Traders plead guilty to foreign exchange scam

By Martha Graybow

NEW YORK (Reuters) - Two currency traders pleaded guilty on Tuesday to defrauding investors, admitting their firm engaged in almost no trading and that they misappropriated money from investors and used it to buy luxury homes and cars, federal prosecutors said.

Michael MacCaull and Bradley Eisner, both 36 years old, pleaded guilty to conspiracy to commit mail and wire fraud at a hearing before U.S. Magistrate Judge Joan Azrack in federal court in Brooklyn, New York, the U.S. Attorney's office in Brooklyn said.

They each face a maximum of 20 years in prison and a $250,000 fine under their plea agreements, according to prosecutors who investigated the case with the U.S. Postal Inspection Service.

MacCaull and Eisner also have forfeited more than $28 million in U.S. currency and property, prosecutors said.

According to court papers, in 2001 MacCaull and Eisner started soliciting investments from the public through their company, Razor FX, which had offices in Great Neck, New York and a mailing address in Upper Saddle River, New Jersey. The company purportedly bought and sold currencies in the spot foreign exchange market, prosecutors said.

But, prosecutors said, almost no foreign exchange trading was being done by them. Instead, they said, MacCaull and Eisner deposited the investments in a bank account for their personal use. They sent bogus account statements to investors, and investors who withdrew money were paid with funds from other investors, prosecutors said.

MacCaull and Eisner took in more than $100 million, returned tens of millions of dollars to investors to keep the scheme going, and kept or spent the rest, according to prosecutors.

Eisner's lawyer, Benjamin Brafman, said by telephone that his client had stopped the fraudulent activity before any investigation and as a result "a lot of funds were secured and ultimately retained so that the loss sustained will be much less severe in the final analysis."

A lawyer for MacCaull, Elliot Fuld, declined to comment.