Trading Firm Executives Guilty of $179M Wire Fraud Scheme

Denver, CO – In a major victory for federal authorities, a jury has found two former executives of a trading firm guilty of running a $179 million wire fraud scheme. Michael Shawn Stewart, 61, of Scottsdale, Arizona, and Bryant Edwin Sewall, 57, formerly of Little Elm, Texas, were charged with 14 counts of wire fraud and conspiracy to commit wire fraud.

The scheme, which was operated through companies Mediatrix Capital and Blue Isle Markets on various Caribbean islands, involved providing false and fraudulent information about an algorithm-based foreign currency exchange trading program to potential investors and salespeople. Stewart and Sewall falsely represented that Mediatrix had a history of successful trading going back to 2013 with no months of losses, when in reality, the company did not exist until 2014 and had many months of net losses.

The executives promised investors ‘100% Transparency’, ‘100% Liquidity’, and ‘World Class Returns’, but in reality, they were manipulating account statements to show only positive trades while hiding massive losses. By the end of the scheme, Stewart and Sewall had promised investors over $179 million but had only $9.8 million in their accounts, a gap they referred to as ‘the hole’. They used their brokerage, Blue Isle, to fraudulently convert investor money into over $40 million in markup fees, which they spent on real estate, boats, cars, jewelry, and other luxuries.

Stewart and Sewall rewarded themselves with approximately $30 million in performance fees, even as they lost approximately $32 million in trades. The scheme caused extensive financial harm to unsuspecting victims, and the guilty verdict is a reflection of the outstanding work of federal prosecutors and the FBI.

United States Attorney for the District of Colorado Cole Finegan said, ‘Holding white-collar criminals accountable for fraud like this is a key part of the work that we do.’ Special Agent in Charge Mark Michalek added, ‘The defendants orchestrated an elaborate foreign currency investment fraud scheme that caused extensive financial harm to unsuspecting victims.’

Sentencing will be held in November 2024. Each count of wire fraud carries a maximum penalty of 20 years of imprisonment, three years of supervised release, a fine of $250,000 or twice the gross gain or loss resulting from the offense, and a $100 special assessment. The conspiracy count carries a maximum penalty of five years of imprisonment, three years of supervised release, a fine of $250,000 or twice the gross gain or loss resulting from the offense, and a $100 special assessment.

A third partner, Michael Young, previously pleaded guilty to making a false statement to the Securities and Exchange Commission and will be sentenced on June 11, 2024. The Federal Bureau of Investigation’s Denver Field Office conducted the investigation, and Assistant United States Attorneys Anna Edgar, Bryan Fields, and former AUSA Pegeen Rhyne handled the prosecution.

Case number: 21-cr-00034-WJM