A supposed AI-driven hedge fund promising guaranteed double-digit returns turned out to be nothing more than smoke and mirrors. On Thursday, Mina Tadrus, the CEO of Tadrus Capital, pleaded guilty to investment adviser fraud in a Brooklyn federal court, admitting he deceived investors who poured more than $5 million into his fund.

The AI Trading Mirage

Tadrus, a Tampa, Florida resident, promoted his hedge fund as “the world’s first private high-yielding and fixed-income quantitative hedge fund” and claimed it used cutting-edge AI-driven trading strategies to deliver 18% to 30% annual returns.

But behind the flashy sales pitch, no real AI-powered trading existed. Instead, prosecutors revealed that Tadrus barely invested any money at all, using over $1.4 million to pay off earlier investors in classic Ponzi scheme fashion and spending hundreds of thousands on personal expenses.

When standing before U.S. District Judge Hector Gonzalez, Tadrus offered a brief and telling admission:
“I took actions that were deceptive.”

SEC Lawsuit and Asset Freeze

The Securities and Exchange Commission (SEC) had already been on Tadrus’ trail. In July 2023, the agency sued him and Tadrus Capital, securing a freeze on his assets—a move that came just six weeks before criminal charges were filed.

Assistant U.S. Attorney John Enright told the court Thursday that at least part of the $3.2 million in frozen funds would be allocated to reimburse victims.

Preying on Trust, Selling a Lie

Prosecutors say Tadrus targeted members of the Egyptian-American Coptic Christian community in Brooklyn, using media interviews, podcasts, and YouTube videos to promote his fund’s “recession-proof” strategy. He even boasted of $5.5 billion in buying power, a claim later exposed as pure fiction.

By 2021 and 2022, Tadrus hired interns to build a functional algorithmic trading model using cTrader. But by December 2022, he admitted to them that no working AI algorithm existed.

Despite this, his fund’s website continued to display fake quarterly gains of 7.5%—all while no actual trading took place.

Sentencing Looms as Defense Pushes Back

Tadrus faces a theoretical sentencing range of seven to nine years, but the investment adviser fraud charge carries a maximum five-year prison term.

His attorney, Jeff Dahlberg of the Federal Defenders of New York, signaled that they may contest the government’s loss calculation and argue for a lower sentence.

For now, Tadrus remains free on a $100,000 bond, with a sentencing date yet to be set.

The government is represented by Genny Ngai and John Enright of the U.S. Attorney’s Office for the Eastern District of New York.
Tadrus is defended by Allegra Glashausser and Jeffrey Dahlberg of the Federal Defenders of New York.

With investors left reeling and authorities cracking down, one thing is clear—Tadrus Capital’s AI hedge fund was nothing more than an algorithm of deception.