A former Rockland County man who portrayed himself as a savvy investment adviser has been indicted for securities fraud for allegedly stealing $1.5 million.
On Oct. 22, two days after the federal grand jury in White Plains indicted Solomon Lichtenstein, 29, on criminal charges, the U.S. Securities Commission accused him of violating securities regulations in a civil complaint filed in U.S. District Court, White Plains.
“Lichtenstein orchestrated a fraudulent investment scheme,” the SEC complaint states, “by misrepresenting how he would use investors’ funds, by falsely reporting their investment returns, and by misappropriating their investments for personal purposes.”
The alleged scheme involved businesses that Lichtenstein formed in 2022: Taraxa Capital Fund LP, a private investment partnership, and Lightstone Trading Inc., a company that borrowed money to invest in Taraxa. Lichtenstein and both businesses were based in Stony Point, Rockland County. Now he lives in Fort Lee, New Jersey.
Lichtenstein left his job as a medical biller, in 2022, and began soliciting investments from “family members, friends and neighbors in his tight-knit religious community,” according to the SEC.
He claimed he had had honed trading strategies under the tutelage of experienced mentors, the indictment states, and made a 1,000% annual return investing his own money.
He pitched Taraxa as a fund that traded in options, futures, large stock indices and exchange traded funds. He allegedly told investors that he closed out his positions at the end of every trading day to reduce risk, claimed that Taraxa would make money as long as the stock market did not move more than two percent a day, and he expected to achieve annual returns of 100% or more.
He charged an annual management fee of 2% and a performance fee of 20% to 40% depending on the results. Investors were permitted to withdraw funds only on the last business day of each year.
Lightstone Trading investors were promised 5% monthly returns, according to the government, and told that the transactions were a way to invest in Taraxa at no risk.
Investors turned over about $3 million to Lichtenstein, according to the civil and criminal cases. He deposited $880,000 in trading accounts, invested about $590,000, and lost $213,000 on the trades. Investors lost about $1.5 million.
He allegedly embezzled about $1 million and used the funds to pay credit card bills; a home mortgage; and expenses at bars, restaurants, and travel.
He allegedly used about $900,000 in Ponzi-like manner, paying back some investors “to create the illusion that Taraxa Capital and Lightstone Trading were legitimate investments.”
The SEC says Lichtenstein posted fabricated results on each investor’s online dashboard. As of August 2024, for instance, the chart for an individual who put in $85,000 falsely displayed a current value of $284,700 and an annualized return of 289%.
LG Properties USA LLC, of Monroe, Orange County, invested $638,000 in Taraxa, according to a lawsuit filed last year in Rockland Supreme Court. LG principal Yechisiel Mayer Gross had received confirmation that the investment was worth $1,151,894, but got back only $234,975, or about 37% of the original investment.
The scheme collapsed in summer 2024, according to the SEC, when Lichtenstein ran out of money and admitted what he had done to several investors.
The SEC is asking the court to restrain Lichtenstein from acting as an investment adviser, order him to disgorge all ill-gotten gains, and pay a civil penalty.
Lichtenstein pleaded not guilty in the criminal case, at an arraignment before Magistrate Judge Andrew E. Krause on Oct. 22. He was released from custody on posting a $100,000 bond.
