‘He Was Helping Us’: Investors Cheer CEO Accused of Scamming Them
For Louisiana Francois, who sank $10,000 into what prosecutors say was a Ponzi-like Cryptocurrency scheme, driving for four hours from her home outside Boston to watch the person who allegedly took her money to be present in court was an easy call.
But she did not go to condemn him instead she went to cheer him on.
“I’m standing with E. Alexandre since he was helping us,” Francois said. “As a nurse, I used to have two professions. Because of EminiFX, I have only one profession right now.”
EminiFX was an exchange platform Alexandre marketed as a Cryptocurrency and foreign currency based on a unique proprietary technology. Federal establishments say that the technology was smoke and mirrors and that E. Alexandre tricked hundreds of clients out of at least $59 million, luring them with “promises of massive passive income returns.”
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They claim that he actually invested just a few million dollars of the total funds, adding rewards to his users balances for onboarding others to the platform and using the growing influx of hard cash to keep his first victims quiet with handsome “returns.” He assured weekly gains of at least 5% and to make them millionaires as the exchange platform traded for them through its “Robo-Advisor Assisted account,” the US says.
A preliminary document by the court-appointed receiver in a parallel, civil suit brought by the Commodity Futures Trading Commission (CFTC) calculated the damage at more than 62,000 EminiFX users cheated of as much as $250 million.
Along the way, the government alleges that, E. Alexandre used those funds to treat himself to a new BMW and other luxuries.
- Alexandre was arrested in May and charged with a commodities fraud and a wire fraud. He has pleaded not guilty.
Hunting for Returns
The accusations come at a volatile time in financial markets, with Digital Currencies and other alternative assets experiencing sharp slumps and investors hunting for positive returns. E. Alexandre is charged of denying his users even the chance of an upturn. Ponzi like schemes, in which money fetched from later investors are used to pay earlier ones, can go unnoticed for years before crashing. The Ponzi-like fraud, the government claims lasted only for about nine months, during which Francois said she was able to make withdrawals from her account.
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To her and other hundreds of investors who gathered for the status conference at federal court in Manhattan last week, Wednesday, the bad guys are the government authorities and the receiver, whom they see as stopping them of their funds. Some were dressed for court themselves, in business suits and dresses, while others pompously wore T-shirts or sported buttons proclaiming, “We support our CEO.”
“After his arrest, everyone is struggling,” said Ricardo, an EminiFX Exchange investor from Pennsylvania who did not agree to give his last name. He said some users had run into financial problems, including unpaid medical and insurance bills, because they could not get access to withdraw their money.
“You said you are going to protect me?” Ricardo said of the government authorities and the receiver. “I do not believe that.”
Guaranteed 5% — a Week
EminiFX Exchange solicited funds from clients starting in September, according to prosecutors and the CFTC. Then, every Friday, clients portfolio holding accounts would show a weekly return of 5% to 9.99%, plus the bump for recruiters.
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The massive majority of their money was never invested in any financial instrument, according to the government, which cites actual investments of only $9 million, mainly in separate equities and single-equity options, and those investments led to losses of around $6 million. Meanwhile, the US authorities accuse E. Alexandre transferred about $15 million to his personal bank account, some of which he used to buy the new BMW.
- Alexandre, described in a 12th May statement by prosecutors as a 50-year-old living in Valley Stream, New York, hosted Zoom webinars every Thursday to update his exchange’s clients, according to the court complaint. In at least one of those meetings, the US authorities say that he told his clients they could quickly become millionaires — as long as they did not make any withdrawals and kept their holdings untouched.
- Alexandre is lawyers have declined to comment on the case proceedings, as did prosecutors and the CFTC. David Castleman, the receiver, pointed to a website available to clients that explains the process of recovering funds.
‘Not Going to Wash Dishes’
Supporters of E. Alexandre had traveled from other nations as well, including Canada, France and Haiti, having organized themselves on the social messaging application, Telegram after the arrest, Francois said. Many said that the weekly statements and the ability to withdraw gains as proof that EminiFX Exchange was legitimate, and consider E. Alexandre a driving force for positive change in their lives.
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In the conference, at which a trial date was set for 27th March, they were mostly silent. E. Alexandre, who had been released on a $3 million bond and home detention, gave short answers to basic questions from the court.
Jean Guillaume, an EminiFX client and Haitian-American who drove to court from Philadelphia, considered that the court case proceedings against E. Alexandre, a Black man, was racist. He offered hypothetical court cases of people of color enriched by EminiFX Exchange and quitting occupations he said corporate America needs to fill with cheap labor.
“These two people are not going to wash dishes” anymore, Guillaume said. “These two people are not going to be in the nursing home, because they are going to have money. And then, when they are losing that workforce, its a threat to them.”
‘Receivership = Deceivership’
After court, followers stood outside hoping to catch a sight of Eddy Alexandre as he left. Chants broke out, some led by people with megaphones.
“We do not need your receivership!” they called out. One handwritten sign read, “Receivership = Deceivership.”
Many were uninspired with the hearing, accusing the prosecution of adjourning because, they said, it had no evidence against Alexandre. Some said they would convene at the courthouse every step of the way, however minor or significant the occasion.
“I do not care if the case takes 6 months, a year, two, three, 10 years,” Francois said. “I will stay and wait for E. Alexandre, because he was not doing a fraud. He was helping us.”
The criminal case is US v. Alexandre, 22-cr-326; the civil case is CFTC v. Alexandre, 22-cv-3822; US District Court, Southern District of New York (Manhattan).
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