Three men from Long Island have admitted to orchestrating a complex fraud scheme that swindled a global financial services company out of over $2 million. The defendants, Edward Hernandez of Lindenhurst, Christopher Flagg and Daquan Lloyd, both of Copiague, pleaded guilty in federal court in Central Islip to charges of money laundering conspiracy. A fourth man, Corey Ortiz from Greensboro, North Carolina, was also involved in the scheme.
Between December 2018 and January 2023, the defendants devised a plan to exploit the company’s “Instant Deposits” feature, which allowed legitimate investors to trade immediately without waiting for wire transfers to clear. By creating hundreds of fictitious brokerage accounts, the fraudsters obtained millions in Instant Deposits and executed trades in thinly traded, highly speculative stock options. They manipulated the prices to transfer funds from the losing accounts to accounts they controlled.
The defendants initiated wire transfers from bank accounts with insufficient funds, ensuring the transfers would fail after they had already drained the Instant Deposits. The stolen money was then laundered through multiple electronic banking platforms.
The investigation revealed that the defendants recruited numerous individuals across several states to participate in the fraudulent scheme, ultimately stealing more than $2 million.
U.S. Attorney Breon Peace emphasized the gravity of the crime.
“Each defendant was convicted of their roles in a sprawling and complex nationwide scheme organized from Long Island to steal millions of dollars that were intended for legitimate investors and launder the proceeds of their crime,” said Peace.
Hernandez, Flagg, Lloyd, and Ortiz each face up to 20 years in prison, restitution up to $2,087,164, and forfeiture amounts ranging from $56,390 to $700,425 when sentenced. The case was handled by the U.S. Attorney’s Office’s Business and Securities Fraud Section, with significant assistance from the Securities and Exchange Commission.
The defendants, known by aliases “Ghost,” “Venus,” “Payday,” and “Jefe,” respectively, will return to court for sentencing in the coming months.
