The United States Federal Trade Commission has finally exploded the Online Trading Academy.
On February 12, 2020, the FTC filed a massive 8000+ page lawsuit alleging that the Online Trading Academy ripped off thousands of consumers for a total of $370 million dollars, since at least 2014.
However, the alleged fraud is likely much larger and probably closer to $670 million dollars. According to a source that contacted TradingSchools.Org, the organization was not charged with the full amount because the statute of limitations only covered the prior 6 years.
The lawsuit filed in the Southern District of California is an absolute nightmare and essentially describes what amounts to a highly refined and well-orchestrated financial slaughterhouse where primarily elderly consumers were fleeced of their life savings.
Additionally, on February 25, the FTC was able to successfully obtain a Temporary Restraining Order and was able to freeze the personal and corporate assets of the company founders: Eyal Shachar and Sam Seiden.
As it currently stands, the fraudulent company is essentially on life support and making a last-ditch, “bet the company” legal strategy to fight the Federal Trade Commission in Federal Court.
Good luck with that.
The TradingSchools.Org Investigation
Since early 2019, TradingSchools.Org began to receive a steady stream of information from former company salespeople describing that a nascent investigation had commenced at the Federal Trade Commission.
We began to receive a tremendous amount of information that could have only come from someone working on the inside.
All the while, hundreds of consumers have requested that TradingSchools.Org write a review about Online Trading Academy. However, with the pending FTC investigation, we felt it best to wait until all the facts came out, and more witnesses were willing to come forward.
The Online Trading Academy is highly litigious. A search of state and federal court record databases reveals that they will sue pretty much anyone that negatively speaks or writes about them.
These lawsuits include suing and or threatening to sue the very people that they have ripped off. Their legal strategy has been to “spend whatever it takes” to keep the truth from coming out.
Finally, the FTC has taken bold action. It is good to know that the assets of the company founders have been frozen, and are pending the outcome of a trial in Federal Court.
In the following paragraphs, I would like to give a highly truncated version of events. Considering that the lawsuit is over 8000 pages long, there is way too much ground to cover. The following is short, sweet, and not perfectly accurate. Many witnesses were not willing to use their real names for fear of yet more legal reprisal.
The people running this company are very ugly.
Online Trading Academy: What, where, and how much?
The headquarters of the Online Trading Academy is located in Irvine, California.
However, there are also dozens of franchises located throughout the United States and several locations located outside of the United States.
The cost of a franchise depended on the territory and size of the general population in the area. The prices ranged from $300k to $750k, with approximately 10% of gross sales paid to the corporate headquarters.
What did you get for your franchise fee? According to our source, the Online Trading Academy pre-packaged a “business opportunity” that taught franchise owners how to fleece consumers with the well-worn sales pitch of “easily earn millions through day trading.”
Consumers would spend upwards of $60k per person to supposedly learn how to day trade from a purported “professional day trader.”
According to the FTC, the company had a special affinity for scamming the elderly and financially illiterate.
More on that later.
Online Trading Academy: The Early Years
Online Trading Academy was established in about 2001 by Eyal Shachar and Sam Seiden.
In the late 1990s, Eyal Sachar arrived in the United States “with zero money” as he describes in his personal biography.
According to people that know him, he is a life long con artist that fled Israel for attempting to sell fake diamonds to consumers.
Additionally, he is described as a “professional con artist” that has spent his entire life selling all manner of get-rich-quick schemes and financial whack-a-doodle.
When he arrived in the United States, “he didn’t know the difference between a stock and a rock.” In fact, he has never day traded successfully, holds no professional qualifications, and has been nearly convicted on multiple financial crimes in his native Israel, according to our source.
But Eyal Shachar quickly realized that American consumers had an unseemingly unquenchable appetite for “day trading” products and services.
About this time, he met a person named Sam Seiden. Mr. Seiden was also a professional con artist that had spent the prior several years selling books and courses describing himself a “millionaire day trader” and he would sell you his “secret trading system” for several thousand dollars.
They next devised a scheme where they would lure unsuspecting consumers into a professional-looking office replete with dozens of computer screens.
The office was made to appear as a “prop trading” office where professional traders were supposedly executing trades and earning hundreds of thousands of dollars each year.
Consumers were allowed to walk and talk to these “professional traders” including Sam Seiden and they were told that “day trading is easy” but you “need a proper education.”
However, what consumers did not realize is that these “professional prop traders” were nothing more than formerly used car salesmen, timeshare salespeople, and generally people of low moral character.
Consumers were then taken into specially designed sales offices where Eyal Shachar and Sam Seiden would walk the consumer down a carefully prepared “primrose path.” In short, they were shown falsified brokerage statements and stories of “day trading glory.”
The cost to learn these supposed secrets was upwards of $60k per consumer. However, most elderly and financially illiterate are on a fixed income and typically financially desperate.
And so, they devised a scheme where the victim was offered the opportunity to finance their “day trading education” at 18% interest, which must be paid back over the following 6-months.
Knowing that these consumers were typically middle class, and their primary asset was their home, they encouraged consumers to leverage their home equity, borrow on credit cards, or do whatever possible to raise money to pay the educational fees, and open a trading account.
Consumers were led to believe that most people started a trading account with $5k and typically earned $5k to $50k per month by using their “patented trading strategy.”
The Patented Trading Strategy
To further extend the fraud, and to add a bit of sizzle to the sales pitch, they presented consumers with a fancy looking document from the United States Patent Office.
Both Sam and Eyal promised consumers that “This patent serves as proof that our trading strategy is legitimate.”
However, nothing could have been further from the truth. Obtaining a patent requires little more than paying a filing fee and submitting the idea to a clerk.
Have a good cookie recipe? Congratulations, for only $495 you can patent the recipe. This does not mean that your cookies are tasty.
But Sam and Eyal systematically convinced consumers by stating, “The United States Patent Office would not have given us a patent unless we could have proven that our trading strategy is legitimate.”
Once again, this is a blatantly fraudulent misrepresentation.
During the first several years of refining the sales pitch, and subsequently ripping off consumers for millions of dollars, they next devised the franchise scheme of replicating the fraud, and teaching others how to also rip off consumers.
The Franchise Scheme
In order for the fraud to be perfectly executed, Sam and Eyal discovered that the “key to the con” was in the perfect presentation.
It is one thing to sell a fraudulent product to faceless people over the internet. It is an entirely different thing when you can isolate the victim in a sales office, staffed with actors portraying themselves as professional day traders.
The magic happened when people were lured into the spider web of the fancy office, and presented with fraudulent information from highly trained “closers.”
Sam and Eyal perfected the sales pitch into what can best be described as “the perfect fraud” according to sources.
Additionally, they specialized in finding high-pressure salespeople with long histories of selling dubious products and services.
The key was to “polish the turd.” In other words, take a person with no financial qualifications, but with experience in selling used cars, vacuum cleaners, or timeshares and then give them the appearance of a “professional day trader.”
In essence, they were perfecting the art of replicating themselves. Like a virus that invades the host, changes the cell structure, and then releases itself unto the host until the host is completely consumed.
Sam Seiden and Eyal Shachar are not too different than the coronavirus in that they consume their victims, and then teach others how to yet consume more victims.
It worked well. Until the vaccine showed up.
Federal Trade Commission: The Undercover Investigators
Vaccines are a medical marvel. They serve one purpose, to track down a virus and destroy it. Some vaccines disguise themselves as weakened versions of a virus, which triggers the body into producing antibodies.
And yet other vaccines disguise themselves as potential victims in which the target virus unwittingly consumes — only to quickly discover that the vaccine implodes within the virus. Thereby destroying it.
In approximately 2018 and 2019, the United States Federal Trade Commission decided to finally take action against the Online Trading Academy. But how?
According to court documents, several former salespeople bravely came forward and provided the exact blueprint of how Online Trading Academy was operating as a sort of “viral franchise scam”.
They described that the “magic” of the $60,000 sales pitch was in isolating the victim within the inner sales chambers at sales offices and then making verbal communications that would be fraudulent, but hard to prove.
Online Trading Academy was clever in teaching the “closers” that the magical sales pitch should be fraudulent in form but concealed and presented only behind closed doors.
With this information, the Federal Trade Commission then armed a team of investigators with the needed information to worm themselves into these fraudulent sales presentations.
In short, investigators infiltrated several of the franchise operations and secretly recorded everything. What they found was unimaginable fraud and misrepresentation.
The Lies, the Fraud, the Misrepresentation
According to Federal Trade Commission investigative reports and submitted affidavits of secret investigators, the highly-trained closers within this financial slaughterhouse made the following fraudulent statements and actions…
All of the “closers” were instructed on how to present themselves as “professional day traders.”
They were encouraged to tell stories of how they typically earned hundreds of thousands of dollars each year from day trading. That they owned expensive sports cars, lived in expensive neighborhoods, and that their kids attended private academies and Universities.
All were lies.
That they traveled the world on private yachts, visited castles (yes, actually visited castles), enjoyed parasailing, giving generously to charity, and buying homes and cars for family members.
All were lies.
They were encouraged to tell stories that nearly all of the students of the $60k education were now earning between $50k to $250k in their very first year. That nearly anyone with a $5k account was virtually guaranteed to double the account, each and every month.
That they could expect to work only an hour each day.
The secret of the sales pitch all played within the storyline of the “patented trading strategy.” All a consumer needed to do was click the button when the software said “buy” and then click the button when the software said “sell.”
They showed victims copies of the patent and declared they have proven to the United States Government that “this is real, we had to prove it, else they would not have given us the patent.”
They portrayed the trading system as a virtual ATM or printing press where money could be obtained with simplicity and ease. But in order to obtain the secret trading strategy, you must pay a fee of $60k.
Of course, they would also finance the cost with a loan at 18% interest that needed to be paid back within 6 months. But assured that nearly everyone paid it back within 6 months with the profits generated with the “patented trading strategy.”
They encouraged elderly victims to sell their stock portfolios to pay the fee, encouraged them to take a second mortgage, or borrow from a family friend. They were clever, deceitful, and absolutely horrifying.
Additionally, they also maintained a relationship with TradeStation Securities in Miami Florida. They would push their victims to TradeStation to open trading accounts and be paid yet more fees and incentives to direct the victims to TradeStation.
Audited TradeStation Accounts: The Big Reveal
But the Federal Trade Commission was thorough…they subpoenaed TradeStation Securities.
The Federal subpoena was clear. The FTC wanted the names, addresses, phone numbers, and most importantly…the account statements of each and every victim of Online Trading Academy.
The FTC then proceeded to analyze the account statements of each and every victim. What they found was discouraging.
According to court records, the Federal Trade Commission individually analyzed 4,799 trading accounts.
The average account size varied between $5k to $15k. Of all of these accounts, 74.9% of the accounts lost an average of 94%.
Typically, the accounts were drained to nothing within 6-months. Which seems to perfectly match when consumers were required to pay off their $60k debt, at 18% interest.
Consumers that refused to pay, or could not pay were threatened with lawsuits and negative credit reporting.
One victim, in particular, lost his entire life savings of $1,364,337.
The Federal Trade Commission submitted “victim impact statements” from multiple parties and their stories are heartbreaking.
Many people were driven to bankruptcy, had to defend lawsuits for posting negative reviews on YouTube, were constantly harassed and threatened by creditors and lawyers working for Online Trading Academy, and the list goes on and on.
This was truly a nightmare scenario for nearly all. But a glimmer of hope for just a few as the FTC immediately halted Online Trading Academy from attempting to collect these debts, attempting to foreclose on homes, and otherwise further harassing the victims.
Wrappings Things Up
Well, this article took much more time than expected. Thanks for making it this far.
The thing that drives me most crazy is that the Federal Government is still only willing to proceed with civil actions. Not willing to push for criminal prosecution.
Undoubtedly, what these charlatans and con artists pulled off were criminal in nature. They should be jailed. And they should be jailed for the remainder of their lives. What they have committed over the past decade is to simply destroy the lives of thousands of innocent people.
The declarations of victims, contained with the complaint of the lawsuit is truly heartbreaking.
Once again, thanks for reading. And a big thanks to our sponsors and advertisers of TradingSchools.Org. Without your generous support, we would not be able to keep the reviews cranking out.