On June 16, 2022, Eddy Alexandre pleaded Not Guilty in the Manhattan federal court to charges of commodities fraud and wire fraud. The United States Attorney’s Office (“USAO”) alleges that, from September 2021 through May 2022, Mr. Alexandre operated a trading platform that attracted $59 million in investments. They further allege that he misappropriated millions of dollars for himself rather than investing the money, and that he promised unrealistic returns on investment.
What type of fraud is alleged and if they allegations are true, what are the consequences of the fraud to the perpetrator?
The Allegations
So that I don’t have to keep saying “alleged” over and over again, I’ll say it up front: This article contains allegations of wrongdoing, which must yet be proven by the prosecutors. Under the laws of the United States, Mr. Alexandre is entitled to the presumption of innocence.
It is alleged that:
Mr. Alexandre is a man of Haitian descent, who lives on Long Island in New York. Sometime last year, he launched an investment company, called EminiFX, that guaranteed weekly returns of 5%, claiming to use his secret methodology in foreign exchange and cryptocurrency trading. He promised his investors that he would double their money in 6 months. He told them that if they invested $100,000, then they would be millionaires within 2-3 years. His website even showed his investors the supposed 5-9.99% returns he earned for them each week.
Instead, he spent much of the money on luxuries for himself, including a $155,000 BMW. He actually invested very little of the funds and sustained major losses on the funds he did put into the market. In order to make payments to his investors, he had to uses other investors’ money rather than actual returns generated by his secret strategy.
Based on news reports, it appears that many of Mr. Alexandre’s investors were Haitian like himself. (Watch for my next article about affinity fraud.)
What is the definition of fraud?
The simplest way to define fraud is a lie. Think about what a lie is: It’s a false statement intended to cause the hearer to take a different course of action that they would take if they knew the truth. Children lie so they don’t get in trouble, right?
Fraud is the same thing, and Merriam-Webster’s Dictionary defines it as follows:
Intentional perversion of the truth in order to induce another to part with something of value.
Synonyms of fraud include deceit and trickery, and you cannot commit fraud (or lie) by accident; it must be intentional.
What are the elements of fraud that Mr. Alexandre’s prosecutors must prove?
In order to prove that a defendant committed a crime of fraud, prosecutors must prove all of the following elements beyond a reasonable doubt. If they fail to prove even one of these elements, then the defendant must be found Not Guilty.
1. The defendant knowingly deceived a person by false representation (he lied);
2. The defendant did so with the intent to persuade the person to let the defendant take possession of property
(including money); AND
3. The person let the defendant take possession of the property because they relied on the false representation (the
lie).
To prove the two specific allegations against Mr. Alexandre, the prosecutors will have to proffer evidence to support additional elements under federal law.
To prove the crime of Commodities Fraud, which is defined at 18 U.S.C § 1348, the USAO must also prove that the fraud was committed “in connection with any commodity for future delivery, or any option on a commodity for future delivery, or any security of an issuer….”
To prove the crime of Wire Fraud, which is defined at 18 U.S.C § 1343, the prosecutors must also prove that the defendant transmitted writings, signs, signals, pictures, or sounds by means of wire, radio, or television communication in interstate or foreign commerce for the purpose of executing the fraud.
These extra elements enable federal prosecutors to shoehorn what otherwise would be state prosecutions into federal jurisdiction.
What are the consequences of fraud to the perpetrator?
First, let me explain an unfortunate truth: Fraud cases are notoriously labor-intensive to investigate – much more so than other types of cases. One detective once told me that he could close 20 residential burglary investigations in the same amount of time it would take to close a single real estate fraud investigation. This may have been hyperbole, but his point was well-taken. The practical effect of this reality is that there will never be enough fraud investigators to catch all the fraudsters, con artists and flimflam men.
If a white collar criminal gets caught, he is demonstrably unlucky just like Jen Shah from the Real Housewives of Salt Lake City (article and article). I say this because it means that (1) a victim figured out which agency to report the crime to (…if they report it at all and many institutional victims, i.e., financial institutions, will not bother), (2) it landed on the desk of a detective who has the time, interest and know-how to investigate a fraud case (many do not), (3) charges were filed by a prosecutor who understands fraud (many filing prosecutors do not), and (4) the actual prosecution was handled by a prosecutor who understands fraud. Essentially, the planets have to align for someone like Mr. Alexandre to get caught in the first place and then prosecuted.
The court can sentence Mr. Alexandre to a maximum of 45 years in federal prison, but it is hard to know at this early stage of the prosecution what his sentence is likely to be. If he pleads guilty or is convicted at by a jury, then the court will consider many factors including:
- The amount of money he stole;
- Who the victims were and their unique vulnerability;
- The nature of the scheme;
- His role in the crime;
- Whether he is authentically remorseful;
- His criminal history; and
- More.
In light of the amount stolen ($59M!), if he is convicted, he will go to prison, but the actual number of years is unpredictable at this point. Check back periodically for updates.
-David Fleck, Esq.
Subject Matter Expert