DOJ Indicts Owners of Foreign Currency Exchange Investment Company on $129 Million Wire Fraud and Conspiracy
Earlier this month, a federal grand jury indicted owners of a foreign currency exchange company with fourteen counts of wire fraud and one count of conspiracy to commit wire fraud.
The grand jury indicted Michael Shawn Stewart, 57, of Scottsdale, Arizona, and Bryant Edwin Sewall, 54, previously of Little Elm, Texas. Court papers allege the defendants took $40 million for their own personal use from investor’s money and lost $32 million in investment money.
With fourteen counts of wire fraud against them, the defendants face life in prison if convicted. Each count of wire fraud carries a maximum penalty of twenty years imprisonment, three years of supervised release, a fine of $250,000 or twice the gross gain or loss resulting from the offense, and a $100 special assessment.
The conspiracy count carries a maximum penalty of five years imprisonment, three years of supervised release, a fine of $250,000 or twice the gross gain or loss resulting from the offense, and a $100 special assessment.
United States Attorney Jason R. Dunn announced the indictments in the wire fraud case as defendant Sewall remains at large.
The case alleges the defendants plus a third unidentified partner used Mediatrix Capital to attract investors for “algorithm-based trading in foreign currency exchange (FOREX) markets. Mediatrix Capital operated from 2016 through 2019 as interested parties invested in the company.
Simultaneously, the defendants owned a majority share of “Blue Isle Markets," a firm acting as the intermediate broker between Mediatrix Capital’s investors and the FOREX brokerage firm where the official trading occurred.
For three years, Stewart and Sewall allegedly forced the unnamed third partner to “provide false and misleading information to investors and potential investors.”
The feds claim this information was a falsified account of Mediatrix Capital’s history within FOREX, including successful fake instances of trading. The falsified trading information went back to 2013 and showed no net losses in any of the trading histories for Mediatrix Capital.
However, Mediatrix Capital had not done any trading before 2015, and when active, had endured losses for numerous months. The indictment states that Mediatrix’s marketing materials lied to investors, claiming “Mediatrix’s FOREX trading program offered “100% Transparency” and “World Class Returns.”
From March 2016 through September 2019, “investors sent more than $129 million to bank accounts held by Blue Isle and Mediatrix to invest in algorithm-based FOREX trading. During that time, trade losses over $32 million occurred, and Stewart, Sewall, and the third business partner spent more than $40 million on personal and business expenses.”
Stewart appeared before United States Magistrate Judge Kristen L. Mix and is out on bond. Sewall remains at large.
As the court documents note, the Federal Bureau of Investigation investigated with assistance from the United States Marshals Service. Assistant United States Attorney Pegeen D. Rhyne is handling the prosecution. Assistant United States Attorneys Tonya S. Andrews and William Gillespie are governing the forfeiture.
The United States Securities and Exchange Commission has filed civil charges against Stewart, Sewall, and other defendants in this investigation.