Not sure if the Forex firm mentioned in this scam is the same company as the Internet site that has currency trading software, but for safety's sake, I'd presume that they are one and the same...
interactive.wsj.com
November 20, 2001
Evergreen, First Equity Are Charged
With Misappropriating Investor Funds
By COLLEEN DEBAISE
Dow Jones Newswires
Senior executives with ties to a financial firm whose
offices were destroyed when terrorists attacked the
World Trade Center have been charged with
misappropriating more than $100 million from
investors in a currency-trading scheme.
The alleged scheme unraveled when concerned
investors started asking questions after the Sept. 11
attacks. The executives falsely assured investors that
their money was safe and plotted a further scheme to
cover up its disappearance, according to the charges.
Andrei Koudachev, the founder of Evergreen
International Spot Trading Inc., and Gary Farberov,
the president of Evergreen's clearing house, First
Equity Enterprises Inc., were charged in the U.S.
District Court for the Eastern District of New York, Brooklyn, with mail- and wire-fraud conspiracy and
money laundering. The New York companies and Forex International Ltd., a Hungarian investment
adviser, were charged in the alleged fraud.
The alleged scheme was put into place in 1997, years before the Sept. 11 terrorist attacks that destroyed
First Equity's office on the 15th floor of 2 World Trade Center. But after the attacks, investors
complained to Evergreen that they couldn't withdraw funds from First Equity, which handles functions
such as customer statements and money transfers for Evergreen.
None of First Equity's five employees were injured when the towers
collapsed.
Brooklyn U.S. Attorney Alan Vinegrad called the alleged fraud "a brazen
scheme" made worse by lies told to concerned Evergreen clients after
the attacks.
Mr. Vinegrad, who announced the indictment, said hundreds of investors were urged in unsolicited cold
calls to send funds to First Equity for trading foreign currencies through Evergreen. Instead of investing
the money, the executives used it to pay personal expenses and millions of dollars in bonuses to other
employees, he said. Mr. Koudachev, who has a residence in Cliffside Park, N.J., is considered a fugitive
by authorities. In a statement, his New York attorney, Nathaniel Z. Marmur, said: "Mr. Koudachev
maintains that he is innocent of these charges and we have no further comment."
Mr. Farberov, of Brooklyn, entered a not-guilty plea when he was arraigned Monday in Brooklyn federal
court. He was ordered released on $500,000 bond, and his next court hearing is slated for Dec. 17. Mr.
Farberov's lawyer, Charles Clayman, said many rumors and false information have been disseminated
concerning this matter. "Gary and I welcome the opportunity to set the record straight," he said.
Messrs. Koudachev and Farberov face as many as 20 years in prison and at least $500,000 in fines on the
charge of money laundering. The indictment seeks the forfeiture of as much as $100 million in assets. A
phone call to one of Evergreen's three New York offices wasn't returned. There was no answer at the
other two offices. An attempt to locate and contact Forex in Budapest was unsuccessful.
According to the charges, Mr. Koudachev in 1997 secretly directed First Equity to send investors' funds
to bank accounts controlled by Forex in Hungary and Vienna. The defendants then allegedly used the
money for personal uses but concealed their actions by having First Equity send monthly account
statements to investors that misrepresented their holdings, prosecutors said.
In late September of this year, as investors became increasingly worried about their money, Mr. Farberov
met with other Evergreen executives at a Brooklyn golf course to discuss how they would cover up the
fraud, Mr. Vinegrad alleges. The plan involved soliciting new funds from investors and secretly using
those funds to repay current investors, he said.
The allegations are the subject of an investor lawsuit filed this month in U.S. District Court for the
Southern District of New York in Manhattan against Evergreen and its executives. The suit seeks the
return of a $2 million investment to Dirk Karreman, an Australian client with Evergreen, and $100 million
in punitive damages.
The Brooklyn U.S. attorney's office began its investigation of Evergreen in late September with the U.S.
Postal Inspection Service and the Federal Bureau of Investigation. The government has seized $5.5
million in accounts located in New York, New Jersey, Chicago and Switzerland during the past six weeks.
Evergreen International Spot Trading is unrelated to Evergreen Investments, the Charlotte, N.C.,
asset-management arm of Wachovia Corp.
Write to Colleen DeBaise at colleen.debaise@dowjones.com
KJC |
