Steven Byers, the former President and Chief Executive Officer of private equity firm WexTrust Capital, has pleaded guilty to two felony counts of conspiracy and securities fraud over a ponzi scheme that is said to have scammed over $250 million out of investors, notably orthodox Jews, for various investments including African diamond mines.

WexTrust Capital, founded in 2003 and affiliated with several companies of a similar name including WexTrust Securities, has offices throughout the world including Ramat Gan, home to Israel’s diamond industry.

A 2008 complaint filed in the Securities and Exchanges Commission, against a number of plaintiffs including Byers, refers to Wextrust's former Chief Operating Officer Joseph Shereshevsky, who was said to have been responsible for Wextrust's expansion into diamond mining investments in Africa. Shereshevsky has a background in the diamond commodity business and is well known in the Orthodox Jewish community, according to the complaint.

According to information from the company's former website, Illinois limited liability company Wextrust had five main areas of business including certain interests in diamond mines and operations in Africa held through Pure Africa Mining Ltd.

According to the 2008 complaint, records obtained from Wextrust Securities indicate that the defendants raised millions in at least six private placements, which, according to the private placement memoranda, was to be used to purchase directly or indirectly interests in certain diamond mines in South Africa and Namibia.

Shereshevsky's role was, according to the complaint, to take the lead in soliciting investors through his wide contacts in the Orthodox Jewish community and to manage the offerings and investments relating to the purchase of real estate and specific assets, including diamond mining interests in Africa.

One of the alleged frauds, called the Block III offering fraud, involved a Virginia limited liability company called Block 111 Managers which was organized to make a loan to and acquire an interest in a Namibian company, Deva Investments (Pty), Ltd., which owns the exploration and mining rights in a group of diamond mines in Namibia known as Block III.

Block 111 issued a private placement memorandum dated March 22, 2007 seeking to raise $11 million from investors. The proceeds were said to be used as follows: (a) $4.5 million would be used for new equipment and operating capital, (b) $1.5 million would be used to fund a reserve for a purchase option on two other mines, (c) $1.75 million would fund an operating reserve, $300,000 would pay legal and operating expenses, and (d) approximately $2.95 million would be paid in fees to Wextrust and Wextrust Securities.

According to the complaint, the defendants knew, or were reckless in not knowing, that the representations were false, and they diverted the proceeds to unauthorized uses almost immediately after the money was raised.

Byers, 47, of Oak Brook, Illinois, pleaded guilty pursuant to a plea agreement with the government, and faces a statutory maximum sentence of 25 years in prison. He has also agreed to forfeit $9.2 million and is subject to mandatory restitution and faces criminal fines up to twice the gross gain or loss derived from the offense.