MOUND, Minn. (KMSP) - A Mound, Minn. couple and their company are under investigation by the FBI and IRS for an alleged investment scheme that promised “exponential growth.” But a search warrant affidavit reveals how four investors grew suspicious of Jeremy Lundin’s Big Island Capital, and the struggles they faced when trying to cash out.
Of the 37 individuals who made deposits with Big Island Capital, 13 are known victims of the alleged scheme, with deposits totaling $636,288.
According to the search warrant affidavit, between May 2015 and May 2017 Lundin worked through a network of associates and friends to solicit investors to invest in Big Island Capital by promising “exponential growth through options trading.” Lundin provided investors with a written investment strategy including the following statement:
“Our investment strategy is consisted of only options trading. This isn’t the buy low, sell high, keep the stock for a long time strategy that the majority of investors participate in. Options trading consists of buying of selling contracts of an underlying company’s stock instead of the stock itself. This means your money goes further and your investment grows exponentially. With this strategy, there is risk. There is a chance that the price of the stock goes the opposite way, but your investment is protected with stop losses.”
Between May 2015 and May 2017, $992,188 from 37 individuals was deposited into a Wells Fargo account in the name of Big Island Capital. The investigation has revealed that Lundin met with potential investors at multiple locations during these two years to pitch his investment strategy, and promised investors their funds would be used for options trading.
Victims of the scheme were able to access online statements via a web-based service at bigisland.capital, which is no longer available.
One investor, identified in court documents as Victim 1, told investigators that Lundin described the investment strategy as options only trading that could double her money. On May 7, 2015, Lundin picked up a check from Victim 1 in the amount of $20,000. In total, Victim 1 invested $191,000 and withdrew $72,500.
The last time Victim 1 was able to access bigisland.capital was Feb. 24, 2017, when her account showed a balance of $1,010,840, and $966,817 after fees. Around February 2017, Victim 1 received a “proof of funds” letter signed by Lundin that showed a current market value of $1,064,989 to her account. On May 4, Victim 1 sent a notarized letter to Lundin, demanding that her money be returned in full. Victim 1 and Lundin met on May 16, but Lundin did not provide a check. He claimed he was in the middle of closing the brokerage account and transferring the balance, and he was unable to withdraw funds. Lundin provided Victim 1 with an account statement dated May 16, 2017 with a balance of $897,918.
VICTIM 2 AND 3
Victim 2 and Victim 3 met Lundin through Victim 1 during the summer of 2014. In the fall of 2015, they discussed investing in Big Island Capital, as they had heard Victim 1 was receiving high returns on her investment.
Around Jan. 21, 2016, Victim 2 invested $15,000, which doubled in value by May 2016, according to the account statement. Based on this perceived success, Victim 3 withdrew more than $40,000 from an Ameriprise IRA and invested it with Big Island Capital.
Victim 2 invested a total of $65,000, with a most recent account statement of $149,027. Victim 3 invested a total of $40,288 with a most recent account balance of $81,579.
In early 2017, Lundin told Victim 2 and Victim 3 their online account was no longer available, and that he wanted to meet all of his investors in person to discuss their investment goals. Lundin said he was unhappy with Interactive Brokers and was planning to move the money to Wells Fargo to help manage money movement, taxes and statements. Lundin said Wells Fargo would take 20 percent of the fund as a fee, and that he planned to hire people to help manage the fund due to the high number of investors.
INVESTORS START INVESTIGATING
Around April 2017, Victim 1 and Victim 2 spoke about their suspicion that Lundin was running a scam. On April 9, Victim 2 requested a withdrawal of $50,000, but the check written by Lundin bounced. Victim 2 then requested a cashier’s check from Lundin, and setup a May 4 meeting.
On May 4, Lundin, Victim 2 and Victim 4 – another victim who had grown suspicious about the investment – met to get cashier’s checks. Lundin said he did not have the checks and blamed Interactive Brokers for the delay. The three met the very next day, and Lundin provided Victim 2 with a $50,000 cashier’s check and Victim 4 with a $10,000 cashier’s check. At this meeting, Victim 2 requested Lundin return the original principal balance.
On May 12, Lundin told Victim 2 he did not have the money, but claimed he had just returned from Connecticut where he “fired” Interactive Brokers in person. Lundin said the money would be transferred to Wells Fargo and available by May 29 or May 30.
MASERATI, LAKE MINNETONKA BOAT
Victim 2 told investigators that Jeremy and Alex Lundin have very nice cars, including a Maserati, two Range Rovers and a Mercedes. Lundin also purchased a large boat in 2016 that Victim 2 spotted at Lord Fletcher’s bar on Lake Minnetonka last summer.
As of May 2016, Alex Lundin took over the role of CEO from Jeremy, according to Victim 2 and Victim 3.
On July 5, 2016, the Big Island Capital account with Interactive Brokers was closed. On May 22, 2017, law enforcement contacted a representative in the compliance department of Interactive Brokers, who said there were no active accounts under the named Big Island Capital, Lundin or Alex Lundin. The only account ever open at Interactive Brokers under those names had $30,000 in total deposits.
According to the search warrant affidavit, $992,188 was deposited in the Big Island Capital account at Wells Fargo between May 2015 and May 2017. From June 1, 2016 through March 28, 2017, total deposits from the account were $552,688, coming from approximately 37 individuals. Of the 37 individuals who made deposits, 13 are known victims of the alleged scheme, with deposits totaling $636,288.
MASERATI PURCHASED SAME DAY AS VICTIM’S INVESTMENT
In addition to just $30,000 being deposited into the Interactive Brokers account, other financial records indicate Lundin did not use the investor funds as promised. For example, on the day Victim 1 invested $98,000, Lundin wrote a check for $71,118 to purchase a 2014 Maserati Ghibli.
Investigators searched Lundin’s home on Gumwood Road in Mound for evidence of suspected mail fraud, wire fraud and money laundering.
Criminal charges have not yet been filed in this case.