Oak Brook man, WexTrust founder charged in $9.2 mil Ponzi scheme

Steven Byers, the co-founder of real-estate investment firm WexTrust Capital LLC, was jailed yesterday on charges that he conspired to cheat investors out of $9.2 million.

Byers and Joseph Shereshevsky, also a WexTrust co-founder, were arrested in August and accused of cheating investors out of millions of dollars in a Ponzi scheme. According to a November indictment, they used money raised from investors to fund the firm’s operations and repay earlier investors. Chicago-based WexTrust, a private-equity firm, specialized in real estate and investment banking, according to its Web site.

Byers, of Oak Brook, had been subject to home confinement and electronic monitoring. At a hearing yesterday, U.S. District Judge Denny Chin in Manhattan ordered Byers jailed. Court records don’t say why. Byers’ attorney, Margaret Shalley, didn’t immediately return a call seeking comment today.

In a Ponzi scheme, money from new investors is used to pay old ones. WexTrust raised at least $255 million in private placements from more than 1,196 investors in the U.S. and abroad, and stole more than $100 million, the U.S. Securities and Exchange Commission alleged in a civil lawsuit filed against the two men in August.

The criminal indictment focuses on $9.2 million that WexTrust raised from investors after telling them the money would be used to buy and operate seven properties that would be leased to the U.S. General Services Administration.

Shereshevsky, of Norfolk, Virginia, has been held in a federal prison in Brooklyn, New York, since his arrest. Byers is now at the same facility, according to the Bureau of Prisons Web site.

The case is U.S. v. Byers, 08-cr-1092, U.S. District Court, Southern District of New York (Manhattan).