Five Towns resident Aaron D. Fischman — former CEO of now defunct Cardis Enterprises International (Cardis) — was indicted Friday on charges that he operated a multi-million dollar securities scheme that defrauded over $22 million from investors across the country and around the world.
“Aaron Fischman was able to fleece investors out of tens of millions of dollars for his own personal benefit,” said Attorney General Letitia James. “These victims believed they were investing in technology to help businesses mitigate against costly charges from electronic transactions, but instead they fell victim to Fischman’s massive fraud. We will always hold white collar criminals accountable for their greed and deception that seek to illegally profit off others.”
According to statements at arraignment, Fischman solicited millions of dollars of investments in Cardis — a Cedarhurst-based company that claimed to possess a patented and proprietary technology that would make low-value credit card transactions less expensive. The technology was supposed to bundle multiple transactions under one fee. Between January 2013 and December 2016, Fischman and his associates promised investors that their money would be used to promote the business of Cardis. However, today’s criminal charges allege that instead of using the money for business purposes, Fischman secretly devised a plan to divert millions of dollars of investor money into his personal bank accounts, to members of his family who had no business association with Cardis, and to select charities.
The 20-count criminal indictment, unsealed Friday in Nassau County State Supreme Court, charges Fischman with: one count of Grand Larceny in the First Degree (a Class “B” felony), four counts of Grand Larceny in the Second Degree (a Class “C” felony), four counts of Grand Larceny in the Third Degree (a Class “D” felony), one count of Money Laundering in the Second Degree (a Class “C” felony), nine counts of securities fraud under the Martin Act (a class “E” felony), and one count of Scheme to Defraud in the First Degree (a Class “E” felony).
If convicted, Fischman faces up to 8 1/3 to 24 years in prison.
While New York served as the center of Fischman’s fraud, the scheme allegedly ensnared investors from multiple states and countries, who invested millions of dollars in Cardis. The OAG contends that Fischman conned many of these investors into making multiple investments across several years, and that many of these investors felt compelled to invest further to avoid risking losing their entire previous investment amounts. In the end, few, if any, of these investors received any return on their investments in Cardis, and the majority lost their entire investment.
The Criminal Enforcement and Financial Crimes Bureau’s criminal investigation into Cardis began in September 2018, after a referral from the OAG’s Investor Protection Bureau. In December 2018, the Investor Protection Bureau filed a civil complaint in New York County State Supreme Court against Fischman and associated individuals and entities, including Cardis USA and Cardis NV. The Investor Protection Bureau subsequently secured default judgments against a number of these entities and individuals. The civil complaint alleges that, since 2011, Fischman and his associates solicited at least $30 million of investments in Cardis NV by fraudulently representing to investors that Cardis was close to monetizing its technology through agreements with prominent companies and that an initial public offering or buyout was on the horizon. The civil case, People v. Fischman, remains ongoing.