Sheldon Silver’s Son-in-Law Admits Running $7 Million Fraud

Updated on

The son-in-law of former New York State Assembly Speaker Sheldon Silver pleaded guilty to bilking his clients out $7 million in a seven-year Ponzi scheme.

Under the plea deal, the U.S. agreed to drop a wire fraud charge against Marcello Trebitsch, allowing him to plead guilty to one count of securities fraud. He agreed to repay $5.9 million and faces 5 1/4 years in prison when he is sentenced Nov. 2. If he’d been convicted after a trial he might have faced as long as 20 years in prison on each charge.

Trebitsch will seek leniency at sentencing because he got himself in over his head in dealing with clients, his lawyer Benjamin Brafman said after Monday’s hearing in Manhattan federal court.

“Mr. Trebitsch, although guilty of a crime, is fundamentally a good man,” Brafman said. He was “dealing with a very sophisticated investor, who while defrauded, was nevertheless also trying to use Mr. Trebitsch to further his own personal agenda.” Brafman said he’d elaborate in a filing to the court.

Trebitsch admitted to receiving $7 million from clients from 2007 to 2014 after promising he would use their money to trade through Allese Capital, an investment fund he controlled. He claimed he would buy low-risk securities that would yield double-digit annual returns.

He said he invested only a portion of the money and suffered “enormous” trading losses which he didn’t disclose to clients.

Apology to Family

“I used some of the investor money to repay other investors,” Trebitsch said in court. “I’m sorry for what I have done and I apologize to the court and to my family.”

The U.S. said he also used some of the money for his own benefit.

Trebitsch’s scheme isn’t related to a separate public corruption case filed against Silver in January, a person with knowledge of the matter said. In that case, Silver is accused of reaping almost $4 million in kickbacks and illegal fees tied to two separate frauds and by extortion. He faces as long as 20 years in prison if convicted. Silver’s trial is set to begin Nov. 2, the same day his son-in-law will be sentenced.

Silver, one of the most powerful New York politicians for more than two decades until his arrest in January, had control over Assembly rule-making that gave him power to decide which bills would go to a vote.

The case is U.S. v. Trebitsch, 15-mj-01196, U.S. District Court and U.S. v. Silver, 15-cr-00093, U.S. District Court, Southern District of New York (Manhattan).

Before it's here, it's on the Bloomberg Terminal. LEARN MORE