Edward J. Servider, a/k/a “Nick Halden,” has been sentenced with commodities fraud, mail fraud, and wire fraud in connection with a scheme to defraud over 100 investors out of more than $2.4 million. From March 2013 through July 2014, Servider, through his firm EJS Capital Management, LLC, fraudulently solicited investments for trading in off-exchange foreign currency (“Forex”) transactions. In fact, none of the money was used for such transactions, and Servider converted the funds to his own use, and the use of others, without the authorization of his investors. Rather than invest his victims’ funds as promised, Servider misappropriated a major portion of investors’ funds and used them to pay personal and business expenses. Servider will be presented today before Magistrate Judge Barbara Moses.
In a separate action in May 2014, the Commodity Futures Trading Commission (“CFTC”) filed civil charges against Servider, EJS Capital Management, LLC and others.
According to the allegations in the Complaint unsealed in Manhattan federal court:
In March 2013, Servider set up a retail foreign currency exchange trading firm, called EJS Capital Management, LLC (“EJS”) in Brooklyn. Serviderand his business partner (“CC-1”) ran EJS from March 2013 through July 2014. EJS employed salespeople who made unsolicited telephone calls to prospective investors. Servider and the EJS salespeople told prospective investors that their funds would be used to trade in Forex transactions, and provided them with a “performance report” that falsely claimed that between 2010 and 2013, EJS had achieved gross annual returns for its investors of approximately 18 percent, 22 percent, 49 percent, and 77 percent (the “EJS Performance Report”). The EJS Performance Report contained false and fraudulent representations, as EJS had never conducted any trading nor achieved any returns for its investors. According to the terms of the contracts into which EJS entered with its investors, EJS was authorized only to engage in Forex transactions on behalf of its investors; EJS was not authorized to withdraw any investor money funds; and the only fee that EJS investors agreed to pay to EJS was a commission based on the success of their investments. Servider directed EJS employees to send account statements to the EJS investors, falsely showing positive returns on their investments.
In fact, instead of being used to execute Forex trading, the majority of the investor funds was misappropriated and used to pay Servider and CC-1’s personal expenses and purported business expenses for EJS. For example, Servider used investor funds to purchase an engagement ring, to lease a BMW vehicle for his girlfriend, and to pay for hotel rooms, rental cars, and parking tickets.
Servider, 28, of Staten Island, New York, is charged with six counts, which are listed below with their respective maximum prison sentences and fines.
|Count||Offense||Maximum prison sentence||Maximum fine|
|One||Conspiracy to Commit Commodities Fraud||5 years||The greatest of $250,000, twice the gross gain or twice the gross loss|
|Two||Commodities Fraud by Misappropriation and Omission||10 years||$1 million|
|Three||Fraud by a Commodity Trading Advisor||10 years||$1 million|
|Four||Conspiracy to Commit Mail Fraud and Wire Fraud||20 years||The greatest of $250,000, twice the gross gain or twice the gross loss|
|Five||Wire Fraud||20 years||The greatest of $250,000, twice the gross gain or twice the gross loss|
|Six||Mail Fraud||20 years||The greatest of $250,000, twice the gross gain or twice the gross loss|
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.