignorant fool .do you know how it works when someone is allowed bail in this case it is impossible to get away.seems like you need a job its clear what posting belongs to who

2

 Sep 05, 2008 at 11:45 AM murray Says:

If, as alleged, he was uncaring enough to dupe people out of 100's of millions$, then why would he care about people losing another 10 million if he were to abscond? (just pocket change to him, and not even coming out of His pocket)If he does leave then he would make these people into additional chumps- guess thats where they get the expression "chump change". It is Not unrealistic to think he would escape, since he has the resources, and given the strong possibility of a lenghty sentence, than why not go. He could go somewhere that has no extradition treaty with the U.S., and live openly. There must be several countries that fall into this category. The island nation of Vanuatu, for one.

3

 Sep 05, 2008 at 12:21 PM Anonymous Says:

Perhaps the assets will be substantial enough to pay back the investors thier principle investments over time.

4

 Sep 05, 2008 at 01:02 PM political analyst Says:

it looks like the assets in africa as well as a significant portion of their real estate holdings have significant values. the good news fors investors is that wextrust or it's principals own the lion's share of the diamomd mining operations, which can one day be used to repay investors if exploration goes well over there.

5

 Sep 05, 2008 at 01:04 PM Anonymous Says:

duh! of course they will be substantial enough to pay ALL the investors!!! the feds hardly have a case here!!! WAKE UP!!

6

 Sep 05, 2008 at 01:36 PM Anonymous Says:

If Wextrust principals win the lottery they may also be able to pay back investors. Always have to be careful about mining companies, that was the real hint to stay away from Wextrust investments. Unfortunately most mining and oil discovery companies arent very legitimate.

7

 Sep 05, 2008 at 03:49 PM murray Says:

An ordinary Lottery win won't put a dent in their problems. They better start playing 'POWERBALL", if they aren't already.

8

 Sep 08, 2008 at 09:50 AM anon Says:

anonymous: you said "duh! of course they will be substantial enough to pay ALL the investors!!! the feds hardly have a case here!!! WAKE UP!!"

WHAT makes you think that there is no case here??

9

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