The treasurer of a pro-Trump political action committee that ran afoul of campaign finance laws almost immediately after it was formed has been charged with running an international Ponzi scheme in which he allegedly duped investors out of nearly $7 million that he used to fund his own opulent lifestyle, including vacations, luxury vehicles, and a down payment on a million-dollar home.
David W. Schamens, a 64-year-old North Carolina resident who in 1996 was barred from the securities industry by the SEC over allegations of fraud, is now accused of securities fraud, along with wire fraud and money laundering, according to a criminal complaint unsealed Monday in New Jersey federal court.
Schamens, the feds claim, carried out a years-long scam with victims in at least three U.S. states and as far away as Australia. But Schamens, who heads a New Jersey-based firm that develops and sells stock-trading software, bizarrely claims the charges are a product of a political vendetta being carried out for his support of Trump, whom he now derides for breaking his campaign promise to build a wall along the U.S. border with Mexico.
ADVERTISEMENT
“This is thermonuclear war now,” Schamens told The Daily Beast of the government’s decision to bring charges against him. “It’s made up. I believe 5,000 subpoenas have been sent out in the last year, have they not? I believe there’s a statement by [Attorney General] Merrick Garland that said they’re going after anybody who supported January 6th, whether they were there or not. I wasn't there, but that's the point—it doesn't matter if you were there.”
(The Jan. 6 committee and others have in fact issued some 5,000 subpoenas and search warrants related to the Capitol riot. Garland, in a Jan. 5 speech, said he would hold “all Jan. 6 perpetrators, at any level, accountable under law—whether they were present that day or were otherwise criminally responsible for the assault on our democracy,” in response to calls for Donald Trump to face accountability for his alleged role in inciting the siege, but not for those who simply agreed with the rioters.)
Schamens’ PAC, called “America Comes First,” was formed in 2016 and supported then-presidential candidate Donald Trump’s hardline policies. In one TV ad, the organization parroted Trump’s false claims about Hillary Clinton’s emails, insisting that the former Secretary of State considered national security “a joke.”
“Trump takes it seriously,” the ad said, some six years before the National Archives discovered classified material had been taken from the White House to Trump’s Mar-a-Lago resort in Florida.
The scam allegedly perpetrated by Schamens began back in 2014 and lasted until June 2021, prosecutors allege in their complaint, saying investors were promised returns ranging from 12 percent to 30 percent annually.
“In reality, however, Schamens was running a Ponzi scheme and stealing the Victim Investors’ funds,” the filing states.
At least 25 people lost vast sums to Schamens’ alleged fraud, which used “fabricated monthly account statements…that falsely represented gains associated with their investments,” and “bogus explanations for delayed and/or incomplete dividend payments and/or redemptions,” according to the feds.
Schamens sold his investment opportunity as a sure bet, prosecutors say. His companies would loan money to day traders in need of capital, executing transactions on TradeStream, a platform run by Schamens. The profits would come from fees TradeStream imposed on the day traders, regardless of whether their trades made money or not, the investors, some of whom sank portions of their retirement accounts into the venture, were told.
In 2018, a number of Schamens’ clients began to demand their money back, the complaint states. Schamens “returned some…funds, in part by using incoming funds from other investors in the manner of a Ponzi scheme,” it explains. Yet, not everyone was so lucky, as Schamens “has strung along the Victim Investors through misrepresentations and false promises.”
To date, investigators say they have identified at least four investors who lost a combined total of $3.35 million in the TradeStream offering.
The following year, prosecutors say Schamens began to solicit investment in what he called the Algo Fund, describing it in presentations as a “proprietary algorithmic trading fund” managed by TradeStream. Investors were told that the fund would use “state of the art servers” located in the same data center as the New York Stock Exchange and the NASDAQ, according to the complaint.
But, as with TradeStream, Schamens provided his Algo Fund clients with “fake records regarding the health of [their] investments,” the complaint states.
Investigators say they have so far identified at least 25 victims who lost a collective $3.45 million by investing in the Algo Fund.
The feds say they followed the money, tracking investor funds that flowed into Schamens’ corporate bank accounts, quickly passing through accounts in the names of law firms that were not involved with the investments, then getting steered into accounts in the names of companies controlled by Schamens, and ultimately into Schamens’ personal bank accounts. The funds were “used largely for personal expenses,” the complaint says.
When one alleged victim became skeptical of Schamens, he tried to liquidate his $2.9 million investment. Schamens returned $300,000 to the unnamed investor, “all of which had been sourced from other Victim Investors,” according to the complaint.
Realizing the rest of his money was not forthcoming, “Victim-1 demanded explanations for the delays in receiving redemption payments,” the complaint continues. “Schamens consistently made excuses for the delays and continued to falsely assure Victim-1 that wire transfers had been sent or were pending.”
The balance of the account—$2.6 million worth—never appeared, the feds say.
Schamens used an identical script on the others, insisting that everything was above board in messages “calculated to lull [victims] into a false sense of security,” according to the complaint.
In 2020, Schamens began hawking a new “investment” opportunity.
Claiming to be “tired of dealing with” the traders propping up one of his other funds, Schamens told prospective customers that he “wanted to transition into the health savings plan market.” Companies that offered their employees health savings accounts would invest that money in the Algo Fund, which Schamens said would increase the value of those health savings accounts as well as generate returns for the Algo Fund’s investors.
But once again, investors lost faith and began to ask for their money back, the feds say.
“Schamens often cited issues such as inclement weather, travel, and illness as reasons for the frequent delays in releasing their funds,” states the complaint.
“On May 29, 2021, Victim-4 sent an email to Schamens with the subject line: ‘Wits End!’” it explains.
“David…We just don’t know what to do to get our funds from you,” the message began, according to the complaint. “This journey began last October. I have, as you know, a long string of emails from you promising ‘the end of the week’ or ‘by next week,’ [o]r even ‘the wiring center is in Dallas and is shut down because of the freeze.’ Could you please tell me when you are actually going to distribute the funds?”
Eventually, Schamens used money invested by other clients to return $150,000 to the unhappy customer. The other $360,000 they invested was allegedly never seen again. In all, investigators say Schamens made off with at least $6.8 million in illicit funds.
Schamens is no stranger to being under the microscope of federal investigators. In 2016, America Comes First found itself in hot water after neglecting to disclose the names of its donors before Election Day, and exceeded campaign contribution limits, according to a ProPublica investigation.
“Basically they’re not obeying any campaign finance law whatsoever,” one lawyer told the news outlet.
Two days after the election, America Comes First posted a now-deleted photo on Facebook that showed Schamens meeting with President-Elect Trump.
In a rambling phone interview with The Daily Beast on Monday, Schamens claimed to have “testified against Hillary Clinton in a secret grand jury in 1997,” purporting to have evidence of “millions of dollars in illegal campaign contributions out of China. So you can draw your conclusions from that.”
“That’s where this all started,” said Schamens.” With that bitch Hillary Clinton… I had my computer seized [by the feds], I had all my information seized, my daughter and my wife had automatic weapons pointed at them when they took it at 6 o’clock in the morning on August 31st.”
Insisting that the allegations in the affidavit used to obtain the search warrant for his home were “100 percent false,” Schamens promised to provide evidence “later.”
“I won’t get into it now, I don't have time,” he said. “But I’ll tell you something—I’m not happy. I’m tired of living in this country and being attacked if you're on the wrong side of the political spectrum… If you’re not with the right group, they will come after you… In this country, politics has now been criminalized. That’s what’s going on here.”
Schamens further said he shared an unspecified piece of evidence with Trump about Clinton, claiming that Trump promised, “Don’t worry, Dave. We’ll get her.”
However, he said the bloom is now off the rose for him with regards to Trump.
“He promised to build a wall,” said Schamens. “Never happened.”
Schamens, who is facing a maximum of 20 years in prison on the wire fraud charge, 25 years on the securities fraud charge, and 20 years on the money laundering charge, will appear in Newark federal court on Tuesday.
“They’re trying to ruin our company, is what they're trying to do,” he said. “They stole our code, I am almost certain. They’ve denied it, but our servers were stolen in 2021 from a military-style security data center. When this investigation started, they were all stolen.”
Still, he concluded, “All I need is an honest judge and a good jury, not one that hates everyone on Wall Street. But I’m pretty damn angry about being villainized and tainted and I’m not happy about it… I’m a very strong Christian, I believe this pandemic has brought out the good people and has brought out the evil people. Almost like in the Old Testament, Passover, everyone had a mark on their door. That’s what the pandemic’s done. You know where people stand.”
The SEC on Monday filed a parallel complaint against Schamens, charging him with lying to retail investors.
“This is not the first time that David Schamens has been charged by the SEC for misconduct and serves as a good reminder for investors to research potential advisers,” Richard R. Best, director of the SEC’s New York Regional Office, said in a statement. “Before entrusting someone with managing your money, investors should visit Investor.gov where they can vet potential advisers.”
