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Q3 I LP: The Cryptic Doctors of Persuasion

Until late last year Dr. Quan Tran, a St. Petersburg, Florida, surgeon had an unusual side hustle. He served as one of three general partners of Q3 I LP, a cryptocurrency hedge fund that he helped launch in August 2017.

Q3 I LP has had few rivals in recent capital markets history: It has claimed monthly returns of 13 percent to 15 percent — and annual returns of 180 percent or more for its first two years of operation. The fund’s managers promoted its investment strategy as a model of prudent risk management: avoidance of margin loans and 70 percent of assets kept in cash at all times.

Dr. Tran, 44, heartily embraced his self-appointed role as Q3 I LP’s chief marketer, persuading other physicians to invest at least $50,000 apiece to become limited partners of the fund. He did this by tapping into several loose, informal doctor networks that coalesced around a Facebook group named Physician Dads’ Group. By October, according to an email Dr. Tran wrote to a prospective limited partner, Q3 I LP had supposedly raised $236 million.

But on Feb. 11, Dr. Tran’s efforts to help build Q3 I LP’s assets under management devolved into a horror show when federal prosecutors from the Southern District of New York unsealed an indictment, charging wire fraud and money laundering against his ex-partner Michael Ackerman, the fund’s former head of trading.

Concurrently, the U.S. Securities and Exchange Commission and the Commodity and Futures Trading Commission on Feb. 11 filed their own complaints against Ackerman. The CFTC complaint also named Q3 Holdings LLC and Q3 I LP as defendants but did not cite Dr. Tran or the funds third general partner, James A. Seijas. (In the SEC complaint, Dr. Tran and Seijas are identified as “Founding Partner 1” and “Founding Partner 2,” respectively. Ackerman, Dr. Tran and Seijas each owned one-third of Q3 Holdings LLC, the holding company for Q3 I LP.)

The Southern Investigative Reporting Foundation (now called the Foundation for Financial Journalism) first got wind of Q3 I LP’s problems in December when a medical professional whom Dr. Tran had pitched reached out to express reservations about the purported astronomical returns. While Dr. Tran’s claim of having doubled the size of investments annually would be suspect enough on its own, especially at a time when the cryptocurrency market was especially volatile, the tip included unusual elements: The limited partners’ actual losses were possibly quite large. Based on the emails and documents the prospective investor provided, the fund bears all the signs of an affinity fraud — not the type plotted in a high-pressure boiler room but something brought to life through a few Facebook groups, email lists and group texts.

Since December one theme has emerged from all the interviews conducted for this investigation: The shared educational and professional experiences among a diverse group of physicians engendered a level of trust among them so deep that it took only a few Facebook posts and screen captures to lead them, Pied Piper like, into financial disaster.

Below is an account, based on six weeks of interviews and federal court filings, of how one person with an incredible story used two other people who were willing to shout it from the digital rooftops to allegedly steal about $34 million from some very well-educated people.


It’s not clear how Dr. Tran, Michael Ackerman and James Seijas first met. Perhaps Ackerman and Seijas became acquainted on the floor of the New York Stock Exchange, where both had worked for more than 15 years in the 1990s and early 2000s as a broker and specialist, respectively.

With an initial $15,000 investment, the three formed the Q3 Trading Club in June 2017 to speculate in cryptocurrencies, according to the Feb. 11 SEC complaint. Rather than trying to pick individual winners and losers from varied cryptocurrency offerings in the market, they used a trading algorithm that Ackerman has said he developed in 2010 to trade stocks but found effective for the trading of currencies.

(Cryptocurrencies are privately constructed units of digital payment that have gained prominence over the past decade. While having no established intrinsic value like a nation’s currency, several well-known cryptocurrencies like Bitcoin and Ether have become popular assets that are used for investing as well as peer-to-peer payments. Yet in addition to the regulatory and technological hurdles that cryptocurrencies face before their widespread adoption, they have attracted no shortage of hucksters and scams.)

Within a month of the Q3 Trading Club’s June 2017 launch, the three founders were seeking out investors. Dr. Tran’s position in the Facebook Physician Dads’ Group proved to be valuable for attracting interest, according to interviews of former Q3 I LP limited partners and the SEC and CFTC complaints.

Previously in June 2017, Dr. Tran had registered an entity called Q3 Crypto LLC at his home address, with Tran, Ackerman and James Seijas’ wife, Donna, listed as board members. (By January 2019, after Q3 Crypto LLC had stopped making the required state filings, Florida’s secretary of state classified it as “inactive.”)

But in August 2017 just as the Q3 Trading Club’s coffers had about $1 million, Ackerman’s trading strategy failed. This resulted in what the CFTC later called “substantial trading losses.” Ackerman announced to his two partners that he would completely redesign his algorithm. 

One former Q3 Trading Club investor informed the Southern Investigative Reporting Foundation that Dr. Tran had told him that after Ackerman adjusted the trading strategy in the fall of 2017, the monthly returns would be 13 percent to 15 percent.

And that is exactly what happened.

Even though the cryptocurrency markets collapsed in 2018, Ackerman’s new trading system delivered monthly returns of 14 percent to 16 percent — what market observers would consider a breathtaking performance. (One index that tracks the monthly performance of 26 cryptocurrency trading hedge funds showed an almost 72 percent  decline in 2018 as compared with the prior year.) 

At this point Ackerman, Tran and Seijas probably reckoned that if this new strategy could deliver more than 180 percent on the initial million dollars, then a hedge fund (with possibly a much larger capital base) might bring almost limitless rewards.

Thus in November 2018 the three Q3 Trading Club founders launched a new fund, Q3 I LP, with the goal of raising $15 million from limited partners. Their fee arrangement was unusual; the fund documents said the general and limited partners would split the profits 50-50, after paying what was described as “minor expenses.” (Most hedge funds charge a management fee of 1 percent to 2 percent of the assets and a performance fee of 20 percent to 25 percent.)

For investors, the fee structure did not appear to be a sticking point, however. From November 2018 to December 2019, Q3 I LP raised more than $33 million from 150 limited partners.

Dr. Tran and Seijas each further invested $250,000 or more in Q3 I LP, according to an affidavit of Homeland Security Investigations’ Special Agent John Rodriguez that prosecutors unsealed on Feb. 11. (The Tran family’s financial exposure to Q3 I LP is  significantly greater than $250,000: Dr. Tran’s brother-in-law, Seth Duhy told the Southern Investigative Reporting Foundation he had invested $1 million in the fund.)

But Q3 I LPs general partners omitted or soft-pedaled some important details in the limited partner agreement and the subscription booklet.

Among the glossed-over matters: Q3 Holdings LLC general partners (Ackerman, Seijas and Dr. Tran) would charge limited partners capital “licensing fees” for Q3 I LP’s right to use Ackerman’s retooled algorithm. That added up to $4 million in payments to the trio from November 2018 to December 2019.

And according to the SEC’s complaint, in December 2018 the Q3 Holdings LLC general partners did not notify their limited partners that they had decided to keep for themselves any profits above the 15 percent benchmark.

Yet that was a minor detail compared to what else the federal prosecutors allege Ackerman omitted, especially about Q3 I LP’s true rate of return.


According to federal prosecutors, as well as the SEC and CFTC, Ackerman’s reworked algorithm was nothing more than a cover story he developed in August 2017 to begin a two-year campaign of fabricating Q3 I LP’s jaw-dropping 180 percent annual return.

For regulators and investors alike, figuring out where all the money went won’t be a light task — as has been the case after the collapse of other investment funds due to fraud. 

Of Q3 I LP’s $33 million in limited partner capital, only about $10 million was invested in various cryptocurrency exchanges, according to the SEC.

So what happened to the other $23 million? Based on the federal indictment and the SEC and CFTC complaints, about half, or $11.5 million, of this amount can be traced in a straightforward fashion. Whether that can be recovered and returned to the limited partners is a different story.

To start with, Ackerman paid himself about $7.5 million in fake performance fees from the $23 million in capital. Per the federal indictment, prosecutors are seeking to compel him to forfeit five properties he bought in 2018 and 2019 with this money, including a 154-acre plot in Montana and a $3.6 million house in Delray Beach, Florida. (Property records for the Delray Beach home list James Seijas and Donna Seijas as the owners, however.

Ackerman also spent $600,000 on personal security services, $100,000 on Tiffany’s jewelry as well as an additional sum on three cars, according to the SEC.

(This does not include the $4 million in licensing fees the three Q3 Holdings LLC general partners raked in from limited partner capital to pay for the right to use Ackerman’s algorithm.)

In an attempt to explain what happened to the additional $11.5 million share, the CFTC complaint points to $3 million of it being used in a Ponzi-like fashion to meet a limited partner redemption request. Where the other capital lies is still unclear.

Figuring out how the fraud happened is not as difficult.

Ackerman told Dr. Tran and Seijas that Q3 I LP’s trading accounts had safeguards in place to prevent him from withdrawing money without a second partner’s approval. Yet, according to the SEC and CFTC complaints, Ackerman withdrew money at will.

Having total control over Q3 I LP’s finances, Ackerman could use basic software to create account balances that showed whatever he wanted them to. His favorite tactic, according to the SEC, was to modify screenshots of the fund’s account statements to inflate the portfolio’s value: On Sept. 1, 2019, Ackerman sent Dr. Tran a text message that showed Q3 I LP’s account balance as slightly less than $182 million, although in truth only $1.5 million was available. Three months later, when the account balance was $428,000, he allegedly sent Dr. Tran and Seijas a screenshot that indicated an account balance of just  under $310 million.

Given the fact that Dr. Tran and Seijas did not handle Q3 I LP’s brokerage accounts, no regulator has suggested they had anything to do with creating fake performance numbers.

Their value to Ackerman was in helping to raise new capital, especially by immediately passing on what he said — or the documents he manufactured — to current and prospective limited partners.

Just as important, they appear to have taken Ackerman’s word on everything.

That’s understandable in Dr. Tran’s case since he had no professional financial services experience. So when Ackerman fed Dr. Tran nonsensical talking points to help him explain Q3 I LP’s returns, he repeated them without raising any questions. Dr. Tran wrote to prospective limited partners that the fund’s secret is a “proprietary stratagem” that focuses on a financial ratio called “correlated capital forfeiture.”

That phrase appears to be absent from finance textbooks: Stephen Cecchetti, a professor of international finance at Brandeis University, told the Southern Investigative Reporting Foundation he had never heard of the term, and a Google search for the phrase also struck out.

Seijas’ lack of oversight seems less explicable. His resume describes 26 years of finance work, including almost 11 years of serving as a financial adviser to high-net worth clients. It’s reasonable to suppose he might have understood that, compared with even much smaller investment funds, Q3 I LP had almost no controls at all.

Many hedge funds arrange for an independent fund administrator to provide monthly or quarterly profit and loss statements to limited partners. And most funds hire an accounting firm to perform an audit at the end of the fiscal year. In contrast, as the SEC has alleged, Dr. Tran and Seijas were forwarding to Q3 I LP’s limited partners screenshots from Ackerman’s cellphone as performance updates. Dr. Tran would then calculate limited partners’ pro rata share of profits and send out the account statements.

Furthermore, Q3 I LP does not appear to have had a prime brokerage relationship. Typically large banks serve as prime brokers to clear and settle trades for hedge funds, as well as hold their cash balances and serve as custodians of their securities portfolios. If Q3 I LP had a prime broker, Ackerman would not have had the ability to inflate the fund’s account balances.

Dr. Tran appears to have been especially adept at raising capital. In January, two Q3 I LP limited partners told the Southern Investigative Reporting Foundation that Dr. Tran’s posts on his personal Facebook account convinced them the fund really was doing well.

And Dr. Tran went on an extensive shopping spree from mid-2018 through the autumn of 2019 and posted all the details on his refreshingly immodest personal Facebook account. (This seems to contrast sharply with Ackerman’s behavior; federal prosecutors allege Ackerman concealed his property purchases by putting other people’s names on the titles.)

For a vacation in June 2019, Dr. Tran took his family for pricey luxe stay to the Maldives, according to his Facebook posting. In August 2019 Dr. Tran posted pictures of his new 50-foot Okean motor yacht (whose base sticker price was roughly $1.14 million) and in November 2019 of his 2018 Bentley Continental GT (that retailed for at least $264,300). Dr. Tran appears to have paid cash for both, according to a search of uniform commercial code filings. (By late January, Dr. Tran had shut his Facebook account.)

The Southern Investigative Reporting Foundation in December sent Dr. Tran a lengthy question about these purchases. He did not respond. In late January,  

Dr. Quan Tran, right, his wife, Evan Elizabeth, and his brother-in-law, Seth Duhy, attend a Nov. 9, 2019, performance of “Moulin Rouge” in Manhattan. Source: Facebook
Dr. Quan Tran, right, attends a Nov. 9, 2019, performance of “Moulin Rouge” in Manhattan with his wife, Evan Elizabeth, and his brother-in-law, Seth Duhy. Source: Facebook

On Dec. 13, 2019, Ackerman sent an email to some Q3 I LP limited partners apologizing for the “endless delays the past month” in providing them performance figures, according to Special Agent Rodriguez’s affidavit. Ackerman said that because of a health problem that had led him to pursue treatment in New York City, he was suspending the fund’s trading for the rest of December and all of January.

Less than 30 minutes after Ackerman sent that email, Dr. Tran sent his own email to Q3 I LP limited partners and offered a very different take on Ackerman and the fund’s health, per Special Agent Rodriguez’s affidavit. Following Ackerman’s Dec. 3 departure from a hospital stay, Dr. Tran wrote, he and Seijas visited him at his house in Sheffield Lake, Ohio: After gaining access to his computer, “[We] discovered what appeared to be a very large discrepancy between the assets [Ackerman] had been reporting to us and the balance in the trading account.”

Dr. Tran said that when confronted about this alleged discrepancy, Ackerman claimed he had moved the assets to another, more secure trading account but refused to name where it was or give Dr. Tran and Seijas access to it, according to Special Agent Rodriguez. Soon afterward, they alerted the SEC’s Miami regional office about the issue, Dr. Tran said.

When news of the regulators’ investigation of Q3 I LP spread across the informal physicians networks in mid-December, “it felt kind of like you’d been struck by lightning, it was so sudden,” said one physician and limited partner, “except getting hit by lightning probably doesnt make you feel betrayed and foolish.”

Upon learning of Q3 I LP’s looming troubles, a pair of friends who had become fund limited partners, Lafayette, Colorado-based Dr. Anthony Kokx and Morgantown, West Virginia-based Dr. Jaime Miller, hired a lawyer to investigate the fund. They referred all questions to their lawyer, Mark Hunter.

Reached in mid-January, Hunter would say only “we’re in the early stages of an investigation and I’m trying to obtain the facts.” He added, “Hopefully I will be able to say more soon.”


Over the course of the investigation into Q3 I LP’s collapse, the Southern Investigative Reporting Foundation identified seven of its limited partners: Miller and Kokx, as well as five other individuals. These five limited partners spoke on the condition of anonymity because they were actively cooperating with federal regulators and law enforcement officials.

Q3 I LP’s general partners did not respond to multiple inquiries from the Southern Investigative Reporting Foundation, including emails posed to Ackerman and Dr. Tran. Nor did they respond to voice messages. And James Seijas did not reply to messages left at his Shrewsbury, New Jersey, home.

Paul Flannery, a lawyer at Flannery, Georgalis LLC who represented Ackerman in his Feb. 14 arraignment in Cleveland, declined to comment on Feb. 17 about his case. Flannery said his firm is still determining if it will represent him in the future.

Updates: This file was updated Feb. 18, 2020, to reflect details gleaned from Homeland Security Investigations’ Special Agent John Rodriguez’s affidavit about alleged irregularities associated with Michael Ackerman’s management of Q3 I LP’s portfolio. A comment about lawyer Paul Flannery’s representation of Michael Ackerman has also been added. 

An earlier version of this article incorrectly identified James Seijas’ wife, Donna. The story was updated on March 2, 2020. The Foundation for Financial Journalism regrets the error.