EminiFX CEO Eddy Alexandre has not yet been assigned a prison to serve his nine-year sentence. Plans are in motion to reimburse club members he defrauded.
This reporting is sponsored by a grant from The McGraw Center for Business Journalism at the Craig Newmark School of Journalism at the City University of New York.
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NEW YORK — EminiFX CEO Eddy Alexandre was sentenced to prison last month for committing a $250 million fraud involving mostly Haitians. Since then, various documents have been filed in three active cases regarding the fraud, including a plan to return the money seized to users of EminiFX and more details about Alexandre’s sentencing.
These latest court filings help address some common questions about the fraud, including the status of the funds seized when the government stopped Alexandre’s operation.
What’s the latest in the EminiFX case?
Judge Valerie Caproni, a judge in the civil case, approved the court-appointed receiver’s plan to start identifying EminiFX users through a portal on the receivership website. The goal is to see which users are eligible to receive what is left of nearly $250 million seized from their investment club.
According to the latest court filings, newly convicted Alexandre may surrender himself to enter prison on Sept. 8 instead of the original Aug. 18 date.
What did EminiFX and Alexandre do again?Alexandre, 51, was arrested in May 2022 after the FBI said EminiFX, which he advertised as a cryptocurrency and foreign exchange trading platform, functioned as a pyramid scheme. Alexandre claimed members could become millionaires by using his proprietary robot-assisted trading software that generated weekly returns of 5% to 9.99%. In reality, Alexandre showed them fictitious returns and used investor funds for some payouts, reward top performers, start buying real estate and afford personal luxury purchases.
Alexandre pled guilty to fraud in February and has been cooperating with Receiver David Castleman to recover the funds and determine the number of victims eligible for refunds.
Who gets their money back and how?
That’s what the receiver is still trying to figure out. The process is expected to “take some time” to complete given the number of EminiFX users, at least 25,000. Castleman said he will give a deadline by which all users should verify their information. He did not say in the filing what the deadline would be.
Why is identifying people and returning the money taking so long?
Most EminiFX investors will not be fully reimbursed for funds they put in because $50 million is already lost as a result of poor investment choices Alexandre did make. In addition, according to Castleman, EminiFX conflated actual funds that members deposited with the value of the fake 5% to 9.99% weekly returns on investment (ROI) and referral bonuses given to members who recruited others. As a result, the total stated account value of the users shown on the system fraudulently “grew” each week.
Castleman said it reached almost $548 million by the time he was appointed, after the May arrest.
Plus, since some users were able to make withdrawals, they may not be due any more money. That’s because, Castleman said, “any user who withdrew some of the ROI and Bonuses was paid, in effect, with the funds of other Users given the lack of any trading activity to support those ROI and bonuses.”
How does the receiver know how much money accumulated or changed hands?
Castleman is in charge of the claims process to return any money back to investors. He has said his team spent months creating financial records for EminiFX, which did not follow good accounting rules for recordkeeping. The team used forensic accounting methods to get a financial picture of the transactions made, based their analysis and best-guess estimates on information Alexandre told them, monies found in bank accounts, brokerage statements and cryptocurrency data from numerous financial institutions.
The receiver’s team sorted through actual funds deposited and fictitious displays shown fraudulently as returns on investment.
Why does the number of investors keep changing?
At the initial time the case was brought, investigators referred to 62,000 people defrauded. Then the number fell at at least 30,000. Castleman’s reports say that after analyzing EminiFX’s operations, the receivership team could trace at least 25,000 individual EminiFX investment club members, and that some users of the website were not necessarily club members.
The upcoming identification process is expected to confirm who was a club member, who had investors under them as referrals who were not club members and who registered on the site, but may not have invested.
User identification portal coming soon
How will the user identification portal work?
Judge Valerie Caproni approved Castleman’s plan to put in place the electronic method for EminiFX members or users to verify who they are and how much they put in. Now, the team is creating a separate portal at https://www.eminifxreceivership.com.
“The procedures…will allow the receiver to determine the scope of non-user claims, eventually consider and move the court to confirm the claims of users, and provide a critical step towards an eventual distribution of the assets,” Castleman said.
Other details are covered in the portal plan, including its availability on desktop and mobile devices, authentication steps, French and Creole translations and how to handle disputed users or amounts.
What can users do on this portal?
Users will be given access to the portal and will receive a special access page containing a transaction log with each of the user’s transactions, Castleman said. The user will be asked to verify their listed transactions, modify such transactions and/or add additional transactions, add an additional user on whose behalf a transaction may have been made.”
When will the portal be available on the site?
As of this writing, a tab for the special portal was not visible on the receiver’s website. The approved plan did not mention an exact date the special page would be available.
Imprisonment delay details and more
What is Alexandre’s sentence?
On July 18, Judge John P. Cronan sentenced Alexandre to nine years in prison and three years of supervision upon release. He ordered Alexandre to surrender to the Bureau of Prisons by Aug.t 18 and to make restitution of $213 million to victims.
Cronan recommended that Alexandre be placed in a prison in the northeast for convenience to and from the New York City area, where Alexandre’s family is based.
If Alexandre is convicted, why isn’t he in prison?
Where a convict is to be held is the responsibility of the Bureau of Prisons, not the courts system. So everyone is waiting for that agency to determine Alexandre’s future location.
What’s the imprisonment delay in Alexandre’s case?
In an Aug. 14 letter to Cronan, Alexandre’s lawyer Emil Bove said the Bureau of Prisons had not assigned a facility for Alexandre to serve his time. Cronan then approved a new surrender date of Sept. 8 or within five days of the facility designation being made, whichever is sooner.
If Alexandre is not assigned a facility by Sept. 6, he may ask for another extension, Cronan said.
What else does the sentence entail?
Among the conditions of his 108-month sentence, Alexandre is to be supervised in the district where he lives once released from prison. He must provide access to his probation officer to any requested financial information. Alexandre must not incur any new credit charges or open additional lines of credit without the approval of the probation officer, unless the defendant is in compliance with the installment payment schedule.
Will Alexandre be deported to Haiti?
The judge did not order that Alexandre, a Haitian citizen, be deported after serving his sentence.
Financial restitution details
Where is he going to get the money to make restitution?
When Alexandre pled guilty, he agreed to forfeit to the federal government a total of $248,829, 276.73 traced to the fraud and to give up ownership or interest in various properties and financial accounts:
- A BMW
- A Mercedes Benz GLS 450
- Seven TD Bank accounts in the name of EminiFX
- Two TD Bank accounts in Alexandre’s name
- Two Bank of America accounts in the name of EminiFX
- One Genisys Credit Union account in Alexandre’s name
- Two Interactive Brokers accounts in Alexandre’s name
- Five Square accounts in the name of either EminiFX or Alexandre
- One Coinbase account in Alexandre’s name
- One Gemini account in Alexandre’s name
Who will get paid first?
The sentencing judgment spells out the specific order for forfeited funds to be used for restitution payments and various court assessments, with community being seventh in line on the list of payments:
- Assessment, which refers to a $100 administrative court fee due the day of the final judgment.
- Restitution principal, the $213,639,133.50 ordered paid to users.
- Restitution interest, which is not shown yet.
- AVAA assessment, zero in this case.
- Fine principal, zero in this case.
- Fine interest, zero in this case.
- Community restitution, which are not yet shown.
- JVTA assessment, zero in this case.
- Penalties, which are not yet shown.
- Costs, including cost of prosecution and court costs, also not shown yet.
Cronan planned to set a hearing in October to view the final restitution amount available and the list of people to whom money should be returned.
Lawsuit against the churches in Florida
What about the churches?
In a civil case filed in Florida, plaintiffs said Alexandre used the Seventh-day Adventist churches in the Haitian community to have his suspected accomplices recruit people. The case is going through the motions, mostly paperwork being filed back and forth.
With about 108 defendants named in that case, individuals and churches, these filings and motions are mounting, but no significant rulings and declarations have been made yet.
Correction: An earlier version of this story incorrectly stated one instance of the new surrender date. The error has been corrected to say Sept. 8.