Father, Son Held on Fraud Charges

The FBI arrested a father and son on charges of using their San Fernando Valley currency-trading business to defraud more than 100 investors out of $77 million, federal prosecutors said Monday.

Moshe Leichner of Bell Canyon and his son, Zvi Leichner of Northridge, were arrested early Saturday on a complaint charging them with two counts of wire fraud. They appeared Monday afternoon before U.S. Magistrate Judge Victor B. Kenton, who advised them of their rights and set a hearing for Friday on the government’s motion to deny bail.

“There’s more than $50 million unaccounted for,” Assistant U.S. Atty. Stephen Kramer said. “Most of the victims got little or no money back.”

The Leichners’ attorney, William L. O’Bryan, couldn’t be reached for comment.

Prosecutors said the Leichners’ business, Midland Euro Inc. in Sherman Oaks, sent statements to investors that typically showed monthly gains of 2% to 4%, and that investors were told that as much as 85% of their initial investment was guaranteed against loss.

In reality, the prosecutors alleged, less than 20% of the funds were invested in foreign currency. Instead, the Leichners allegedly falsified financial statements to investors while using the money to pay themselves large sums and purchase houses, cars and airplanes.

The National Futures Assn., which regulates commodity brokers, suspended Midland Euro after an audit in October, saying it was necessary to protect customers. The federal criminal complaint alleges that Midland Euro employees shredded documents before the audit and continued to trade foreign currency for clients after being barred from doing so by the NFA.

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