The Securities and Exchange Commission filed a lawsuit in late July against Mina Tadrus and Tadrus Capital LLC (“Defendants”) for allegedly defrauding investors in an algorithmic trading scheme.
In its lawsuit, the SEC contends that at least since September 2020, the Defendants offered and sold investments in Tadrus Capital Fund LP, a supposed pooled investment vehicle, that targeted Egyptian Coptic Christian community members. Per the SEC’s Complaint, the Defendants raised in excess of $5 million in capital from more than thirty (30) investors. The SEC further alleged that Defendants misrepresented to investor that their investment capital would be pooled and then used in algorithmic trading, which would purportedly ensure a consistent, monthly investment return. The Defendants did not, however, actually invest the investor capital, but rather used at least $1.4 million to make payments to other investors in a Ponzi-like fashion, and misappropriated at a minimum $380,000, the SEC contends.
The SEC charged Defendants with violations of the antifraud sections of the Securities Act of 1933, the Securities Exchange Act of 1934 and Rule 10b-5, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The SEC has sought preliminary and permanent injunctions, disgorgement of ill-gotten gains from the alleged fraudulent scheme, and civil penalties against both Defendants, and specifically a conduct-based injunction and officer-and-director bar against Defendant Mina Tadrus.
If the SEC’s allegations in this case prove to be true, this case will mark yet another affinity fraud where members of a religious community are specifically targeted given their shared beliefs and implicit trust that flows from it. It will also mark yet another fraudulent scheme involving “guaranteed” steady returns from an algo-trading artificial intelligence program, a pitch that defies commons sense and natural market volatility. Notwithstanding the new technology, the old adage still applies: if it’s too good to be true …
David Chase, Esq. of the Law Firm of David R. Chase, a former SEC prosecutor, is now an SEC subpoena defense attorney and represents individuals in SEC fraud investigations nationwide. You may contact him toll-free at: 800-760-0912 or e-mail at: david@davidchaselaw.com, and can visit the Firm’s website for more information and content at: www.davidchaselaw.com.
