Teaneck Man Charged in $37K Fraud Scheme

UPDATE: Moshe Butler admitted to bank fraud April 25. Read more at the link: 

A 33-year-old Teaneck man who had already pleaded guilty in one fraud scheme was charged Wednesday with bilking Morgan Stanley Smith Barney out of more than $37,000, U.S. Attorney Paul J. Fishman said.

In July 2011, Moshe Butler opened an account with Morgan Stanley Smith Barney in New York where he was allowed immediate access to funds deposited by check, federal prosecutors said. On Aug. 12, Butler deposited a $50,000 check in the account, but quickly burned through the money on largely failed securities and commodities option contracts.

Ultimately, Butler lost the original $50,000 plus an additional $18,921, prosecutors said. Days later, Butler deposited a $100,000 check from a closed bank account he solely controlled into the Morgan Stanley account to cover the negative balance.

The account Butler tried using to cover the Morgan Stanley balance had been closed more than two months earlier after he wrote a dozen bad checks, according to prosecutors.

“Despite having deposited a check he knew was written on a closed account, Butler took advantage of the fact that [Morgan Stanley Smith Barney] made the funds immediately available to him by quickly withdrawing $7,000 in cash and purchasing securities and commodities option contracts in his account,” the U.S. Attorney’s Office said in a news release.

Those securities deals also failed, leading to an additional $11,496 in losses, prosecutors said. In October, Butler tried to cover his losses with a $30,000 check, which also bounced. In all of October, Butler wrote 13 bad checks totaling about $165,400 in his J.P. Morgan Chase account, according to a criminal complaint signed by an FBI agent.

He surrendered to FBI agents in Newark early Wednesday to face one count of bank fraud. If convicted, prosecutors say Butler could face up to 10 years in prison and a $1 million fine.

Butler was already awaiting sentencing after pleading guilty to a separate fraud scheme in December. 

The government's complaint is attached to this article in PDF format