Federal authorities are accusing a 27-year-old Lincolnwood resident of overseeing an investment fraud scheme that “exploited the trust of the Orthodox Jewish religious community” — whose members may have lost several million dollars in the alleged scam.The complaint was recently filed by the U .S. Securities and Exchange Commission against Jacob Garfinkel and his Skokie business enterprise known as 5G Funding that was said to “make short-term, high-interest loans to small businesses secured by a portion of the businesses’ future receivables,” court records show.“Garfinkel claimed that 5G Funding’s business was highly profitable, and that he and the investors would split the net profits that 5G Funding generated from merchant cash advances that the investors funded,” according to the complaint, filed in U.S. District Court in Chicago.The complaint alleges that while Garfinkel “did use some investor funds to engage in an unprofitable merchant cash advance business, he misled investors about the nature and amount of his compensation and collected $1.1 million in ‘origination fees’ out of 5G Funding’s merchant cash advances.”“He also diverted another approximately $1 million in merchant repayments and other funds that he represented would be used to benefit 5G Funding investors, and not himself. Garfinkel diverted these funds for his personal spending and for transfers to related parties.”Garfinkel and his business “made multiple other misrepresentations to investors,” according to the SEC, which regulates the financial sector. Among the claims: that “he had a track record of generating returns in the merchant cash advance industry.”Garfinkel “solicited investments in 5G Funding from friends, neighbors, and word-of-mouth referrals from existing investors, almost exclusively within Orthodox Jewish communities in Illinois, New York and New Jersey.”“Investors trusted Garfinkel due to their social or community connections with him. Some investors based their decision to invest on their oral and written communications with Garfinkel about the investment, recommendations from existing 5G Funding investors, and their trust in Garfinkel.”The newly filed SEC case Garfinkel is accused of diverting around $320,000 in “additional merchant cash advance repayments that should have been paid to 5G Funding investors to an account he controlled in the name of JCG Consulting.”“Garfinkel was the sole signatory on JCG Consulting’s bank account and used it for his personal expenses, including using it to pay a down payment on a home, to pay his personal gambling expenses, and to purchase cars and watches,” according to the SEC.Garfinkel’s attorney, Ariel Weissberg, said: “Mr. Garfinkel will not have any comment as to the current proceedings other than that he denies any wrongful conduct.”All told, Garfinkel and his business are accused of raising around $4.5 million from investors, with less than $1.7 million returned — meaning about $2.8 million was allegedly lost.Of the 23 investors in the scheme, 22 allegedly lost money, with those losses between $15,000 and $670,000.The SEC’s complaint accused Garfinkel and his business of violating anti-fraud provisions of federal law and is seeking a judgment that would bar Garfinkel “from again offering or selling securities” and claw back “ill-gotten gains plus prejudgment interest” and impose “civil monetary penalties.”While the SEC proceeding is a civil matter, sources say there is also a criminal investigation into Garfinkel, though federal authorities wouldn’t comment.The U.S. attorney’s office and SEC have been involved in other proceedings against another man who’s accused of scamming members of the Orthodox Jewish community in the Chicago region: Rabbi Zvi Feiner.Rabbi Feiner’s recent plea agreement Filed in 2019, the SEC case accused Feiner and another man of operating “a fraudulent scheme involving the misappropriation of proceeds raised through the offer and sale of membership interests in limited liability companies ... that would purchase, own, and sell nursing homes and assisted living facilities.”“Feiner is an ordained Orthodox Jewish rabbi and was a well-regarded figure in the Orthodox Jewish community on Chicago’s north side and near north suburbs. As such, he exploited those relationships by soliciting members of the Orthodox Jewish community to invest in his scheme.”Among them: an elderly Holocaust survivor, who invested more than $1 million, court records show.That SEC case is essentially on hold while a parallel criminal case is underway, though that appears to be winding down. Feiner recently pleaded guilty to wire fraud, while other charges are expected to be dismissed.He has yet to be sentenced, but prosecutors are recommending no prison time or fine. Related Rabbi accused of fraud in nursing home deals Before regulators closed North Loop bank, millions in loans to Chicago rabbi, developer went uncollected Little-known court case hints at larger issues in Orthodox Jewish community — child sexual abuse and secrecy ...read more read less