Two Ex-Trading Firm Execs Found Guilty of $170M Wire Fraud Scheme

• DENVER – A Colorado jury has found two former trading firm executives guilty of 14 counts of wire fraud and conspiracy to commit wire fraud in a scheme that swindled investors out of over $170 million.

Michael Shawn Stewart, 61, of Scottsdale, Arizona, and Bryant Edwin Sewall, 57, formerly of Little Elm, Texas, were found guilty in a three-week trial of orchestrating the elaborate scheme through their companies, Mediatrix Capital and Blue Isle Markets, operating on various Caribbean islands.

Prosecutors presented evidence that Stewart and Sewall provided false and fraudulent information about an algorithm-based foreign currency exchange trading program to potential investors and salespeople, promising “100% Transparency,” “100% Liquidity,” and “World Class Returns.”

However, the companies’ trading history showed months of net losses, and the executives manipulated account statements to show only positive trades while hiding massive losses that reduced 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 referred to as “the hole.”

Despite losing approximately $32 million in trades, Stewart and Sewall rewarded themselves with approximately $30 million in performance fees. They also used their brokerage to fraudulently convert investor money into over $40 million in markup fees, which they spent on luxuries such as real estate, boats, cars, and jewelry.

United States Attorney for the District of Colorado Cole Finegan praised the guilty verdicts, saying “Holding white-collar criminals accountable for fraud like this is a key part of the work that we do.” The FBI’s Denver Field Office conducted the investigation, and Assistant United States Attorneys Anna Edgar, Bryan Fields, and former AUSA Pegeen Rhyne handled the prosecution.

Sentencing is set for 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 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.