Michael S. Young of Mediatrix Capital and his $125M fraud
It seems that the outstanding warrant for Ritossa’s arrest in the US for personal reasons first mentioned in the Vanity Fair article by Adam Ciralsky is quickly becoming the smallest of Ritossa’s problems. To explain we need to go back to 2018 first.
One company that used to regularly attend Ritossa investment summits was Mediatrix Capital. Usually, it was represented by one of the founders, Michael Stephen Young of Denver CO - the others being Michael Shawn Stewart of Scottsdale AZ, and Bryant Edwin Sewall of Dallas TX, and the Bahamas.
Mediatrix Capital Inc. began operations in March 2016. Its principals encouraged investment into their company that used a highly profitable algorithm-based strategy for currency trading that has generated total profits of over 1600% since December 2013. Mediatrix was looking for investors and attended Ritossa’s conference to find them.
Michael Young was one of the VIP guests. During the Monaco summit (June 2018) he was interviewed by Vanessa Eriksson for the Summit’s marquee video.
In that video, Mr. Young explains what luxury means for him. His explanation will take an unusual twist toward the end of our story.
And the interviewe was later used for the CEO Magazine article, too:
Michael S. Young is interviewed by Vanessa Eriksson for the CEO Magazine.
Mediatrix's performance was so great, that during the 2018 Monaco Summit Mediatrix and Michael Young received the award for being the best family office asset manager, publicized by The Billionaire Chronicle, a magazine that often features Prince Michel de Yougolsavie:
Mediatrix awarded best 2018 asset manager. Note Mr. Ritossa on the right.
Undoubtedly, this led to more investment in their company – “The Monaco Single and Multi-Family International Association claims support from an “A-list group of 400+ billionaires, sheikhs, royal families and business leaders.”
Who were represented by the familiar, trustworthy people:
Markus Lehner, Summit Chairman; Giuseppe Ambrosio, President of the Monaco Single & Multi Family Office Association; Anthony Ritossa, Chairman of Ritossa Family Office.
Mediatrix continued to sign up investors by advertising and pumped their legitimacy using a familiar scheme – articles in the CEO Magazine, the Billionaire Chronicle, press releases pushed to and searchable on news outlets like Business Insider, PR newswire, etc:
Mediatrix Capital Honored as Best Family Office Asset Manager by the Monaco Single & Multi Family Office International Association
— BusinessInsiderMediatrix Capital Fund Ltd. Launches as Bloomberg-listed Hedge Fund
— PR Newswire
Yes, this technique can lead to cutting headlines short, but who notices when you can read words "prestigious award" on Business Insider? Maybe Medatrix is not a bad name for this fund, but it should be spelled like this: Media Tricks.
Business Insider "writes" about the award.
Native ads like this were also widespread:
The Algo-Trading Opportunity: Finding the Yield in a Haystack
Volatile markets represent a key risk to investors, but algorithmic trading enables a way to use this volatility to one’s advantage. Mediatrix Capital’s managed account strategy, for example, has just completed its 32nd straight month of positive client gains. Through the last three years, there has been recession, war, terror attacks, the Swiss decoupling from the Euro as well as Brexit – just to name a few major impactful events.
With Mediatrix Capital, consistent performance and world class yields are ongoing because the trading systems rely on a sophisticated, proprietary algorithmic approach coupled with artificial intelligence in the Spot Markets.
Yes, "using Artificial Intelligence for trading" reminded us of Markus Lehner a bit. And yes, getting money from investors and then using it to pay to attend Ritossa’s conference to collect more money reminds us of another participant.
The SEC lawsuit (2019)
On Sep 11, 2019, US Securities and Exchange Commission files an emergency lawsuit. (SEC press release).
Contrary to what we heard from the stage and the press, the SEC said the strategy was far from being a success, racking up more than $18 million of losses in 2018 alone – the year it won the prize in Monaco. And most of the investors’ money was not even used for trading, being directly routed to the founders’ accounts or used to finance personal expenses:
Mediatrix falsely claimed to investors that from December 2013 through at least March 2019, their trading strategy had never had an unprofitable month and had returned more than 1,600%. They further claimed that their highly successful trading strategy had enabled Mediatrix Capital to accumulate assets under management of $225 million as of the end of 2018
In reality, by the end of 2018, the firm had just $35 million in assets under management (less than 16% of the amount claimed).
Defendants used investors’ money to finance their own luxury lifestyle and purchases, and diverted more than $5 million of additional investors’ funds for other improper expenditures to perpetuate the fraud.
They ultimately misappropriated approximately $35 million and improperly spent at least $5 million out of approximately $125 million raised (approximately 33% of the money raised) for various purposes by distributing these monies to themselves and entities they control; to pay commissions to sales agents, property rentals; travel-related costs; and other numerous payments that were personal in nature. This includes at least $18.5 million that was never forwarded to any Blue Isle Brokerage Account or returned to investors, but rather was transferred out of the Blue Isle bank accounts after deposit to other bank accounts controlled by Defendants and [their spouses] or was otherwise dissipated by Defendants. Misappropriated investor money was used to purchase a boat and boat lift (over $400,000), three Land Rovers (over $230,000), jewelry (approximately $225,000) and seven real properties (over $12 million), among other things.
Even when Defendants used the remaining portion of investors’ money for trading, Defendants’ trading consistently lost money – losing more than $18 million from its trading in 2018 alone.
Reminder: 2018 is the year they received the award at Mr. Ritossa'summit.
The SEC's complaint continues:
To induce investment into their failing trading strategy, Defendants defrauded investors by repeatedly misrepresenting the profitability of their trading, falsifying investors’ account statements to show phantom profits, and making Ponzi-like payments to investors who opted to cash out their “profits” — all in order to prop-up the façade of profitable trading.
Defendants also made numerous misleading statements implying that Blue Isle 1 and Blue Isle 2 were independent, third-party administrators that received Mediatrix Capital’s trading data directly from brokerage firms before reporting it to investors, when in fact, Defendants owned and controlled the Blue Isle entities and manipulated the trading data it conveyed to investors.
Defendants’ misrepresentations, omissions, and other fraudulent conduct had the same goal and effect: provide investors with a false picture of trading profitability and a false sense of security, so as to induce additional investment to perpetuate the fraud.
Defendants’ continued misappropriation and accelerating trading losses have driven their fraud to the brink of collapse. Mediatrix Capital’s most recent bank and brokerage account records indicate that only a fraction of investors’ funds remain (16%).
In total, approximately 75% of investor monies have been misappropriated, lost in trading, or improperly spent to perpetuate the fraud.
Full text of the SEC complaint is available here.
In February 2021, in addition to the continuing civil case, Federal grand jury indicted the “award-winning businessmen”, and their assets were frozen. The jury charged them with fourteen counts of wire fraud and one count of conspiracy to commit wire fraud, each count carrying up to 20 years of jail time.
Anyway, the money is mostly gone. The court appointed a receiver (a party who takes control of a company for the preservation of its assets and for the benefit of those entitled to the assets) who would oversee searching for embezzled and misappropriated funds to try to make investors if not whole, but at least not completely dry. The court has held defendants in contempt for violating its orders, including attempts to sell frozen assets.
The households filed appeals, but the original order was affirmed (Jul 28, 2022).
Second lawsuit (summer 2022)
And then, after another year of digging and searching, on June 14, 2022, the the court-appointed receiver filed another lawsuit, against 11 new entities.
The complaint alleges that these entities received more than $1 million in proceeds and commissions from the Mediatrix fraud. The Receiver claims that these transfers are fraudulent, and seeks a judgment declaring these payments set aside as fraudulent transfers, to be returned to the Mediatrix investors.
Among those 11 companies - Ritossa Investment Holding Ltd.
Could it be a coincidence, and this is not related to our Ritossa? A company with this name does not exist on the internet, except for in pages related to this lawsuit.
JustDiligence was able to obtain the original summons in the case. See for yourself.
Summons filed June 23, 2022
The address matches that of Ritossa Family Office in Dubai.
Ritossa has had 21 days to reply. As of today, the answer has not been filed.
Our verdict:
