A former stockbroker has been sentenced to prison for what authorities said was a scheme that defrauded people who invested in a hedge fund, according to Financial Advisor.
A federal judge sentenced 38-year-old Mina Tadrus to 30 years behind bars and ordered him to pay restitution of over $4.2 million. Tadrus, based in Tampa, pleaded guilty in February to investment adviser fraud.
Tadrus, who was registered with FINRA and was a derivatives consultant for a global financial institution, founded Tadrus Capital LLC in 2020. Federal prosecutors said he claimed to operate “the world’s first private high-yielding and fixed-income quantitative hedge fund” powered by artificial intelligence (AI) high-frequency trading models. The fund purported to guarantee investors up to 30% returns annually. But Tadrus actually used no AI-based algorithmic trading, authorities said. He also falsely claimed that Tadrus Capital was “recession-proof” and had liquidity with access to $5.5 billion in purchasing power.
“Between September 2020 and July 2023, at least 31 individuals—predominantly Tadrus’s family, friends, and members of the Egyptian-American Coptic Christian community—invested more than $5.7 million with Tadrus Capital,” the U.S. Attorney’s Office states. “Less than one percent of the investor funds were used for legitimate investment activities and none of those activities included the promised AI-based algorithmic trading. Instead, Tadrus used approximately $1.7 million of investor funds both to pay other investors the monthly returns he had falsely promised, and to pay himself, his employees, and his personal expenses.”
The Securities and Exchange Commission also filed a parallel civil enforcement action against Tadrus and his firm in July 2023 for violations of securities laws.
“The defendant traded on excitement over the newest AI technology to trick investors to invest millions with his hedge fund. In the end, he perpetrated one of the oldest frauds in the book,” stated United States Attorney Nocella. “Today’s sentence serves as a reminder to all investment advisors that your clients place great faith in you to truthfully manage their investments, nest-eggs, and retirement savings.”
The Internal Revenue Service’s criminal investigation unit joined with the SEC and federal prosecutors in working on the case against Tadrus. “While Tadrus sold a dream of high-profits to his investors, the only return they saw was the negative result of being swindled by someone they trusted,” stated IRS-CI New York Special Agent in Charge Harry Chavis. “Today’s sentence and imposed restitution sees that Tadrus will spend real time behind bars and pay for his crimes. This new reality is not AI generated.”
Hyman Cotter PC routinely represents investors harmed when financial professionals and their firms engaged in misconduct that caused their clients investment losses. If you think your financial professional or firm engaged in misconduct that caused investment losses, contact the Chicago investor fraudattorneys of Hyman Cotter PC to schedule a free consultation by calling 312-291-4600 or through our online contact form.
