The chief executive officer of a cryptocurrency company in New York City was placed under arrest by the FBI last week and charged with running a $60 million fraud scheme.
A federal criminal complaint that was filed in New York City federal court states that Eddy Alexandre, 50, from Valley Stream, New York, collected funds from hundreds of investors after he made false representations relating to his EminiFX trading platform from September 2021 to May 2022.
US Attorney Damian Williams noted in the complaint that Eddy Alexandre allegedly had his investors put in more than $59 million by telling them they would have large passive income returns using his proprietary trading platform.
The FBI added that the accused took millions of dollars from trusting investors and he guaranteed weekly returns of 5% through the trading platform with a new technology he wouldn’t explain.
Alexandre has been charged with one count of commodities fraud and one count of wire fraud.
FBI Says Alexandre Never Invested Most Of The Money
The FBI stated that the defendant didn’t invest most of the money he collected from investors, and lost most of the limited amount he did invest. He also is accused of spending about $15 million of the money on his personal expenses.
Also, he put millions of dollars in his personal bank accounts and spent $175,000 on luxury vehicles.
His investors thought they were making between 5% and 10% each week with fake account statements that were in EminiFX’s website, the FBI says. Federal agents say Alexandre told worried investors he had expert traders making their investments but he never said what they were investing in.
Further, Alexandre spent customer money on various business expenses, such as renting his office, holding a party, and hiring attorneys, according to the federal complaint. He also used the business office and other promotional gatherings to locate new investors. The pitch involved a multilevel marketing recruitment strategy.
How the FBI Caught Eddy Alexandre
Eddy Alexandre is from Haiti and incorporated the EminiFX platform in New York City last year. He launched it from his office a few weeks later. Soon, the Department of Justice and FBI began in investigate Alexandre and his platform.
Over several months, both agencies surveilled the CEO. They figured out that Alexandre was making up the weekly ROI he paid to his investors.
The FBI has videos and images of a whiteboard in Alexandre’s office. It had listed the daily ROI he paid to EminiFX investors. But on the right side of the board was a note “Never less than 5% and never more than 9.99%!”
The returns were fake and not tied to any type of financial trading. He just made it up as he went along. He wrote the rate on his whiteboard and made sure the returns were between 5% and 9.99%.
The FBI also investigated Alexandre with witness interviews, went to his weekly investor webinars, and watched his social media.
Furthermore, the FBI said several EminiFX investors posted videos online of their account dashboards. One showed the ‘weekly profit’ for the investor was 9.94%.
As of early May 2022, about $35 million was still in the EminiFX account. The FBI said that in a webinar on April 22, Alexandre lied and claimed there were in-person events that were held in his office.
He said he was getting questions that his business address was fake, but it was real, he said. The CEO added that after he had a Sunday event at his office, several EminiFX investors put in 10% more into the investment, bringing the total funds to $114 million.
The FBI reported that Alexandre failed to invest most of the funds under his management and used them instead for personal expenses. Also, the only way an investor could get their money out was by using funds of other investors – basically a Ponzi scheme.
Cryptocurrency Fraud Becoming Widespread
Cryptocurrency is wildly popular and so is crypto fraud. Last week, a crypto trader who defrauded more than 150 people received 42 months in prison. Jeremy Spence ran several crypto funds and claimed to make large returns. But in reality, he was losing money and running a Ponzi scheme.
The Department of Justice stated last week that the 25-year-old solicited millions with false representations, including that his crypto trading had been highly profitable. But Spence’s trading hadn’t been profitable at all. Spence ran social media channels for an investment scheme called Coin Signals.
In addition to his 42-month prison sentence, he will have three years of supervised release and must pay his victims back at least $2.8 million.
The FBI arrested Spence in January 2021, and civil charges have been brought forward by the Commodity Futures Trading Commission.
Spence pleaded guilty to one count of commodities fraud in November 2021 for soliciting at least $5 million from cryptocurrency investors by creating new funds between 2017 and 2019. He said they were making returns but were losing money.
For example, DOJ said Spence put a message in a chat group that one fund made a 150% return that month. The judge who sentenced him said she was struck by the stupidity of the people Spence lied to. She added there are real-life consequences for ‘these shenanigans and they are serious.’
Because the investments were always losing money, Spence made phony account balances to hide the negative results. Spence began running a Ponzi scheme using money from new investors to pay old investors. It’s estimated about $2 million of crypto was paid this way.
Spence told the judge he was mortified by his behavior and apologized to his investors.