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Cryptocurrency, Ponzi-schemes, and Fraud: Modern Crimes in America

WhiteCollar4

A $9 million scam led to the imprisonment of a man who built what was effectively a Ponzi-scheme, selling the virtual currency known as PayCoin. In addition to prison time, the perpetrator will later experience years of supervised release, and has been mandated to pay restitution to all of his victims. If you are facing charges on a white collar crime such as fraud, securing the assistance of a knowledgeable local criminal attorney is an essential first step.

More on the Case 

Homero Joshua Garza created a number of businesses selling computers and hardware designed to assist users in navigating cryptocurrencies.  This part of his endeavor was completely legal.  What happened next, though, got Garza into trouble.

Inadequate Support 

Initially, Garza’s companies sold the technical equipment necessary to mine legitimate virtual currencies.  He marketed the hardware as a way to help less technically-savvy enthusiasts find success with cryptocurrencies. This evolved into promises of great profits through robust mining, but without the infrastructure to support the shares being sold. Investors started losing money. Garza resorted to paying off antsy investors with new investors–defrauding investors with his own little Ponzi-scheme.  Meanwhile, he was busy developing PayCoin.

Lies, and More Lies 

PayCoin was not registered prior to the public offering, but this was the least of Garza’s problems.  In order to attract investors, Garza duped them into believing a host of lies, including:

  • He had $100 million in reserve for the company;
  • The cash would be used to ensure units would never dip below $20;
  • Amazon, Target, and other large corporations had partnered with him.

As enthused buyers bought the lies, they also bought into PayCoin.  But without the financial reserves and partnerships, the cryptocurrency nose-dived, costing people around the globe millions of dollars.

Enter the SEC 

Once the Securities and Exchange Commission got involved, it became clear that both civil and criminal laws had been broken.  The FBI then took the lead in investigating the fraud case.  While investors lost their shirts, Garza was driving around in his Lamborghini, his Maserati, or his Ferrari—or perhaps jetting around in his private jet.  The case went to court, and the rest is history.

Defenses to Fraud Charges 

White-collar crimes are serious business.  A strong defense will include addressing a number of issues that the prosecutor presents, possibly including:

  • Your position in the company that gave you the ability to defraud others;
  • The evidence of hidden or spent money that did not belong to you, or that you were not authorized or entitled to spend;
  • Indications that you intended to permanently divest another entity of their money or assets, to your own benefit.

Looking at Your Case 

Having an experienced white-collar criminal attorney is essential during any criminal white-collar investigation or prosecution.  Attorney Deric Zacca is experienced in defending white-collar investigations and prosecutions and knows how to properly defend cases involving white-collar crime.  To schedule a consultation related to your situation, contact his Fort Lauderdale office today.

Resource:

fbi.gov/news/stories/cryptocurrency-fraudster-sentenced-021119

https://www.zaccalaw.com/money-laundering-when-prosecutors-follow-the-money/