Attorney Involved In Cryptocurrency Ponzi Scheme – Putting A Spin On Age-Old Scam

Audrey Strauss, Acting United States Attorney for the Southern District of New York,  and Peter C. Fitzhugh, Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), introduced the unsealing of an indictment charging PABLO RENATO RODRIGUEZ, GUTEMBERG DOS SANTOS, SCOTT HUGHES, CECILIA MILLAN, and JACKIE AGUILAR for his or her roles in an internationally coordinated fraud and cash laundering ring intertwined in defrauding people by investments in AirBit Club, a purported cryptocurrency mining and buying and selling firm.

The case has been assigned to U.S. District Judge George B. Daniels.  RODRIGUEZ and HUGHES are highly anticipated to be introduced right this moment earlier than U.S. Magistrate Judge John Early of the Central District of California, MILLAN is predicted to be introduced right this moment earlier than U.S. Magistrate Judge L. Patrick Auld of the Middle District of North Carolina, and AGUILAR is predicted to be introduced right this moment earlier than U.S. Magistrate Judge Christine A. Nowak of the Eastern District of Texas.  DOS SANTOS was arrested in Panama City, Panama, and is pending extradition to the United States. 

Acting United States Attorney Audrey Strauss stated:  “As alleged, the defendants put a modern-day spin on an age-old investment scam, promising extraordinary rates of guaranteed return on phantom investments in cryptocurrencies.  Thanks to HSI, the defendants are in custody and facing serious criminal charges.”

HSI Special Agent-in-Charge Peter C. Fitzhugh stated:  “Those arrested today have not only been charged with running a multimillion-dollar cryptocurrency investment fraud and money laundering ring, but also for allegedly spending their victim’s money on luxury cars, jewelry, and homes. These alleged fraudsters pulled out all the stops to sell their scheme to their victims with enticing recruitment events, then shamelessly used proceeds of their scheme to recruit additional victims through even more aggressive and lavish marketing pitches. As today’s arrests show, HSI New York’s El Dorado Task Force investigates financial crimes of every type, and will stop those who prey on unsuspecting investors who entrust their hard-earned savings to so-called financial advisors.  Those who violate this trust for their personal gain will face consequences for their actions.”

According to the allegations within the Superseding Indictment unsealed right this moment: ^[1]   

RODRIGUEZ, DOS SANTOS, HUGHES, MILLAN, and AGUILAR participated in a coordinated scheme through which victim-investors (the “Victims”) have been induced to put money into AirBit Club primarily based on the promise of assured income in trade for money investments in membership “memberships” (the “AirBit Club Scheme” or the “Scheme”).  Beginning in late 2015, AirBit Club, by its founders, RODRIGUEZ and DOS SANTOS, as well as its promoters (the “Promoters”), together with MILLAN and AGUILAR, marketed AirBit Club as a multilevel advertising and marketing membership within the cryptocurrency trade.  Promoters falsely promised Victims that AirBit Club earned returns on cryptocurrency mining and buying and selling and that Victims would earn passive, assured each day returns on any membership bought.

RODRIGUEZ, DOS SANTOS, HUGHES, MILLAN, and AGUILAR traveled all through the United States, and around the globe to locations in Latin America, Asia, and Eastern Europe, what place they hosted lavish expos and small group displays geared toward convincing Victims to buy AirBit Club memberships.  In furtherance of the AirBit Club Scheme, the Victims have been induced to purchase memberships in money, together with within the Southern District of New York.  Following a Victim’s funding, a Promoter offered the Victim with entry to an on-line AirBit Club portal to view the purported returns on memberships (the “Online Portal”).  While Victims noticed “profits” accumulate on their Online Portal, these representations have been false: no Bitcoin mining or buying and selling on behalf of Victims actually occurred.  Instead, RODRIGUEZ, DOS SANTOS, MILLAN, and AGUILAR enriched themselves, and spent Victim cash on vehicles, jewellery, and luxurious houses, and financed extra extravagant expos to recruit extra Victims. 

HUGHES, an lawyer licensed to follow legislation in California, had beforehand represented RODRIGUEZ and DOS SANTOS in a Securities and Exchange Commission investigation related to a different funding scheme referred to as Vizinova earlier than aiding RODRIGUEZ and DOS SANTOS in perpetrating the AirBit Club Scheme by, amongst different issues, serving to to take away detrimental details about AirBit Club and Vizinova from the internet. 

In many cases, as early as 2016, Victims who tried to withdraw cash from the AirBit Club Online Portal and complained to a Promoter have been met with excuses, delays, and hidden charges amounting to greater than 50% of the Victim’s requested withdrawal, in the event that they have been in a position to make any withdrawal in any respect.  In one occasion, AGUILAR advised one Victim of the AirBit Club Scheme who was complaining about her lack of ability to withdraw AirBit Club returns that she ought to “bring new blood” into the AirBit Club Scheme in an effort to obtain her returns.

In April 2020, one other sufferer acquired a discover on the AirBit Club Online Portal that his account was closed – and principal funding misplaced – on account of “execution of financial sustainability Reserve, policy #34 of the Airbit Club Terms and Conditions, due to the economic and financial crisis caused by (Covid-19).”

RODRIGUEZ, DOS SANTOS, HUGHES, and MILLAN sought to hide the AirBit Club Scheme, as well as their respective management of the proceeds of that Scheme, by requesting that Victims buy memberships in money, utilizing third-party cryptocurrency brokers, and by laundering the Scheme’s proceeds by multiple home and overseas financial institution accounts, together with an lawyer belief account managed by HUGHES (the “Hughes Trust Account”).  The Hughes Trust Account was ostensibly meant to keep up custody of HUGHES’s legislation follow’s consumer funds.  Instead, the Hughes Trust Account was utilized by RODRIGUEZ, DOS SANTOS, HUGHES, and MILLAN to hide the character and origin of the AirBit Club Scheme’s illicit proceeds.  Through that account, HUGHES directed Victim funds to the private bills of RODRIGUEZ, DOS SANTOS, MILLAN, and himself, and funded promotional occasions and sponsorships designed to additional promote the AirBit Club Scheme.  In complete, the defendants laundered at the least $20 million in proceeds of the Scheme by these numerous strategies.

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            RODRIGUEZ, 37, of Irvine, California, DOS SANTOS, 45, of Panama City, Panama, and MILLAN, 37, of Greensboro, North Carolina, are every charged with one depend of conspiracy to commit wire fraud, one depend of conspiracy to commit financial institution fraud, and one depend of conspiracy to commit cash laundering.   HUGHES, 44, of Newport Beach, California, is charged with one depend of conspiracy to commit financial institution fraud and one depend of conspiracy to commit cash laundering.  AGUILAR, 55, of Plano, Texas, is charged with one depend of conspiracy to commit wire fraud.

The wire fraud conspiracy and cash laundering conspiracy costs every carry a most time period of 20 years in jail, and the financial institution fraud conspiracy cost carries a most time period of 30 years in jail.  The most potential sentences are prescribed by Congress and are offered right here for informational functions solely, as any sentencings of the defendants can be decided by the decide. 

            Ms. Strauss praised the excellent investigative work of Special Agents from Homeland Security Investigations’ El Dorado Task Force, HSI Panama, the HSI Panama City Transnational Criminal Investigative Unit, and HSI New Orleans.  Ms. Strauss additional thanked the attorneys and investigators on the Securities and Exchange Commission whose experience and diligence have been integral to the event of this investigation.

The case is being dealt with by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Kiersten A. Fletcher, Cecilia E. Vogel, and Elizabeth A. Espinosa are answerable for the prosecution. 

The costs contained within the Indictment are merely accusations, and the defendants are presumed harmless until and till confirmed responsible.        

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^[1] As the introductory phrase signifies, everything of the textual content of the Superseding Indictment and the outline of the Superseding Indictment set forth herein represent solely allegations and each reality described needs to be treated as an allegation.

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