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, closing the civil chapter of a $2M free-riding scheme that ran from November 2018 through January 2022 and involved over 600 brokerage accounts, a multi-state recruitment network, and a systematic exploitation of a feature designed to help legitimate investors trade without waiting for bank transfers to clear.
The scheme was orchestrated by Flagg and co-principal Eduardo Hernandez, both formerly of Long Island, New York. Lloyd and Treusch served as recruiters. Parallel criminal proceedings, United States v. Hernandez et al. and United States v. Treusch, were also resolved, and the disgorgement obligations from the civil judgments are deemed satisfied by the restitution and forfeiture orders entered in those criminal cases. Flagg is ordered to disgorge $56,390 plus $5,570 in prejudgment interest. Lloyd is ordered to disgorge $376,050 plus $37,145.75 in prejudgment interest. Treusch is ordered to disgorge $50,000 plus $4,939 in prejudgment interest.
A $5,000 Instant Deposit Feature Designed for Legitimate Investors Became the Engine of the Scheme
Robinhood, the Menlo Park, California-based brokerage identified in the DOJ indictment as the primary victim, offered a subscription tier called Robinhood Gold that provided account holders with an instant deposit credit of up to $5,000 when they initiated a transfer from a linked bank account. The credit was designed to let investors trade immediately rather than waiting the five business days it typically took for a bank transfer to clear. Flagg and Hernandez recognized that the window between when the credit was issued and when the underlying bank transfer was supposed to arrive created an exploitable gap. If the bank account linked to the brokerage account had no money in it, the transfer would eventually fail. But for the brief period the instant credit was active, a buyer could purchase securities, sell them to a different account at a profit, and walk away, leaving the first account with a loss and the linked bank with a reversed transfer.
The mechanics were straightforward. Flagg and Hernandez opened or controlled accounts they designated as loser accounts at Robinhood, initiating transfers from linked bank accounts that held no funds. The instant credit enabled the loser accounts to purchase illiquid options, typically deep out-of-the-money put contracts on thinly traded securities, at prices far above market value. Those same options were simultaneously sold from winner accounts that Flagg and Hernandez also controlled, generating guaranteed profits in the winner accounts. According to the SEC’s complaint, on one example trade on June 14, 2021, Flagg offered Taro Pharmaceutical Industries put options at between $1.00 and $2.50 per contract, many times their actual market value. The loser account bought them at those inflated prices using instant deposit credit. The winner account collected the proceeds. The loser account’s bank transfer was reversed due to insufficient funds. Robinhood was left with the loss.
Treusch Recruited Dozens of Account Holders Through Instagram Posts Showing Screenshots of Trading Gains
Scaling the scheme required volume. Each loser account could only be used once before the broker detected insufficient funds, froze it, and eventually closed it. To sustain the operation across four years, Flagg and Hernandez needed a continuous supply of new accounts in the names of real people. Travis Treusch, Flagg’s cousin, handled that task from approximately July 2020 through January 2022. He posted screenshots of Hernandez’s and Flagg’s profitable trading to Instagram alongside offers for people to make quick, easy money, according to the SEC’s complaint against Treusch.
He targeted individuals who would agree to open new brokerage accounts or provide access to existing accounts for a nominal payment. Once someone agreed, Treusch directed them to open a loser account at Robinhood or a similar broker, link a bank account as the purported funding source, and specifically not to leave any money in that account so the transfer would fail and no funds would ever reach the loser account. Treusch then handed the recruits’ login credentials to Flagg and Hernandez, who accessed and traded in those accounts in the recruits’ names, deceiving the broker. Treusch was paid approximately $300 to $500 for each loser account he delivered.
Lloyd Operated as a Parallel Recruiter and Was Himself a Nominee Account Holder
Daquan Lloyd, 28, of Copiague, New York, operated independently as a recruiter alongside Treusch. Lloyd both opened his own loser accounts for use in the scheme and solicited others to do the same, then handed login credentials to the principals. He also allowed Flagg and Hernandez to use his personal information to set up brokerage accounts in his own name that were used as winner accounts, making him both a recruiter and a nominee in the scheme’s structure. The SEC complaint describes Lloyd forwarding Hernandez a screenshot of a broker-dealer email approving his application to add options trading to one of his accounts, illustrating the degree to which the principals were actively managing the account opening process across their network.
The disgorgement figures reflect each defendant’s level of involvement. Lloyd’s obligation of $376,050 is the largest of the three, consistent with his role as both a recruiter and a winner account nominee who received a larger share of the profits. Flagg’s $56,390 reflects net profits remaining after the broader criminal restitution order. Treusch’s $50,000 reflects his role as a paid per-account recruiter.
600 Accounts, 14 Devices, and a Five-Year Conduct Injunction Barring Account Opening Without Disclosure
The operational scale of the scheme was documented in detail by the SEC’s Market Abuse Unit. Over the course of the relevant period, the defendants churned through over 600 loser accounts at Robinhood and similar brokers. During one twelve-month window from February 2020 through February 2021, at least 244 accounts were opened and traded in connection with the scheme, yet only 14 devices were used to access all 244 of them, a pattern that made clear the accounts were not being operated by their nominal holders.
The final consent judgments impose conduct-based injunctions on all three defendants: five years for Flagg and Lloyd and three years for Treusch. Each injunction requires that before opening any brokerage account, the defendant must provide the relevant brokerage firm with a copy of the SEC complaint and any judgment entered against him. The injunction effectively flags each defendant to any broker they approach, making account-based schemes structurally impossible to repeat without immediate broker notification.
Conclusion
The Flagg, Lloyd, and Treusch judgments close the civil portion of a scheme that exploited a consumer-friendly fintech feature, the instant deposit credit, to systematically drain a brokerage of $2M over four years. The operation required only basic mechanics: matched trades between accounts the principals controlled, a network of people willing to open accounts for a few hundred dollars each, and a social media recruitment campaign built on screenshots of gains that the victims of the loser accounts would eventually absorb. The criminal proceedings have already determined the restitution. The conduct injunctions now follow each defendant into every brokerage relationship they attempt for the next three to five years.
