The case against Wall Street trader Ronen Zakai, a former stockbroker, seems simple enough on the surface. The 42-year old is charged with taking more than $700,000 from clients to purchase shares of Facebook. Instead of purchasing the stock, Zakai is accused of ‘misappropriating the funds,’ pocketing the money over a two-year period that ended in June 2012.
According to a press release from the Manhattan District Attorney’s Office, Zakai “quickly depleted the funds for his personal use on various expenses – including country club membership fees, car payments, traveling, and shopping trips – and through large cash withdrawals.”
The case against Zakai centers around five Investors, eager to snap up shares of Facebook ahead of the social media giant’s initial public offering that occurred in May 2012 through what Zakai was calling, ‘The Social Innovation Fund.’
More than a year later, the frenzy over what Facebook may accomplish in the future has not quieted. FB recently surged more than 25 percent in a single day on reports that the company had beaten its second quarter revenue estimates.
At first glance, the Ronen Zakai story seems almost the same as a rash of other fraud cases, stemming from con men, like Zakai, who convinced investors of their ability to invest in Facebook before the public. However, The Blot has learned through two anonymous sources, that the indictments against Zakai are not isolated and only represent a small portion of the wide-scale corruption and regulatory agency missteps that culminate in a scandal, whose sentiments echo those of Bernard Madoff.
For its part, the Manhattan District Attorney’s office will not reveal how deep the scandal goes, having declined to comment on how the charges against Zakai first came to light.
In addition, FINRA, a private corporation that acts as a self-regulatory agency for securities dealers, has assured The Blot that Zakai did not fall within their jurisdiction.
Joel Mazmanian is a freelance writer. Follow him on Twitter: @joelmazmanian. Picture by Jesse Ward, licensed from the New York Daily News.