The U.S. Securities and Exchange Commission told U.S. District Judge Frederic Block that defendant Mina Tadrus has agreed to a permanent bar preventing him from acting as an officer or director and from issuing securities as part of a proposed deal.
If signed off on by Judge Block, the deal would "leave open for later resolution by motion (or settlement) the monetary relief sought" by the SEC. No timetable for a decision on the partial settlement was available.
Tadrus is set to be sentenced on Aug. 18 after pleading guilty in February to a count of investment adviser fraud before U.S. District Judge Hector Gonzalez in Brooklyn in a parallel criminal case.
Tadrus executed the scheme from September 2020 through July 2023, prosecutors say, and falsely promised investors large returns through their stakes in "the world's first private high-yielding and fixed-income quantitative hedge fund."
While Tadrus publicly claimed his fund used AI-based algorithmic trading strategies, in reality, prosecutors say, Tadrus did not invest the vast majority of investors' funds, much less with any AI-based algorithmic trading model, instead using over $1.4 million to make Ponzi-type payments to earlier investors for "guaranteed" monthly returns and spending hundreds of thousands of dollars on personal expenses.
In an Aug. 1 sentencing letter in his criminal case, a remorseful Tadrus said he plans to make restitution and asked for a non-incarceratory sentence.
"He allowed his obsession with developing the perfect algorithm to overpower his common sense," the filing reads in part.
The government has yet to file its sentencing recommendation.
Tadrus is representing himself in the SEC case. In the criminal matter, he is represented by Jeffrey Dahlberg and Allegra Glashausser of the Federal Defenders of New York Inc.
The SEC is represented by its trial counsel Abigail Rosen.
The government is represented by Jonathan Lax of the U.S. Attorney's Office for the Eastern District of New York.
The case is SEC v. Tadrus et al. case number 1:23-cv-05708, in the U.S. District Court for the Eastern District of New York.
--Editing by Philip Shea.
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