Sean F. Mescall, of Charlotte, North Carolina, has been charged with operating a $1.3 million Ponzi scheme involving foreign currency (forex) trading, according to a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) on September 9, 2009.
Mescall, along with his company CapitalStreet Financial LLC (CSF), allegedly defrauded at least 69 customers by promising unrealistically high returns – between 60 and 80 percent annually – on forex investments. The CFTC alleges that Mescall misappropriated approximately $875,000 of customer funds.
The scheme, which ran from at least September 2006, involved falsely portraying CSF as a well-established firm with a long history and numerous offices. In reality, CSF was founded in August 2006 and operated with only four offices in the Charlotte area. Mescall reportedly sustained $275,000 in trading losses but concealed these losses by providing customers with fabricated monthly statements.
The misappropriated funds were used to pay earlier investors – a hallmark of a Ponzi scheme – and to cover Mescall’s personal living expenses. Funds were also allegedly directed to relief defendant Gaincapital, Inc., a company owned by Mescall. Another relief defendant named was Gerald Mescall, a relative of Sean Mescall.
On the same day the complaint was filed, U.S. District Court Judge Robert J. Conrad, Jr. issued an order freezing the assets of Mescall, CSF, and the relief defendants. A preliminary injunction hearing was scheduled for September 16, 2009. A receiver, Joseph Grier, Esq., was appointed by the court to oversee the case.
The CFTC is seeking restitution, disgorgement of ill-gotten gains, civil monetary penalties, and a permanent ban on Mescall’s trading activities. The Securities Division of the North Carolina Secretary of State also arrested Mescall and executed search warrants at CSF and his home in a related action.
Customers who believe they were affected by this scheme are encouraged to contact the receiver, Joseph Grier, Esq. at (704) 375-3720 or visit www.grierlaw.com.
Source: CFTC.gov
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