Company and individuals to pay over $11.6 million for Forex Fraud Scheme
Federal Court Orders Defendants EJS Capital Management, LLC, Alex Vladimir Ekdeshman, and Edward J. Servider to Pay $11.6 Million in Sanctions for Forex Fraud Scheme
Relief Defendants Alisa Ekdeshman, Executive Services of Florida, LLC, Executive Management of Montana, Inc., and Michael Vilner Ordered to Pay $760,375 in Disgorgement
The U.S. Commodity Futures Trading Commission (CFTC) obtained judgments against each of the Defendants and Relief Defendants in this fraudulent, off-exchange foreign currency (forex) scheme involving misappropriation of customer funds and false statements to customers to conceal the fraud. The Orders impose permanent registration and trading bans against the Defendants and order the Defendants to pay over $11.6 million in sanctions and the Relief Defendants to disgorge a total of $760,375 of ill-gotten gains.
Specifically, the U.S. District Court for the Southern District of New York, entered the following Orders: 1) on December 18, 2015, an Order of default judgment against Defendants EJS Capital Management (EJS) and Alex Vladimir Ekdeshman and Relief Defendants Executive Services of Florida, LLC (ESF) and Executive Management of Montana, Inc. (EMM); 2) on December 21, 2015, an Order of summary judgment against Defendant Edward J. Servider and Relief Defendant Michael Vilner; and 3) on October 26, 2016, an Order of summary judgment against Relief Defendant Alisa Ekdeshman.
These Orders stem from a Complaint filed by the CFTC on May 1, 2014, which alleged that Defendants EJS, Ekdeshman, and Servider engaged in a fraudulent off-exchange foreign currency (forex) scheme.
The Court’s Orders find that between April 2013 and May 2014, Defendants EJS, Ekdeshman, and Servider solicited and accepted over $2 million from approximately 112 members of the general public to trade forex and misappropriated most of the customer funds for their own personal and business expenses. The Orders further find that Defendants provided false account statements to customers that listed purported profits from forex trading, although no customer funds were traded in forex and no profits were generated from forex trading. In addition, the Orders find that EJS’s website contained a false performance report of EJS’s trading profits.
The Orders require Defendants EJS, Ekdeshman, and Servider to jointly 1) pay over $2.3 million in restitution to Defendants’ victims; 2) disgorge ill-gotten gains of over $2.3 million; and 3) pay over $7 million in civil monetary penalties. EJS, Ekdeshman, and Servider will obtain a dollar-for-dollar credit against their restitution obligation as a result of any payments made in satisfaction of their disgorgement obligations. EJS, Ekdeshman, and Servider also are permanently banned from trading and registration with the CFTC and are permanently enjoined from violating the anti-fraud provisions, among other provisions, of the Commodity Exchange Act and CFTC regulations, as charged.
The Orders also require Relief Defendants Vilner and his companies, ESF and EMM, to jointly disgorge $555,000, which represents the amount of ill-gotten gains they received from EJS and to which they have no legitimate claim. Relief Defendant Alisa Ekdeshman, Defendant Alex Ekdeshman’s wife, is required to disgorge $205,375, which is the amount of ill-gotten gains she received from EJS and to which she had no legitimate claim.
On June 4, 2014, the Court also entered an Order of Permanent Injunction against Defendant Ekdeshman finding that due to his actions in the EJS fraud, he violated the terms of a U.S. District Court Order entered on July 8, 2013, arising out of a prior CFTC action against Ekdeshman and Paramount Management, LLC, CFTC v. Paramount Management, LLC and Alex Vladimir Ekdeshman, C.A. No. 13-Civ. 4436 (CM) (SDNY Sept. 9, 2013) (see CFTC Press Release, Complaint, and Consent Order 6690-13), where Ekdeshman is found to have committed solicitation fraud and misappropriated customer funds for personal and business expenses.
In Related Criminal Action, Ekdeshman was Sentenced to 87 Months of Imprisonment and Ordered to Pay Restitution
In a related criminal action involving Defendant Ekdeshman’s conduct at Paramount, Ekdeshman pleaded guilty to commodities fraud in United States of America v. Alex Ekdeshman, No. 1:14-cr-00427 (S.D.N.Y.). On June 29, 2015, the Court sentenced Ekdeshman to 87 months of imprisonment and ordered him to pay restitution to the victims of his fraud.
Defendant Servider is currently awaiting trial on commodity fraud and mail and wire fraud charges for his conduct at EJS in a related criminal action filed in the U.S. District Court for the Southern District of New York. United States of America v. Edward J. Servider, No. 1:16-mj-06465 (S.D.N.Y.).
The CFTC cautions that Orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
The CFTC thanks the U.S. Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, the U.K. Financial Conduct Authority, the l’Autorité des Marchés Financiers du Québec, and the Financial Services Board of the Republic of South Africa for their assistance.
CFTC Division of Enforcement staff members responsible for this case are Elizabeth C. Brennan, Judith M. Slowly, Katherine Rasor, W. Derek Shakabpa, Mark Picard, Steven Ringer, David Acevedo, Lenel Hickson, Jr., and Manal M. Sultan.