Investigation Newsletter: Fraud Scheme Results in $ 56 Million Seizure, US Largest Cryptocurrency Recovery | Arent Renard
Fraud Scheme Results in $ 56 Million Seized as America’s Largest Cryptocurrency Recovery
On November 12, 2021, the U.S. Department of Justice and Southern District Attorney’s Office of California’s request was granted to liquidate approximately $ 56 million (at current estimated prices) in fraud proceeds seized from the major northern developer. – American cryptocurrency BitConnect. The BitConnect scheme is the largest criminally indicted cryptocurrency fraud scheme to date, and this liquidation is the largest cryptocurrency fraud recovery by the United States.
Court documents indicate that the developer pleaded guilty on September 1, 2021 to participating in a conspiracy to defraud BitConnect investors in the United States and abroad, admitting that he made as much as $ 24 million. dollars through the fraud and agreed to pay back the full amount. to defrauded investors. Investors were said to have been encouraged to invest more than $ 2 billion under the program. The government will now begin the process of restitution to victims of the BitConnect program by selling the cryptocurrency and holding the proceeds in US dollars. According to the press release from the Department of Justice, the government intends to keep the seized proceeds in cryptocurrency wallets and use the funds to restore the integrity of the victims in accordance with a future restitution order issued. by the court at the time of the sentence.
The promoter faces a maximum sentence of 20 years in prison and is expected to be sentenced on January 7, 2022. The DOJ press release can be viewed here.
Seven convicted of $ 20 million in COVID-19 fraud
On November 15, 2021, seven defendants were convicted of a scheme to fraudulently obtain more than $ 20 million in COVID-19 relief funds from the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL). The defendants were each sentenced individually, ranging from 10 months probation to 17 years in prison.
Court documents and evidence from the June 2021 trial indicate that the defendants used dozens of fake, stolen or imitation identities to submit fraudulent claims for around 150 PPP and EIDL loans, seeking around $ 20 million in funds. The defendants allegedly created identities belonging to elderly or deceased people and foreign students who never returned to the United States. In support of the loan applications, the defendants also allegedly submitted false and false documents to lenders and the Small Business Administration (SBA), including forged tax documents and payroll records. After receiving the funds from the PPP and EIDL loans, the defendants then allegedly used the funds to purchase luxury homes, luxury gold coins and jewelry, designer handbags and a Harley-Davidson motorcycle.
Four of the defendants were convicted following a jury trial in June 2021. Prior to the verdict of the trial, the remaining defendants pleaded guilty to combinations of bank fraud, aggravated identity theft, electronic fraud , conspiracy to commit money laundering and conspiracy to commit electronic fraud. and bank fraud.
The press release from the Ministry of Justice is available here
Texan woman pleads guilty to bribery and fraud to obtain international adoptions
On November 17, 2021, a Texas program manager at an Ohio-based intercountry adoption agency pleaded guilty in the Northern District of Ohio to schemes to secure the adoption of international children by bribing Ugandan officials and by defrauding US authorities.
Court documents indicate that the director was involved in a scheme to bribe Ugandan officials to obtain adoption of Polish and Ugandan children by families in the United States. (2) probation officers to guarantee reports recommending that certain children be placed in an orphanage; and (3) court clerks to influence the allocation of certain cases to “adoption-friendly” judges. The official admitted in her plea deal that she ordered clients of the adoption agency to work with her alleged co-conspirator despite knowing that the co-conspirator tricked the clients into providing false information to the US State Department in order to deceive the State Department in its approval. visa applications.
The government also alleges a second regime. Apparently another co-conspirator, the executive director of the adoption agency, discovered that the clients of the adoption agency determined that they were unable to care for one of the two Polish children. that they intended to adopt. After this discovery, the director and her accomplice had the Polish child adopted by relatives of the director, who were not eligible for international adoption.
The director pleaded guilty to conspiring to violate the Corrupt Practices Abroad Act (FCPA) and to commit visa fraud under the overseas adoption program. She also pleaded guilty to conspiring to defraud the United States government. She is due to be sentenced on March 9, 2022. The executive director is to be tried on February 7, 2022, and the other co-conspirator is still at large.
The press release from the Ministry of Justice can be viewed here.