Disbarred New York Attorney Sentenced To Three Years In Prison For Multi-Million Dollar Securities Fraud Scheme
Damian Williams, the United States Attorney for the Southern District of New York, announced that JAESON BIRNBAUM, a disbarred lawyer, was sentenced today to 36 months in prison for defrauding investors in his now bankrupt litigation finance firm, “Cash4Cases.” BIRNBAUM previously pled guilty to securities fraud for misappropriating investors funds and pledging the same lawsuit recoveries as collateral to multiple parties, contrary to his representations. U.S. District Paul A. Crotty imposed the sentence in Manhattan federal court.
U.S. Attorney Damian Williams stated: “As a lawyer Birnbaum understood the importance of honest dealings and putting his investors first. Instead, Birnbaum chose to lie to his investors in order to steal their money and cover up his fraud by doctoring company records. Through today’s sentence, Birnbaum has been held accountable for this serious fraud.”
According to statements in the Information, and other public filings and statements in court:
From at least in or about 2017 through in or about 2019, BIRNBAUM obtained more than $3 million in investments for Cash4Cases based on fraudulent misrepresentations. These investments were in the form of promissory notes, titled “Investor Security Agreements” (“ISAs”), which purported to provide the relevant investors with a security interest in the recoveries associated with certain specified lawsuits that were ostensibly purchased by Cash4Cases. In fact, in some instances, the lawsuits that were either never funded by Cash4Cases or BIRNBAUM had previously pledged their recoveries to other parties.
To help carry out his fraud, BIRNBAUM directed an employee to falsify his company’s books and records to make it appear that the recoveries from lawsuits that had already been paid out were still available to be pledged as collateral to new investors.
BIRNBAUM also misappropriated a substantial portion of investors’ funds for his personal use and to make promised payments to earlier investors in Ponzi-like manner. As one example, BIRNBAUM obtained a $1 million investment for Cash4Cases in September 2019. Prior to this investment, BIRNBAUM told the investor that Cash4Cases would use the money exclusively for advances to litigants. However, contrary to this representation, BIRNBAUM used the money to make a $530,000 down payment on the purchase of a house and to pay for other personal expenses and Ponzi-like payments to earlier investors.
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BIRNBAUM, 48, of Boca Raton, Florida, was also sentenced to a three-year term of supervised release. He was further ordered to pay restitution to his victims in the amount of $2,661,072.24 and to forfeit $2,661,072.24 in fraud proceeds.
Mr. Williams praised the investigative work of the United States Postal Inspection Service and thanked the U.S. Securities and Exchange Commission for its assistance.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant United States Attorney Daniel Loss is in charge of the prosecution.
