A New York man received five years' probation for defrauding his customers of more than $66 million they thought was invested in the foreign-exchange market and instead was spent on art and an Aston Martin car.
A New York man received five years' probation for defrauding his customers of more than $66 million they thought was invested in the foreign-exchange market and instead was spent on art and an Aston Martin car.
Bradley D. Eisner was sentenced today by U.S. District Judge Dora Irizarry in Brooklyn, New York. He pleaded guilty in July 2008 after turning himself in and cooperating with the government.
“This is an extraordinary case,” Irizarry said. “But for Mr. Eisner coming forward, we wouldn't be sitting here today.”
Michael R. MacCaull, Eisner's partner in Great Neck, New York-based Razor FX, was sentenced in March to 15 years and eight months. MacCaull, who also pleaded guilty in the Razor FX case, spent 13 months in prison after pleading guilty in 2001 in a crackdown on Sterling Foster & Co., a defunct New York boiler- room firm that manipulated stock prices. He's in federal prison in Fort Dix, New Jersey.
Eisner and MacCaull, both 38, pretended to be investing in the spot foreign exchange market while they retained most investor funds for their own use, according to prosecutors. The Ponzi scheme operated from January 2001 to January 2008, according to prosecutors.
“This is an extraordinary sentence in a case that is obviously quite unique, and I commend the court for rewarding the defendant for having the courage to stop a massive fraud simply because he didn't want to be a criminal,” Eisner's lawyer Benjamin Brafman said after the hearing.
Federal Guidelines
Federal guidelines called for a sentence of between 12 years and seven months and 15 years and eight months.
Irizarry said she had never before sentenced “someone who has cooperated with the government where he has come forward to report the crime even before it was on the government's radar” and the scheme was not about to collapse.
“Mr. Eisner brought to light a complex scheme that likely would have gone undetected for quite some time,” Assistant U.S. Attorney Sarah Coyne told Irizzary today. “The government, of course, does not excuse Mr. Eisner's criminal conduct.”
Coyne said Eisner pocketed $10 million and Brafman said Eisner lost about $1 million of that gambling. As part of his sentence, he's not allowed to gamble or visit places with casinos such as Las Vegas or Atlantic City, New Jersey.
Picasso, De Kooning
At his sentencing, MacCaull blamed Eisner for concocting and reaping the benefits of their fraud. MacCaull claimed not to know the extent of the scheme, saying that Eisner kept most of more than $110 million that Razor FX took from investors to trade in currencies and used the money to buy a $3 million home in Long Island, New York, and artworks by Picasso and Willem De Kooning.
Both men “were simply depositing the money in a bank account from which they paid their living expenses,” then- Brooklyn U.S. Attorney Benton Campbell said when MacCaull was arrested in 2008.
Eisner and MacCaull allegedly used Razor FX investor funds to pay their salaries and personal expenses, including what officials described as MacCaull's “luxurious apartment” in Northport, New York, and the Aston Martin. Eisner and MacCaull received about $70 million from investors in 2007 alone, prosecutors said.
To conceal their scheme, they created fictitious account statements and returned tens of millions of dollars to investors with money from new ones, prosecutors said.
Father's Laundromat
Eisner and MacCaull must pay back $66.3 million to the victims. Eisner works in his father's laundromat, Brafman said at the hearing.
“I'm truly sorry for what I did,” Eisner told the judge today. He apologized to his victims and said he wanted to stop his “criminal conduct” while there were still assets to return to investors. Irizzary said people got back about half of what they gave Razor FX.
Prosecutors said 272 investors were victimized by the scheme, several of whom wrote letters to Irizarry about the impact of Eisner's fraud.
“We lost our future financial security to Mr. Eisner, the public face of Razor FX,” David B. Dringman and Evi Remp- Dringman wrote on July 20. “Ultimately we were forced to make the decision to sell our home in California that we had hoped to keep for our future.”
The couple had invested $250,000 of home-equity money with Razor FX in December 2007, a month before Eisner and MacCaull were arrested, according to the letter.
