Man Who Met Trader Through Craigslist Ad Must Repay Brokerage

A man who lost $120,000 shortly after letting a trader he met on Craigslist access his investment account must repay his brokerage, an Illinois federal district judge ruled.

Erik Evert’s “terrible, horrible, no good, very bad day” also included the discovery that his account with Ironbeam Inc.—the terms of which he violated when he gave the Craigslist trader access—lacked default risk protections. Evert’s agreement with Ironbeam was a valid contract, so he’s on the hook for the losses, the U.S. District Court for the Northern District of Illinois said.

Answering a Craigslist ad entitled “let a high level trader make you money” led Evert to a trader who promised $1,000 in daily profits on crude oil futures, Judge Sara L. Ellis’s Oct. 21 opinion said. Five days later, Evert opened the Ironbeam account and “electronically signed” the firm’s customer agreement. The Ironbeam clerk who set up Evert’s account failed “to enable default risk procedures” or “put any trading limitations” on the account, the opinion said.

The trades started four days after that. Ironbeam quickly called Evert to discuss the trades and eventually discovered he was letting the Craigslist trader use the account, Ellis said. The account’s debit balance was negative $126,183.36 by the time Ironbeam could fully liquidate it, the opinion said.

Evert argued that the contract was unconscionable after the brokerage sought to collect. There wasn’t any negotiation, he thought the contract was with a different company, the terms were all in fine print, and there wasn’t any distinction among different terms, Evert said.

But “nothing from” Evert’s “smattering of unsubstantiated claims sticks,” the opinion said. He could have enlarged the font size or chosen to open his account with a different brokerage, and he didn’t point out “any provision that is inordinately one-sided or oppressive,” Ellis said.

Evert paid Ironbeam about $25,000 before the parties went to court, but he still owes about $101,000 to cover his debit balance and another $37,500 to take care of the brokerage’s liquidation fees, the opinion said. He also needs to pay Ironbeam’s court costs and attorney’s fees, Ellis said.

Oak Park, Ill.-based Henry K. Becker represented Ironbeam. McKnight & Kitzinger LLC represented Evert.

The case is Ironbeam Inc. v. Evert, 2019 BL 401824, N.D. Ill., No. 18-cv-01287, summary judgment granted 10/21/19.