The episode coincides with a development in a $250 million Ponzi scheme I’ve been following: Eddy Alexandre, the founder of EminiFX, pleaded guilty last week to one count of commodities fraud.
Alexandre claimed he had developed a proprietary trading system to invest in cryptocurrency and the foreign exchange markets, or Forex. Each week EminiFX’s website falsely represented returns of at least 5 percent, which investors could withdraw or reinvest, the Justice Department said.
But Alexandre failed to invest “a substantial portion” of investors’ money and even used some funds for personal purchases, U.S. Attorney Damian Williams said in a statement after the guilty plea. Alexandre transferred about $14.7 million to his personal bank account, the government said, and spent $155,000 in investor funds to buy himself a BMW and an additional $13,000 on car payments, including for a Mercedes-Benz.
Emil Bove, an attorney for Alexandre, did not respond to requests for comment.
The red flags always seem so clear in the aftermath of a Ponzi, pyramid or other scheme — the ridiculously inflated and “guaranteed” returns, the insidious way promoters use a trusted pal or even pastor to ingratiate themselves to investors, or the lack of independent verification of claims offered by the con artists.
“If it’s too good to be true, it probably is,” is time-tested advice. But con artists are skilled at making people see what is not there.
With hindsight available, it looks like the people getting scammed were blinded by their own greed, which made them more gullible. It’s how we rationalize that we couldn’t be ripped off.
You can’t cheat an honest man, right?
We must remember that these people are victims and that our attitudes can keep them from reporting these crimes. If they’re too embarrassed or ashamed to admit what happened to them, it allows the scheme to continue or emboldens others to prey on people.
I’ve interviewed a lot of scam victims, including those involved in the EminiFX case. Some were trying to make money to pay bills, send their kids to college, get rid of student loan debt or, yes, get rich too quickly. But their motives shouldn’t make them fair game for crooks.
Yvon Witty of Brooklyn was introduced to EminiFX by a friend. He invested more than $10,000, even though he didn’t understand how Alexandre could consistently achieve 5 percent weekly returns.
“I tried to make a few dollars, and I end up losing the ones I had,” Witty said in an interview after calling 855-ASK-POST (855-275-7678).
Witty trusted his friend, who he said also lost money. They were just following the recommendations of others who benefited from the scheme. And that’s typical: Early investors can get a payout, but the money generally comes from newer victims. A Ponzi scheme eventually collapses because either fewer investors can be found to keep the con going or the operation is shut down by authorities.
Witty conceded he didn’t know anything about EminiFX. He wasn’t alone. Most investors I spoke with couldn’t explain what the company was doing. “I’m not an online person,” Witty said. He had relied on others to help him navigate the website.
I asked Witty why he was so trusting and whether he felt the need to check anything out himself.
“No,” he said. “They told me they were making money off it, so I [trusted] them. That was my mistake.”
Even those who cling to a con artist’s assurances of innocence despite overwhelming evidence of illicit activity should elicit our empathy. In many cases, the victims have developed relationships with the fraudsters, making it hard for them to believe they were duped.
Thousands of Alexandre’s victims, many of whom are from Haiti, said they believed he was just trying to help the Haitian and Black community build wealth. One investor created a Change.org campaign in support of Alexandre, and almost 15,000 people have signed the online petition.
Investors were still supporting the petition drive even after Alexandre admitted his guilt in court.
“He was loyal to the members and his determination was highly appreciated by helping members of EminiFX to have a better life,” one investor wrote.
This is a rare occasion where a scheme was stopped soon enough to find a lot of investor money. Alexandre agreed to forfeit close to $250 million. But there are tens of thousands of individual investors, the Justice Department said. By the way, anyone involved with EminiFX should visit eminifxreceivership.com for updates about the claims process.
There should be no shame and no stigma in falling for a scam. Failing to protect yourself is not a crime. Running a Ponzi or pyramid scheme is.
Witty agreed to go on record to help others avoid being scammed.
“I don’t have that much money,” he said. “I can’t just give people $10,000 just like that. That’s not a good feeling. I will never get into this again. Never, never again.”
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