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Israeli Man Charged with Operating FOREX Ponzi Scheme

Preet Bharara, the united States Attorney for the Southern District of New York, and Diego Rodriguez, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (FBI), announced on Tuesday that Fadi Ewiess AKA “Fadi Awise,” was arrested Saturday ,morning on wire fraud charges stemming from his participation in a ponzi scheme to defraud investors through the operation of a purported foreign exchange (Forex) trading company. Ewiess was charged with raising over $5.8 million by representing to investors that his company would trade foreign currencies on their behalf that he would generate high rates of return in so doing, and that his investors’ capital would be guaranteed by third-pary financial institutions. Instead of engaging in forex transactions with his investors’ money, however, Ewiess largely spent the money on personal expenses like gambling or making distributions to other investors. Ewiess was arrested Saturday morning in Fort Lauderdale, Florida.

U.S. Attorney Preet Bharara said: “As alleged, Fadi Ewiess lied to prospective investors about his cimpany’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 ran a multimillion dollar ponzi scheme under the guise of a foreign exhange trading company. Instead of using investor money for foreign echanges, 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.”

According to the Complain unsealed in Manhattan federal court:

From 2016 through 2016 Ewiess operated a company (the “Company”) that purported to host an online foreign currency trading platform. Investors could either trade currencies themselves, or have the Company trade on their behalf. Ewiess represented that the Company had expertise in forex trading and could achieve outsized returns, and that investor funds being traded by the Company would be fully guaranteed against losses by a particular United States bank – assuming that the investor provided a sufficiently high amount of money. To substantiate this purported guarantee, moreover, Ewiess distributed forged documents that appeared to have been (but in actually were not) issued by the relevant bank. 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.

Ewiess and others raised more than $5.8 million during the course of the ponzi scheme, with much of this money coming from investors in Saudi Arabia and other countries. Instead of using investor proceeds to trade currencies, as that he and the Company had promised, however, Ewiess spent millions 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 ir refer additional money to Ewiess and the Company, thereby allowing the scheme to continue for a longer period of time.

Ewiess, 38, of Israel, is charged with one count of conspiring to commit wire fraud and one count of wire fraud. 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.