The mastermind of what the US Department of Justice calls a scam of “epic proportions” has been sentenced to 10 years in prison. His crypto scheme raised more than $ 147 million, duping 72,000 investors. He is also ordered to pay the US Internal Revenue Service more than $ 1.8 million for tax evasion.
Fake cryptocurrency scam
The US Department of Justice (DOJ) announced on Monday that a California man, Steve Chen, has been sentenced to 10 years in prison for his “leading role” in a major crypto fraud case. Judge John Walter called Chen’s plan a scam of “epic proportions.”
The DOJ explained that the 63-year-old had “carried out a massive investment scam involving a multinational corporation issuing a fake digital currency allegedly backed by billions of dollars worth of amber and other gems.” Chen pleaded guilty to one conspiracy to commit wire fraud and one tax evasion in June last year.
Chen was the owner and CEO of US Fine Investment Arts Inc. (USFIA) and six other companies. The DOJ said it was fraudulently promoting and soliciting investments from July 2013 to September 2015. He convinced investors that USFIA was a successful multi-level marketing company extracting amber and other gems from the mines it ‘owned’ in the US, Dominican Republic. , Argentina and Mexico. In reality, however, the mines did not exist. The DOJ added:
He ended up bringing in about $ 147 million from 72,000 victims in one of the largest pyramid schemes ever prosecuted in this district.
Investors were tricked into purchasing USFIA packs that supposedly consisted of amber and other gems as well as USFIA points. They were told these points could be converted into USFIA shares when the company went public, which never happened. Investments range from $ 1,000 to $ 30,000 each. USFIA “also offered other bonuses – including cash, travel, luxury cars, homes in the Los Angeles area, and EB-5 visas for immigrant investors – to investors who recruited other people to buy these ‘packages,'” said the Ministry of Justice.
As of September 2014, Chen and others replaced points with “ Gem Coins, ” which “ were not in circulation in any industry, were not accepted by any merchants, and had no economic value, ” the DOJ continued, adding:
They falsely promoted these ‘coins’ as a legitimate digital currency backed by the company’s gem holdings. Chen also falsely stated that these “coins” were already widely circulating in the jewelry and financial industries.
In addition, Chen committed tax evasion when he reported that his gross income for 2014 was $ 138,015, while it was about $ 4,816,193. That’s why he owed the U.S. Internal Revenue Service (IRS) $ 1,885,094 – before interest and fines. The DOJ notice concludes:
Judge Walter ordered Chen to repay the $ 1,885,094 tax evasion to the IRS.
What do you think of this conviction? Let us know in the comments below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or invitation to an offer to buy or sell, or a recommendation or endorsement of products, services or companies. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.