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David Schamens, 64, of Greensboro, NC, promised annual return rates of 12% to 30% when he began soliciting investments in 2014 in Secaucus-based TradeStream Analytics LTD, as well as in other entities with names such as TD Trading LLC, TFG Trading LLC, and Tradedesk Financial Group Inc., U.S. Attorney Philip R. Sellinger said.
He then launched Tradestream Algo Fund, an algorithm-based trading pool that he claimed to have developed, the U.S. attorney said.
"In each instance, Schamens directed investors to wire funds directly or to transfer portions of their Individual Retirement Accounts (IRAs) to bank accounts he controlled," he said.
Schamens then moved the money through several different bank accounts before directing it elsewhere, Sellinger said.
He used some of the misappropriated funds for personal expenses -- including buying a house and making payments on a luxury car -- while also repaying earlier investors in typical Ponzi-scheme fashion, the U.S. attorney said.
Schamens also took several steps to keep his customers’ trust, Sellinger said -- among them:
- sending false account statements;
- posting false monthly account statements to his companies’ websites showing balances for trading accounts that didn't exist;
- sending false tax documents reporting earnings that did not exist.
Special agents of the Department of Homeland Security's Homeland Security Investigations' Newark Field Office charged Schamens with wire fraud, securities fraud and money laundering, Sellinger said. He's scheduled for a first appearance in U.S. District Court in Newark federal court on Tuesday.
Sellinger credited the work of the HSI agents who conducted the investigation. He also cited the role of the U.S. Securities Exchange Commission’s Division of Enforcement under Director Gurbir S. Grewal, the former New Jersey attorney general and one-time federal and Bergen County prosecutor from Glen Rock.
Assistant U.S. Attorneys Sophie E. Reiter and Anthony Torntore of Sellinger's Cyber Crime Unit are handling the case for the government.
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ANYONE who believes they may have been victimized in this particular case is asked to contact Homeland Security Investigations' Newark Field Office: (973) 776-5500.
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