Chicago trading firm founder Randall Rye was living the high life last fall when he plunked down $110,000 for the hottest tickets in town — the Cubs‘ World Series.
“Go Cubs go!” a beaming Rye, then 25, posted on Twitter over the photo of himself and Murray.
Such splurging was nothing new for Rye. After founding his company, Faster Than Light Trading LLC, in September 2015, he spent hundreds of thousands of dollars on tickets to mega-events ranging from the Super Bowl to the Masters golf tournament, prosecutors said. He jetted off to exotic locales such as Bali and St. Lucia, smoked fine Cuban cigars, ate in the best restaurants and wore diamond-studded designer watches.
But while Rye portrayed himself as a wunderkind who’d developed a trading algorithm guaranteed to reap huge returns, prosecutors say it was all a mirage.
Not only was there no algorithm but Rye also wasn’t investing his clients’ money, prosecutors alleged. In fact, he’d dropped out of college with a 1.6 grade-point average. He later told the FBI that while he’d “read a few books” on the subject of trading, he had little real-world experience.
“In reality, the only thing Rye did that was faster than light was spend the victims’ funds,” Assistant U.S. Attorney Sunil Harjani wrote in a recent court filing.
Rye, 26, pleaded guilty in April to one count of wire fraud, admitting in a plea agreement with prosecutors that he duped about 20 investors — including his then-girlfriend’s father and other relatives — out of $1.67 million between September 2015 and February 2017.
Prosecutors are asking for up to 6 1/2 years in prison for Rye, calling his Ponzi-like scheme a “mini-Bernie Madoff scam” that stripped investors of hard-earned nest eggs earmarked for retirement and college funds for children and grandchildren.
“At night I have trouble sleeping, I get upset every time I think about what has happened,” one investor who lost $250,000 in the scam wrote to the court. “I find myself getting angry, I can’t believe I let myself do something so stupid.”
Rye’s lawyer, Mary H. Judge, asked Guzman for a sentence of not more than three years in prison. She wrote in a court filing Monday that Rye has come clean about the fraud — which was fueled by alcohol and drug abuse — and never set out to hurt anyone.
“Like many fraud defendants, Mr. Rye convinced himself he could fix the problem and regain the funds needed to properly pay his clients,” Judge wrote. “The deeper in the hole he found himself, the deeper he dug himself in, and the more he abused alcohol and drugs, thereby creating a vicious cycle that quickly imploded into this case.”
According to court records, Rye founded Faster Than Light Trading after moving to Chicago from his native San Diego and working as a trading manager at a small local trading firm.
He began building his business by soliciting funds from his girlfriend’s father, who lived in California, claiming he was using a proprietary trading program to invest in options and futures contracts, prosecutors said. That connection led to a host of investors, mainly relatives and friends of his girlfriend’s parents.
Rye told prospective clients he had developed his own algorithms while in college and had sold at least one to Goldman Sachs Group Inc., according to a criminal complaint filed against Rye in February.
To throw off the victims, Rye used money from new investors to pay “profits” to earlier investors, prosecutors said. He also sent others false account statements showing great returns.
Investigators were able to piece together many of Rye’s lavish expenditures though bank records and photos he posted on social media. In December 2015, for example, he spent more than $20,000 at luxury watch shops at the Caesar’s Palace resort in Las Vegas, then posted a photo of the watches.
In another photo on Instagram, Rye appeared to be on a tropical beach with a cigar in his mouth. The caption on the photo read, “Good morning peasants.”
The photo of Rye with Murray at the World Series, meanwhile, is still on his Instagram account. It initially garnered dozens of “likes” and comments from viewers who said they were jealous.
After Rye’s arrest, however, one commenter had a different take.
“How’s jail lol” it said.
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