Credit Used For CEO’s Personal Expenses
A Flushing man and his colleague at an online ticket brokerage company have been charged for allegedly diverting more than $3 million from a business line of credit held by the company for personal purposes.
Leor Zahavi and David Blumenson, the chief executive officer and chief financial officer, respectively, of Admit One LLC, were named in an indictment filed in Manhattan federal court last Wednesday, Apr. 11, charging them for the scheme, which was allegedly used for Zahavi’s benefit. They were initially charged by complaint in November 2011.
The charges were announced by Preet Bharara, the U.S. Attorney for the Southern District of New York, Janice K. Fedarcyk, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (FBI); and Jon Rymer, the Inspector General of the Federal Deposit Insurance Corporation (FDIC).
According to the charges, Admit One LLC buys and sells tickets for sports and entertainment events. For several years, the company held a $6.5 million revolving line of credit at Bank of America.
Between August 2008 to January 2009, it is alleged, Zahavi and Blumenson engaged in a scheme to fraudulently transfer more than $3 million in funds from this line of credit to a personal investment account held by Zahavi. Zahavi subsequently lost a large amount of the transferred funds in failed day-trading investments.
To conceal the fraudulent transfers, Zahavi and Blumenson made false representations and provided false documentation to Bank of America to make it appear as if Admit One had spent $3.45 million from the line of credit on “personal seat licenses,” or season ticket agreements.
In fact, Admit One never made any such purchase. Admit One ultimately defaulted on the line of credit, leading Bank of America to sell the note for the line of credit to a third-party, at a loss of approximately $3.65 million.
Zahavi, 47, of Flushing and Blumenson, 47, of New Hyde Park, L.I. both face a maximum term of 95 years in prison, a maximum term of five years of supervised release, and a fine of the greatest of $1 million, or twice the gross pecuniary gain derived from the offense or twice the gross pecuniary loss to the victims.
Bharara praised the investigative work of the FBI and the FDIC.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Serrin Turner is in charge of the prosecution.
It was noted that the charge and allegations contained in the complaint and Indictment are merely accusations, and the defendants are presumed innocent until proven guilty.
