An Israeli man living in the U.S. faces federal wire fraud charges in connection with a fraudulent scheme to obtain investments from individual investors purportedly for the purpose of trading in forex.
As alleged, Fadi Ewiess, aka “Fadi Awise”, perpetrated one of the oldest financial crimes in the book, the Ponzi scheme, lying to investors about his plans for their money and instead spending it on himself and to pay other investors.
The 38 year old man was arrested and charged Saturday morning in Fort Lauderdale Florida on a count of conspiring to commit wire fraud and another count of wire fraud. He remains in federal custody in Manhattan. If convicted, he faces up to 20 years in prison and a fine of up to $250,000 on each count.
Ewiess was charged with scamming many investors, the majority of whom were from Saudi Arabia and other countries, who under the Commodity Exchange Act were not authorized to trade leveraged forex in the United States. FBI agents determined that Ewiess and others raised more than $5.8 million during the course of the scheme.
More specifically, the complaint alleges that from 2015 through 2016, Ewiess operated a company that purported to host an online forex trading platform. Investors could either trade currencies themselves, or have the company trade on their behalf.
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Through alleged misleading representations over his ability to generate outsized returns, the defendant managed to lure investors interested in forex trading and defrauded them out of close to six million dollars. In addition, he claimed that his investors’ capital would be fully guaranteed against losses by a particular United States bank.
However, instead of engaging in real forex transactions, Ewiess largely spent the money on personal expenses like travel, hotels, gambling trips, and on transfers to his family members. Also, he used some new investors’ funds to pay back other investors in a Ponzi-like fashion, so that they would invest or refer additional money to Ewiess, thereby allowing the scheme to continue for a longer period of time.
According to the criminal complaint, Ewiess distributed forged documents that appeared to have been issued by the relevant bank, in a bid to substantiate this purported guarantee.
In connection with the scheme, Ewiess also employed other individuals in his scheme, promising large commissions, as well as prizes like watches and cellular telephones, to individuals who raised money for the scheme.
This matter is being investigated by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Robert Allen is in charge of the prosecution.
Commenting on the news, U.S. Attorney Preet Bharara said: “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.”
“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,” added FBI Assistant Director-in-Charge Diego Rodriguez in an accompanying statement.