The Securities and Exchange Commission (SEC) has launched a lawsuit against Defendants Mina Tadrus and Tadrus Capital LLC.

The complaint, filed with the New York Eastern District Court, alleges that Tadrus and Tadrus Capital—respectively, the founder and chief executive officer of an eponymous investment advisory firm and the firm itself—engaged in a multimillion-dollar Ponzi scheme.

Since at least September 2020, Tadrus has solicited and sold investments in Tadrus Capital Fund LP – a purported pooled investment vehicle. Defendants raised over $5 million from at least 31 investors.

Tadrus falsely told investors that their funds would be pooled and invested in “the world’s first private high-yielding and fixed-income quantitative hedge fund” using “artificial intelligence-based high-frequency trading models” that would yield “investors 1.5% or 2.5%, paid on the first of each month, for an annual return on investment [return on investment] of 18% or 30% a year.”

In reality, the defendants did not invest the vast majority of investors’ funds, if any.

Instead, they used a significant portion of the investor funds for Tadrus’ own personal benefit – diverting funds directly to Tadrus and to pay his personal credit card bills, and, made Ponzi payments – which they told investors were “guaranteed” monthly return on investment payments.

In total, during the relevant period, Defendants used approximately $1,431,900 of investors’ money to pay investors the “guaranteed” monthly return on investment payments, including over $275,000 in June 2023 alone, and further misappropriated at least $383,267.93 of investors’ money for Tadrus’ own benefit.

The Commission seeks a final judgment:

• (a) permanently enjoining Defendants from violating the federal securities laws and rules this Complaint alleges they have violated;
• (b) ordering Defendants to disgorge all ill-gotten gains they received as a result of the violations alleged here and to pay prejudgment interest thereon, pursuant to Exchange Act Sections 21(d)(3), 21(d)(5), and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5), and 78u(d)(7)];
• (c) ordering Defendants to pay civil money penalties pursuant to Securities Act Section 20(d) [15 U.S.C. § 77t(d)], Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)], and Advisers Act Section 209(e) [15 U.S.C. § 80b-9(e)];
• (d) permanently prohibiting Tadrus from serving as an officer or director of any company that has a class of securities registered under Exchange Act Section 12 [15 U.S.C. § 78l] or that is required to file reports under Exchange Act Section 15(d) [15 U.S.C. § 78o(d)], pursuant to Securities Act Section 20(e) [15 U.S.C. § 77t(e)] and Exchange Act Section 21(d)(2) [15 U.S.C. § 78u(d)(2)];
• (e) permanently enjoining Tadrus from directly or indirectly, including, but not limited to, through any entity owned or controlled by Tadrus, participating in the issuance, purchase, offer, or sale of any security, provided however, that such injunction shall not prevent Tadrus from purchasing or selling securities for his own personal account; and
• (f) ordering any other and further relief the Court may deem just and proper.