Michael Shawn Stewart, 61, of Scottsdale, Arizona, and Bryant Edwin Sewall, 57, formerly of Little Elm, Texas, were found guilty of 14 counts of wire fraud and conspiracy to commit wire fraud in Denver, Colorado.
A jury delivered the guilty verdict after a three-week trial.
Evidence presented at the trial showed that Stewart and Sewall provided false and fraudulent information about an algorithm-based foreign currency exchange program to potential investors and to salespeople they were using to solicit investors.
The duo falsely represented that Mediatrix Capital had a history of successful foreign currency trading going back to 2013 with no months of losses when, instead, Mediatrix did not exist until 2014 and its trading history included many months of net losses.
Mediatrix promised its investors ‘100% Transparency,’ ‘100% Liquidity,’ and ‘World Class Returns.’ However, after luring investors into the scheme, Stewart and Sewall fraudulently induced them to stay by manipulating account statements to show only positive trades while intentionally hiding massive losses that substantially reduced those investors’ accounts.
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 internally referred to as ‘the hole.’ Even as they lost approximately $32 million in trades, Stewart and Sewall rewarded themselves with approximately $30 million in performance fees.
They also used their brokerage, Blue Isle, to fraudulently convert investor money into over $40 million in markup fees. They spent the money on real estate, boats, cars, jewelry, and other luxuries.
The U.S. Attorney’s Office for the District of Colorado announced the guilty verdicts.
United States Attorney Cole Finegan said, ‘Holding white-collar criminals accountable for fraud like this is a key part of the work that we do. This was a complex scheme, and these guilty verdicts are a reflection of the outstanding work of our prosecutors as well as the exceptional work of our partners at the FBI.’
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. FBI Denver will continue to investigate and seek justice for individuals who fall victim to criminals who cheat and lie their way into victims’ pockets.’
United States District Judge William J. Martinez presided over the trial. Sentencing will be held in November 2024.
Each count of wire fraud carries a maximum penalty of twenty 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 involved with Mediatrix and Blue Isle, Michael Young, previously pleaded guilty to making a false statement to the Securities and Exchange Commission and will be sentenced on June 11, 2024.
Key Facts
- State: Colorado
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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