Israeli man charged in the US for multi-million dollar FX ponzi scheme

38 year old Fadi Ewiess has been charged with bilking his investors out of $5.8 million, promising them high returns from his managed FX scheme. Instead he spent the money on transfers to family and gambling

court

A court in the United States, along with the Federal Bureau of Investigations (FBI) have charged Fadi Ewiess (also known as Fadi Awise) with operating a $5.8 million FX trading ponzi scheme.

US Attorney for the Southern District of New York, Preet Bharara, with the help of Diego Rodriguez, the Assistant Director in Charge of the New York Field Office of the FBI, brought the case to court after Mr. Ewiess was arrested on Saturday morning on charges of wire fraud.

The US authorities discovered that Mr. Ewiess had collected over $5.8 million from retail customers who thought they were investing in a managed FX portfolio, representing to such investors that his company would trade FX on their behalf in order to generate high rates of return for the customers.

Mr. Ewiess, an Arab citizen of Israel, promised investors that their capital would be guaranteed by third party financial institutions.

Instead of trading the markets by engaging in FX transactions, the law enforcement agencies found that Mr. Ewiess spent the money on personal interests including gambling, and also made distributions to other investors. As a result of this, he was arrested in Fort Lauderdale, Florida on Saturday morning.

U.S. Attorney Preet Bharara made a public statement on the matter:

“As alleged, Fadi Ewiess lied to prospective investors about his company’s expertise in the foreign exchange markets and sent them forged ‘guarantees’ from New York banks to lure them into investing with him. Through his fraud scheme, Ewiess allegedly raised more than $5.8 million from victims around the globe, spending much of that money on his own gambling and personal expenses.”

FBI Assistant Director-in-Charge Diego Rodriguez also commented publicly today

“As alleged, Ewiess ran a multimillion dollar ponzi scheme under the guise of a foreign exchange trading company. Instead of using investor money for foreign exchanges, Ewiess traveled and gambled the money away or paid investors to continue to invest in his scheme. Making sure our markets are fair to all investors and bringing charges against those who profit remains a top priority for the FBI.”

The arrest was preceded by a complaint made in a federal court in Manhattan, which was kept confidential until today at which point it was unsealed.

The complaint states that from 2015 until now, Mr. Ewiess operated a company that purported to offer online FX trading via a managed platform.

Investors had a choice of either trading the markets themselves, or via said managed platform.

Mr. Ewiess represented that the company had expertise in FX trading and could achieve very large returns, and that investor funds being traded by the firm would be guaranteed by a large North American bank.

To substantiate such a guarantee, Mr. Ewiess generated and distributed forged documents that appeared to have been issued by the relevent bank, however they were found to be fraudulent by law enforcement agencies and the court.

Many of the victims of the fraud were not based in North America. Most of them were from Saudi Arabia and surrounding regions of the Middle East.

Mr. Ewiess spent millions dollars worth of his investors’ money on personal expenses like travel and hotels, on gambling trips, and on transfers to his family members.

Other investor money was used to pay returns to investors so that they would invest or refer additional money to Mr. Ewiess and his company, thereby allowing the scheme to continue for a longer period of time, this being a classic trait of ponzi schemes.

38 year old Mr. Ewiess is charged with one count of conspiring to commit wire fraud and one count of wire fraud, both very serious felonies in the US.

Each count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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