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BROKERAGE SCAM! Crooks Raked in Millions Using FAKE Money Accounts!

  
April 30, 2026


  
  

    

      
      

    

  




  



        


SEC v. Christopher Flagg, Daquan Lloyd, Travis Treusch — U.S. Securities and Exchange Commission Litigation Release No. 26545, dated April 30, 2026.


The SEC secured final consent judgments against Christopher Flagg, Daquan Lloyd, and Travis Treusch for their involvement in a $2 million "free-riding" scheme. The defendants allegedly used unfunded brokerage accounts to generate trading profits in other accounts they controlled, exploiting a broker's instant deposit credit. The judgments include disgorgement, prejudgment interest, and conduct-based injunctions.




In Plain English
Imagine someone opens a store but doesn't have any money in their bank account yet. They tell the bank they have money, and the bank lets them spend it for a short time. The person then uses this 'pretend money' to buy and sell things very quickly, making small profits each time. They do this over and over, using many fake bank accounts, to trick the bank out of real money. The SEC stopped this trick and made the people involved pay back the money they gained unfairly.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.


How the Alleged Scheme Worked
  1. Open Unfunded Accounts The defendants opened numerous brokerage accounts, referred to as 'loser accounts,' without depositing any actual funds. These accounts were opened at a broker that offered an 'instant deposit credit,' essentially allowing trading with funds that weren't yet settled.
  2. Fund 'Winner' Accounts The defendants also controlled other brokerage accounts, called 'winner accounts.' They used the instant deposit credit from the 'loser accounts' to fund trades in these 'winner accounts.'
  3. Create Artificial Prices Trades were executed at artificial prices. This was likely done to manipulate the perceived value of securities and create a basis for generating profits.
  4. Generate Trading Profits By repeatedly executing trades using the broker's credit, the defendants aimed to generate guaranteed trading profits in their 'winner accounts.'
  5. Transfer Credit to Winner Accounts The core of the scheme involved transferring the credit provided by the broker from the 'loser accounts' to the 'winner accounts,' effectively accumulating profits at the broker's expense.
  6. Accumulate Guaranteed Profits This process allowed the defendants to accumulate profits that were guaranteed because they were based on the broker's credit, not on actual market performance or risk.
  7. Recruit Others Defendants like Lloyd and Treusch aided the scheme by opening 'loser accounts' in their own names and recruiting other individuals to do the same, increasing the number of accounts used.
  8. Operate at Scale Over a four-year period, the defendants allegedly used at least 600 brokerage accounts to conduct this fraudulent 'free-riding' scheme, amassing approximately $2 million in alleged profits.


The Enforcement Action
On April 27, 2026, the U.S. District Court for the Eastern District of New York entered final consent judgments against Christopher Flagg, Daquan Lloyd, and Travis Treusch for their roles in an alleged $2 million "free-riding" scheme. The SEC had filed its initial complaint on October 31, 2023, and a related complaint on February 11, 2024. The judgments permanently enjoin the defendants from violating antifraud provisions of federal securities laws and impose conduct-based injunctions prohibiting them from opening brokerage accounts without providing copies of the SEC complaint and any judgment. Flagg was ordered to pay $56,390.00 in disgorgement plus $5,570.00 in interest, Lloyd $376,050.00 plus $37,145.75 in interest, and Treusch $50,000.00 plus $4,939.00 in interest. Payment for Flagg and Lloyd is satisfied by restitution and forfeiture in parallel criminal actions, as is Treusch's payment in his related criminal case. Conduct-based injunctions against Flagg and Lloyd remain in effect for five years, and against Treusch for three years.


Named in this action: Christopher Flagg, Daquan Lloyd, Travis Treusch.


Original SEC litigation release ↗ · Browse all cases