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Father, Son Traders Agree to Guilty Plea

Moshe and Zvi Leichner are charged with defrauding hundreds of investors out of more than $130 million.

June 17, 2003|David Rosenzweig | Times Staff Writer

A father and son who operated a foreign-exchange trading firm in Sherman Oaks have agreed to plead guilty to charges that they defrauded hundreds of investors out of more than $130 million, the U.S. attorney's office said Monday.

Moshe Leichner, 54, of Bell Canyon and his son, Zvi, 31, of Northridge have been held without bond since their arrest in February. The pair are expected to enter their pleas within the next few weeks to two counts of wire fraud and one count of money laundering. The offenses carry a maximum penalty of 20 years in prison.

Operating through their business, Midland Euro Inc., the Leichners obtained the money from more than 300 investors in the United States, Canada, Saudi Arabia and Israel from 1998 until their arrests, prosecutors said.

Assistant U.S. Atty. Stephen Kramer said that about $97 million remains unaccounted for, but that as part of their plea deal, the defendants have agreed to help authorities locate the missing money.

"We believe, however, that when the final tally comes in, the total will be substantially less," said Zvi Leichner's attorney, Victor Sherman.

Although their promises to investors varied somewhat, the Leichners typically claimed that Midland Euro would generate guaranteed monthly profit of 2% to 4%, according to a criminal complaint filed in federal court in Los Angeles.

The pair also told investors that 40% to 85% of their money was guaranteed against losses, prosecutors said.

In reality, the government charged, less than $26 million of the more than $130 million the Leichners obtained was invested in foreign currency. Instead, the father and son siphoned off the bulk of the money to pay themselves huge salaries and to acquire houses, planes, boats and automobiles. The pair have agreed to forfeit several houses and cars as well as money held in overseas accounts.

Prosecutors said the father and son tried to conceal their misappropriations by sending victims false documents claiming that the money was deposited in various financial institutions.

The National Futures Assn., which regulates commodity brokers, suspended Midland Euro after an audit in 1991, but the federal criminal complaint said the Leichners continued to operate after being barred by the agency.

Midland Euro also is under investigation by the U.S. Commodity Futures Trading Commission and is being sued by several people seeking return of their investments.

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