A heavy-equipment broker from New York defrauded several investors out of $30 million, a federal grand jury has charged.
The dealer, Eilat Lev, was indicted in Kentucky because he allegedly used a bank in Pulaski County for transactions that were part of the scheme.
Lev owned a company called International Tractor Company Inc. in Ardsley, N.Y., and brokered sales of construction equipment in the U.S. and internationally, according to the indictment. Lev relied on other people to finance purchases, with the understanding he would sell the equipment and repay the investment with interest and profit, the indictment said.
One investor, identified only by the initials L.H., opened a line of credit at First Southern National Bank in Somerset in 2005 to finance deals with Lev, the indictment said.
In reality, Lev operated what is known as a Ponzi scheme, diverting money from new investors to pay prior investors, rather than buying and selling equipment, the indictment charged.
Lev allegedly supplied false documents to L.H. and to the bank to cover the scheme.
One set of initials matches the name of a Nashville man who claimed in a federal lawsuit there that Lev promised him an annual return of 20 percent on his investment. The man said he invested a total of $11.6 million with Lev and another man before finding out the equipment he thought was being traded didn't exist, according to the lawsuit.
The Kentucky indictment gave no information about the investors, other than that L.H. also was in the business of buying and selling heavy equipment.
The scheme lasted from 2005 until the fall of 2008. By that time, Lev didn't have money to continue paying investors, the indictment said.
Lev declared bankruptcy in New York in June 2011, listing $597,814 in assets and $10.8 million in liabilities, according to a court document.
The federal charges against Lev are that he devised a scheme to defraud people and had the bank in Somerset wire money to his bank in New York. Lev was indicted March 14, but the document was sealed at first. He is to be arraigned in federal court in London Wednesday.
The maximum penalty on the charges would be 30 years in prison and $1 million fine.
The government is seeking a judgment of $30 million from Lev and plans to seize property in New York if he is convicted and doesn't have the money.