$28 Million in Forfeited Assets Restored to Victims in Fraudulent Spot Foreign Currency Ponzi Scheme
The Asset Forfeiture Money Laundering Section (AFMLS) of the U.S. Department of Justice has approved the request by the United States Attorney’s Office to restore to investor-victims the $28 million in ill-gotten gains forfeited by defendants Bradley David Eisner and Michael Richard MacCaull in the Razor FX fraudulent spot foreign currency trading scheme. In July 2008, Eisner and MacCaull pleaded guilty to engaging in a $66 million dollar scheme to defraud investors, and as part of the sentencing proceeding earlier this year were ordered to make restitution to their victims. As a result, Razor FX’s 272 investor victims will recover approximately forty percent of their losses – according to AFMLS, an exceptionally high rate of recovery.
The restoration decision was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Peter Zegarac, Inspector-in-Charge, United States Postal Inspection Service, New York Division.
Beginning in 2001, the defendants held themselves out as traders on the foreign currency exchange market, also known as the forex market, and solicited investments from the public through their company, Razor FX. Shortly after its inception, however, Razor FX began operating a fraud on its investors, with almost no trading in the forex market being conducted. Instead, the defendants simply deposited the investments in a bank account, from which they paid their personal living expenses, including luxury homes and automobiles. To conceal the scheme, the defendants sent out phony account statements to investors reporting non-existent trades and profits. Over the course of the scheme, Eisner and MacCaull took in more than $66 million from investors, returned tens of millions of dollars to investors in order to perpetuate the scheme, and retained or spent the remaining funds. Investors who sought to withdraw funds were simply paid from funds received from other investors. On occasion, in order to reduce their liabilities to investors, the defendants reported phony trading losses – a practice they referred to as “squashing” the accounts.
“Asset forfeiture is an invaluable tool that we will continue to utilize to help compensate crime victims,” stated United States Attorney Lynch. Ms. Lynch extended her grateful appreciation to the U.S. Postal Inspection Service, the agency responsible for leading the government’s investigation.
The government’s case was prosecuted by Assistant United States Attorneys Sarah Coyne, Paul Tuchmann, Karen Hennigan, and Kathleen Nandan.
BRADLEY DAVID EISNER
MICHAEL RICHARD MacCAULL
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