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Alleged $125M Offering Fraud Touted “Highly Profitable” Trading Strategy

The US Securities and Exchange Commission (SEC) has secured an asset freeze against three people and entities accused of operating a $125M offering fraud. The regulator contends that the international trading program, run by Mediatrix Capital, Inc. and its principals Michael Stewart, Michael Young, and Bryant Sewall, touted an algorithmic trading strategy that was supposedly “highly profitable,” had never experienced a month when it didn’t make money, and rendered over 1600% of returns.

The SEC contends that the reality was a very different story, with the trading strategy regularly losing money–over $18M from trading just in 2018. The Commission is accusing the defendants of the following:

    • Misrepresentations involving the trading strategy’s ability to make money
    • Falsifying account statements
    • Issuing Ponzi-like payments
    • Misappropriating over $35M of investor funds to pay for their luxury lifestyles
    • Making false claims that trading outcomes had been audited

The other defendants in the securities fraud case are the entities Blue Isle 1 and Blue Isle 2.

The SEC said that the alleged $125M offering fraud started in March 2016 and has been going on since then. Investors were told that their funds would be pooled together. Defendants are accused of claiming that their successful trading strategy, which had not seen an unprofitable month in 5 ½ years, made it possible for Mediatrix Capital to acquire $225M in assets under management.

Instead, the defendants allegedly stole over $35M of investors’ funds and spent the money on luxury cars and properties, while diverting over $5M to improper expenses to keep the fraud going. What portion of investors’ money they did trade in went to unregistered securities and frequently resulted in losses.

The SEC believes that as a result of this alleged $125M offering fraud, investors have lost tens of millions of dollars. Now, the regulator has obtained an emergency enforcement action to stop the scam.

The Commission’s complaint also names a number of relief defendants, including relatives, friends, and shell companies of the defendants that the SEC believes were given illicit profits related to the scam.

Offering Fraud Lawyers
If you are an investor that lost money in this $125M offering fraud involving Mediatrix Capital, please contact Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) today. This is not the kind of investor claim that you should file without an experienced securities fraud law firm representing you and fighting for your right to financial recovery. Our offering fraud lawyers can help you explore your legal options.

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