Three cryptocurrency traders allegedly scammed over 100 investors through a Ponzi scheme that generated over $35 million, according to victims who formed an entity to represent them. Interestingly, the trio worked for reputable banks and institutional firms, including Wells Fargo Advisors and NYSE.
Former Wall Street Executives Operated Alleged Crypto Scam
Q3 Investment Recovery Vehicle, which represents the defrauded investors, initiated the federal securities fraud action in Florida last month. It accuses three individuals of organizing a scheme referred to as Q3, which attracted victims with a fake winning trading formula.
The crypto scam was led by a trio that included James Seijas, who worked as a financial advisor for Wells Fargo Advisors until March 2019, Michael Ackerman, a former New York Stock Exchange (NYSE) institutional broker, and surgeon Quan Tran.
The recovery vehicle has been assigned the complaints of at least 20 victims, though the total number exceeds 100. It said that similar accusations against Ackerman have already been voiced in a US Securities and Exchange action, a US Commodity Futures Trading Association action, and a criminal wire fraud and money laundering indictment.
As per the recovery vehicle, Q3 founders attracted investments by social media channels like Facebook. They promoted their fraudulent scheme in a doctors’ group on the site. Potential victims were told that they could use their funds for crypto trading. The recovery vehicle explained:
The founders claimed, fraudulently, that the investments would be used to trade cryptocurrency using a proprietary and wildly successful algorithm developed by Ackerman.
Two Wells Fargo Entities Named in the Complaint
Besides the trio, the recovery vehicle named two more individuals as part of the plot, including Seijas’ wife Donna Seijas, who acted as a managing partner of Q3, and Steve Saunders, the VP of operations for Skyway Capital Markets. The list of defendants includes two Wells Fargo entities and three Q3 entities.
The recovery vehicle claims that over 100 individuals and entities were defrauded. It seems that less than $10 million or even less than $5 million of their investments were used for crypto trading. The rest of about $20 million were used by defendants for own purposes.
Wells Fargo, which by the way prohibited customers from buying Bitcoin and other crypto-assets, has been regularly surrounded by scandals these years. Besides the $3 billion fake account scandal, the bank has been accused of violating the ERISA rules and informing clients about risks related to inverse exchange-traded funds (ETFs).
Before working for Wells Fargo, James Seijas held various positions at Fidelity Investments, Barclays, and Bank of America.
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