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AirBit Club ‘ponzi’ co-founder gets 12 years prison

September 27, 2023 Coin Telegraph

Cecilia Millan

Convicted fraudster Pablo Renato Rodriguez will also need to serve three years of supervised release after he finishes his 12 year imprisonment sentence.

The co-founder of AirBit Club — a cryptocurrency pyramid scheme that swindled investors of over $100 million — has been sentenced to 12 years in prison for his role in a $100 million "pyramid scheme" that purported to be involved in crypto mining.

The sentencing comes nearly seven months after Rodriguez — the co-founder of AirBit Club — pleaded guilty to wire fraud conspiracy charges in a United States District Court in March.

In a Sept. 26 statement, Damian Williams, United States Attorney for the Southern District of New York said Rodriguez “preyed” on unsophisticated investors with false promises that their funds were invested into legitimate cryptocurrency trading and mining operations.

“Instead of investing on behalf of investors, Rodriguez hid victims’ money in a complex laundering scheme using Bitcoin, an attorney trust account, and international front and shell companies and used victims’ money to line his own pockets.”

District Court Judge George B. Daniels imposed an additional three years of supervised release for Rodriguez, which will follow his 12-year prison sentence.

.@HSINewYork's El Dorado Task Force, the largest anti-money laundering task force in the US, is proud to have played a vital role in delivering justice to the victims of Pablo Renato Rodriguez and the fraudulent "AirBit Club” Ponzi Scheme #HomelandSecurityInvestigations #HSINY https://t.co/UVco4ai3rI
— HSI New York (@HSINewYork) September 26, 2023

The convicted fraudster was ordered to pay a forfeiture of $65 million and to forfeit other items, including a total of 3,800 Bitcoins (BTC) (worth $100 million), Rodriguez’s Irvine residence in California, $900,000 in U.S. dollars seized from the property and nearly $1 million previously held in escrow for a Gulfstream Jet.

The other defendants — Dos Santos, Scott Hughes, Cecilia Millan and Karina Chairez have also pleaded guilty and are awaiting sentencing verdicts.

AirBit Club was launched in 2015. Prospective investors were told that AirBit Club earned returns on cryptocurrency mining and trading and that victims would earn passive, guaranteed daily returns on any membership purchased.

However, as early as 2016, club members wishing to withdraw proceeds were met with excuses, delays and hidden fees and told they must recruit new members if they wanted to receive the returns.

The operators of the club, including Rodriguez were charged with fraud and money laundering by the DOJ in August 2020 after a probe by the United States Homeland Security Investigations.

In 2022, $7.6 billion in funds were lost to cryptocurrency ponzi and pyramid schemes, according to a June 28 report by blockchain intelligence firm TRM Labs.

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FTX’s Bankman-Fried seeks gag order for all witnesses in criminal case

July 24, 2023 Coin Telegraph

Caroline Ellison

Lawyers representing SBF have agreed to a gag order preventing him from making comments that could sway his criminal trial but says it should apply to other witnesses too.

Former FTX CEO Sam Bankman-Fried has agreed to a gag order preventing him from making comments to third parties that may interfere with his trial — but argues other potential witnesses should be gagged as well, including current FTX CEO John Ray.

The gag order against Sam Bankman-Fried was initially requested on July 20, when the U.S. government accused the FTX founder of attempting to interfere with a fair trial by publicly discrediting former business partner and witness Caroline Ellison in an interview with the New York Times.

In a July 22 letter to United States District Court Judge Lewis A. Kaplan of New York, Bankman-Fried’s lawyers Cohen & Gresser LLP denied the accusations but agreed to accept a gag order as requested.

A gag order is a legal order often issued by a court to restrict information or comment from being made public or passed onto any unauthorized third party. In this case, Bankman-Fried will no longer be able to make comments that publicly discredit a government witness by sharing confidential information that may taint the jury pool.

*Legal filing by Cohen & Gresser LLP to District Court Judge Lewis Kaplan in New York. Source: Courtlistener.*

However, in accepting the relief, Bankman-Fried’s lawyers also want the same gag order to be applied to all parties and witnesses that could be involved in his criminal trial.

“We respectfully request that any such relief, however, should apply not just to Mr. Bankman-Fried, but equally to all ‘parties and witnesses’ — namely, the Government and all potential witnesses in this case.”

This would include the U.S. government, former employees of cryptocurrency exchange FTX, FTX Debtor entities, Alameda Research and other potential witnesses involved in the case, according to the attorneys.

Explaining the request, the lawyers said there has been a “toxic media environment” surrounding their client since the collapse of the exchange, noting that FTX CEO John Ray was one of the bigger culprits.

“Most notably, the current CEO of the FTX Debtor entities, John J. Ray III, who has routinely (and gratuitously) attacked and vilified Mr. Bankman-Fried in his public comments and filings in the FTX bankruptcy proceedings,” they said.

“Mr. Ray’s repeated ad hominem attacks on Mr. Bankman-Fried — which have very little do with his role recovering assets for FTX creditors and seem more directed towards publicly vilifying Mr. Bankman-Fried. [This] has left Mr. Bankman-Fried with little choice but to respond,” the lawyers added.

The law firm argued that the U.S. government was applying a double standard by touting several articles that sought to harm SBF’s reputation. This formed the basis of their request for the same gag order for SBF.

SBF pleaded not guilty to a series of fraud charges for the alleged role he played leading to the bankruptcy of FTX. The trial for SBF’s fraud charges begins on October 3.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

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Ex-NFL team owner Reggie Fowler gets 6 years for crypto ‘shadow banking’

June 6, 2023 Coin Telegraph

Bank Fraud

United States Attorney Damian Williams says the lies of the former Minnesota Vikings co-owner exposed the U.S. financial system to “serious risk.”

Reginald Fowler, a former NFL team owner, has been sentenced to six years of prison for operating as a “shadow bank” to the crypto sector, which involved over $700 million in unregulated transactions over a 10-month timespan in 2018.

The 63-year-old, who was a co-owner of the Minnesota Vikings, was sentenced to a total of 75 months on bank fraud and money laundering charges, according to a statement from the United States Attorney’s Office in New York on June 5.

Former co-owner of Minnesota Vikings sentenced to 75 months in prison for providing shadow banking services to cryptocurrency exchangeshttps://t.co/Nc2PVhEajw
— US Attorney SDNY (@SDNYnews) June 5, 2023

It marks the end of a five-year long case that began when he was arrested in 2019 for alleged shadow banking. Shadow banking is a term used to describe (often illegal) bank-like activities that are carried out by non-bank entities.

Fowler initially pleaded not guilty to all charges in 2020, but changed his plea to guilty in April 2022.

In his latest statement, U.S. Attorney Damian Williams said that a string of lies enabled Fowler to mislead and deceive several banks:

“Reginald Fowler evaded federal law by processing hundreds of millions of dollars of unregulated transactions on behalf of cryptocurrency exchanges as a shadow bank. He did so by lying to legitimate U.S. financial institutions, which exposed the U.S. financial system to serious risk.”

Williams then said Fowler “victimized” the Alliance of American Football (AAF) — a former professional football league — by lying about his net worth in order to own a “substantial” stake in the league.

“Let it be clear: this Office is committed to prosecuting people who lie to banks and skirt the law as a means to conduct their business,” the federal prosecutor stressed.

According to Williams, Fowler managed to pull off his crimes by establishing Global Trading Solutions (GTS) around February 2018, which worked with Crypto Capital and other crypto firms operating out of Israel.

There, Fowler, GTS and the crypto firms sidestepped a license by lying to banks in order to open accounts that were used to process crypto transactions.

OK -now at crypto Fowler sentencing. It was set for 10: FOwler just came in at 10:19 am. Inner City Press is covering the case https://t.co/S97h82I3FP and will live tweet, thread below pic.twitter.com/HapbKHoHaz
— Inner City Press (@innercitypress) June 5, 2023

Fowler opened a dozen of these accounts to facilitate these crypto transactions without the banks’ knowledge and failed to disclose GTS’s relationship with the crypto firms, Williams said:

“At no point were FOWLER, GTS, nor any of the Crypto Companies ever licensed as a money transmitting business in the United States, as required by federal law.”

One of the crypto firms involved was iFinex Inc — the parent company of crypto exchange Bitfinex and stablecoin issuer Tether, it claimed.

Other convictions included bank fraud conspiracy, operation of an unlicensed money-transmitting business, conspiracy to operate an unlicensed money-transmitting business, and wire fraud.

In addition to the prison sentence, Fowler was ordered to forfeit $740 million and pay over $53 million in restitution to the AAF.

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OneCoin head of compliance facing 40 year sentence after US extradition

March 22, 2023 Coin Telegraph

Coin Telegraph

The alleged fraudster was accused of doing the “exact opposite” of her job title, which was to ensure OneCoin was complying with laws.

United States federal prosecutors have charged a former executive of the fraudulent cryptocurrency scheme OneCoin for her role in the operation, who now faces up to 40 years in prison after being extradited from Bulgaria.

On March 21 the Department of Justice (DOJ) charged OneCoin’s former head of legal and compliance Irina Dilkinska with one count of wire fraud and one count of conspiracy to commit money laundering, each carrying a maximum potential sentence of 20 years in prison.

Dilkinska allegedly aided in laundering over $400 million of OneCoin’s proceeds, and upon hearing of a co-conspirator’s arrest destroyed incriminating evidence and sent incriminating messages.

Bulgarian woman charged for role in multi-billion-dollar cryptocurrency pyramid scheme “OneCoin” and extradited from Bulgaria to the United Stateshttps://t.co/XsY0rYJWeF
— US Attorney SDNY (@SDNYnews) March 21, 2023

U.S. Attorney Damian Williams pointed out the irony in Dilikinska’s job title given the nature of OneCoin, saying:

“Irina Dilkinska, the supposed Head of Legal and Compliance for the OneCoin cryptocurrency pyramid scheme, accomplished the exact opposite of her job title and allegedly enabled OneCoin to launder millions of dollars of illegal proceeds through shell companies."

The announcement said Dilkinska was extradited from Bulgaria on March 20 and was set to appear before U.S. Magistrate Judge Sarah Netburn the following day.

OneCoin was founded in 2014 by “cryptoqueen” Ruja Ignatova and Karl Sebastian Greenwood, the latter of which pleaded guilty to multiple charges brought against him in December 2022 and faces up to 60 years in prison.

Ignatova, however, has managed to evade law enforcement agencies, going missing in October 2017 after a flight to Greece just 15 days after a federal warrant was issued for her arrest.

In 2014, a woman named Ruja Ignatova launched a fake cryptocurrency named "OneCoin". Despite the currency never existing, Ruja convinced people all over the world to invest. In 2017, after raking in $4 billion profit, she boarded a plane to Greece and hasn't been seen since. pic.twitter.com/DoJCfmy0Uj
— Facts - Weird & Interesting (@info_tale) March 15, 2023

In June 2022, Ignatova was added to the Federal Bureau of Investigation’s Top Ten Most Wanted List, and a $100,000 reward is offered for information leading to her arrest.

OneCoin was exposed as a scam back in 2015 but managed to generate over $4.3 billion in revenue, with profits of nearly $3 billion, between Q4 2014 and Q4 2016 alone.

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AirBit Club execs face decades in prison after pleading guilty to $100M fraud

March 9, 2023 Coin Telegraph

AirBit Club

Co-founder Rodriguez and senior promoters Millan, Aguilar and Chairez all recently pled guilty to the charges, while the other founder, Dos Santos pled guilty in October, 2021.

Six people involved in a cryptocurrency “Ponzi scheme” that raked in about $100 million over five years have pled guilty to a series of fraud and money laundering charges, each carrying a maximum sentence of 20 to 30 years of prison.

One of the founders of “AirBit Club,” Pablo Renato Rodriguez, was the latest to plead guilty to wire fraud conspiracy charges on Mar. 8.

According to a Mar. 8 statement from the United States Department of Justice (DOJ), AirBit Club was a fake cryptocurrency mining and trading company operating between 2015 to 2020, where executives and promoters induced victim investors into believing that they’d make guaranteed passive income and profits on any membership purchased.

Operators and attorney of global multi-million-dollar cryptocurrency Ponzi scheme “AirBit Club” plead guiltyhttps://t.co/MT3mM9aqPV
— US Attorney SDNY (@SDNYnews) March 8, 2023

According to the DOJ, the perpetrators traveled throughout the United States, Latin America, Asia and Eastern Europe to market AirBit at “lavish expos” to convince investors to purchase AirBit Club memberships.

Victims saw “profits” accumulate on the AirBit Club online portal, but no actual mining or trading was ever carried out. One victim trying to withdraw was asked to “bring new blood” into the AirBit Club scheme in order to withdraw her funds.

U.S. Attorney Damian Williams said the operators used funds from victims to purchase luxurious cars, houses and jewerly. Some of the proceeds were used to finance more expos to recruit more victims too:

“The defendants took advantage of the growing hype around cryptocurrency to con unsuspecting victims around the world out of millions of dollars with false promises that their money was being invested in cryptocurrency trading and mining."

"Instead of doing any cryptocurrency trading or mining on behalf of investors, the defendants built a Ponzi scheme and took the victims’ money to line their own pockets," he added.

The representatives were first officially charged Aug. 18, 2020.

Since then, senior promoters Cecilia Millan, Jackie Aguilar and Karina Chairez each pled guilty to a series of wire fraud conspiracy, bank fraud conspiracy and money laundering conspiracy charges on Jan. 31, Feb. 8 and Feb. 22, while another founder, Gutenberg Dos Santos pled guilty to wire fraud and money laundering conspiracy charges on Oct. 21, 2021, according to the Mar. 8 statement.

These guilty pleas send a clear message that we are coming after all of those who seek to exploit cryptocurrency to commit fraud,” Williams added.

The operators have been ordered to forfeit their fraudulent proceeds of AirBit Club, which include fiat currency, real estate and Bitcoin (BTC), collectively valued at about $100 million.

Cointelegraph found there are still videos of the AirBit Club representatives marketing the membership scheme on YouTube.

The scheme often used the hashtag “#AirBitBillionaireClub” and shared several fake success stories of investors to try to lure in more victims.

California-licensed Attorney Scott Hughes, an attorney accused of laundering proceeds of the scheme, also pled guilty to money laundering charges on Mar. 2.

Rodriguez, Millan, Aguilar, Chairez and Hughes will be sentenced on different dates between June and August this year.

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