Charlotte Man Is Sentenced To Prison For $700,000 Investment Fraud Scheme

CHARLOTTE, N.C. - Today, U.S. District Judge Kenneth D. Bell sentenced Frank Lynold Mercado, 27, of Charlotte, to 41 months in prison followed by two years of supervised release for defrauding over 100 victims of more than $700,000 through a fraudulent investment scheme, announced Dena J. King, U.S. Attorney for the Western District of North Carolina. Mercado was also ordered to pay $709,690 in restitution.

Robert M. DeWitt, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, joins U.S. Attorney King in making today's announcement.

According to court documents and court proceedings, from July 2019 to December 2022, Mercado executed an investment fraud scheme in which he caused more than 100 investors to sustain nearly $700,000 in losses. Mercado induced the victims - many of whom were his friends, former co-workers, and other social acquaintances - to invest their money by holding himself out to be an expert in options trading with years of experience and a successful track record. As part of the scheme, Mercado falsely represented to victim investors that he would use their money for options trading and similar investments through his hedge fund, Tiger-Wolf Capital, LLC (Tiger-Wolf Capital). Instead of investing the funds as promised, Mercado used a portion of the money to make Ponzi-style payments to investors, and to fund his personal lifestyle, including to make large credit card payments and pay for personal expenditures such as Airbnb rentals, restaurants, and bars.

Court documents show that with the money that he did invest, Mercado suffered trading losses and then lied to investors about the performance of their investments. For example, Mercado periodically sent updates to victim investors through emails, text messages, or screenshots of purported account portals that reflected fictitious trading gains. He also made false and fraudulent statements to investors about substantial returns on their investments in order to induce his victims to invest additional money with him and/or to leave their current investments with him. According to court documents, as a result of the scheme, Mercado caused victims to suffer losses, with some victims experiencing significant financial hardship.

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On June 12, 2022, Mercado pleaded guilty to wire fraud. He will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility.

On May 30, 2024, the U.S. Securities and Exchange Commission announced the filing of a complaint against Mercado in the U.S. District Court for the Western District of North Carolina, charging Mercado and Tiger-Wolf Capital with securities violations. On July 2, 2024, the court, pursuant to consents signed by Mercado and Tiger-Wolf, enjoined them from violating the charged provisions and ordered them to pay disgorgement, prejudgment interest, and civil money penalties in amounts to be determined at a later date. The court also barred Mercado from serving as officer or director of a public company and enjoined him from participating in the issuance, purchase, offer, or sale of securities, except in his personal account.

U.S. Attorney King commended the FBI for their investigation of the case and thanked the U.S. Securities and Exchange Commission for their coordination and assistance.

Special Assistant U.S. Attorney Eric Frick of the U.S. Attorney's Office in Charlotte prosecuted the case.