US Sentences Mastermind of $147 Million Crypto ‘Scam of Epic Proportions’ to 10 Years in Prison

Mastermind of $147 Million Crypto ‘Scam of Epic Proportions’ Sentenced to 10 Years in US Prison

The mastermind of what the U.S. Department of Justice calls a rip-off of “epic proportions” has been sentenced to 10 years in jail. His crypto scheme collected over $147 million, duping 72,000 buyers. He can be ordered to pay the U.S. Internal Revenue Service greater than $1.eight million for tax evasion.

Scam Involving Fake Cryptocurrency

The U.S. Department of Justice (DOJ) introduced Monday {that a} California man, Steve Chen, has been sentenced to 10 years in federal jail for his “main function” in a significant crypto fraud case. Judge John Walter referred to as Chen’s scheme a rip-off of “epic proportions.”

The DOJ defined that the 63-year-old performed “an enormous funding rip-off the place a multinational firm issued a phony digital foreign money purportedly backed by billions of {dollars}’ value of amber and different gem stones.” Chen pleaded responsible in June final yr to 1 depend of conspiracy to commit wire fraud and one depend of tax evasion.

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Chen was the proprietor and CEO of U.S. Fine Investment Arts Inc. (USFIA) and 6 different firms. The DOJ detailed that he fraudulently promoted and solicited investments from July 2013 till September 2015. He satisfied buyers that USFIA was a profitable multi-level advertising firm that extracted amber and different gem stones from the mines it “owned” within the U.S., the Dominican Republic, Argentina, and Mexico. However, in actuality, the mines didn’t exist. The DOJ added:

He finally obtained roughly $147 million from 72,000 victims, in one of many largest pyramid schemes ever prosecuted on this district.

Investors had been duped into shopping for USFIA “packages” purportedly comprised amber and different gem stones, in addition to USFIA “factors.” They had been instructed that these factors may very well be transformed to USFIA shares when the corporate had its IPO, which by no means occurred. The investments vary from $1,000 to $30,000 every. USFIA additionally “provided different bonuses – together with money, journey, luxurious automobiles, properties within the Los Angeles space, and EB-5 visas for immigrant buyers – to buyers who recruited different folks to buy these ‘packages,’” the Justice division detailed.

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From September 2014, Chen and others substituted factors for “Gem Coins,” which “had no circulation in any business, weren’t accepted by any retailers, and had no financial worth,” the DOJ continued, including:

They falsely promoted these ‘cash’ as a professional digital foreign money backed by the corporate’s gemstone holdings. Chen additionally falsely represented that these ‘cash’ already had been in broad circulation within the jewellery and finance industries.

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In addition, Chen dedicated tax evasion when he reported that his gross revenue for 2014 was $138,015 when it was roughly $4,816,193. He, subsequently, owed the U.S. Internal Revenue Service (IRS) $1,885,094 – earlier than curiosity and penalties. The DOJ discover concludes:

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Judge Walter ordered Chen to pay restitution of $1,885,094 to the IRS on the tax evasion depend.

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