Trial delayed again for ex-WexTrust executive

The federal trial of a Norfolk resident charged with fraud in an alleged $255 million Ponzi scheme has been delayed another month, to February.

The case against Joseph Shereshevsky, the former chief operating officer of WexTrust, had been scheduled to go to trial in a Manhattan federal court in mid-October.

A week before, the presiding judge postponed the trial until Jan. 24 after Shereshevsky's lead lawyer removed himself from the case.

Last week, the court again postponed the trial until Feb. 22.

"This date may be subject to additional change depending on the court's docket and other factors," said a statement on the website of the receiver for WexTrust's assets.

Meanwhile, the sentencing for Steven Byers, WexTrust's founder and CEO, has been delayed until Jan. 24. Byers, who pleaded guilty in April, had been scheduled for sentencing Oct. 27.

"Sentencing was postponed for unknown reasons cited in a letter from Byers' attorney to the court" on Oct. 21, a statement on the WexTrust receiver's site said. "This letter was filed under seal and is therefore not available to the receiver or the general public."

The FBI arrested Byers and Shereshevsky on Aug. 11, 2008. Prosecutors contend they bilked investors, including some from the Orthodox Jewish community in Hampton Roads, through a Ponzi-like scheme.

WexTrust took in $255 million between 2003 and 2008 for real estate, diamond mines and other investments and, prosecutors say, diverted more than $100 million for unauthorized uses.

Byers remains out on bail pending his sentencing. Shereshevsky, who wasn't able to meet the court's bail requirements, is in federal custody in New York.

The WexTrust receiver, Timothy J. Coleman, also filed a motion on Oct. 30 to sell a warehouse property owned by WexTrust in Hammond, La.

WexTrust acquired the 710,603-square-foot warehouse on about 82.5 acres in 2007 for $28.4 million, according to the receiver's filing. It raised $8.3 million from 82 investors and financed the rest with a mortgage.

A real estate brokerage hired by the receiver to sell the property has reached a deal to sell it for $25.75 million. The sale must be approved by the judge in the case.

Proceeds from the sale will be used to pay off the mortgage with the remainder going into a pool with other WexTrust assets for eventual distribution to WexTrust investors on a proportionate basis.

A federal appeals court overruled one investor's objection to the receiver's pro rata distribution plan and another's objection to a court order that resolved outstanding claims.

 Christopher Dinsmore, (757) 446-2271, chris.dinsmore@pilotonline.com