Key Takeaways
- A $5 million penalty has been ordered for the IcomTech Ponzi scheme for cheating investors through a fake crypto platform.
- The IcomTech Ponzi scheme was active in 2018-2019 and managed to cheat hundreds of victims.
- The company promised a 2.8% daily return to the investors suggesting the probability to double their investment within eight months.
- Between August 2018 and December 2019, IcomTech Ponzi accumulated over $1 million from almost 190 investors.
- Instead of funding the investor money for trading, the company the defendants used it for an extravagant lifestyle and promotional events.
- The IcomTech Ponzi scheme failed in 2019 because the company could not satisfy the withdrawal request.
IcomTech Ponzi scheme promoters have been ordered to pay a penalty of $5 million for defrauding investors through a fake crypto trading platform. Icomtech founders David Carmona and the four promoters of the scheme, Juan Arellano Parra, Moses Valdez, and David Brend violated the Commodities Exchange Act and Commodities Futures Trading Commission Regulations. The court found them guilty and ordered them to pay over $1 million in restitution to the defrauded customers. The court also imposed a $1 million civil monetary penalty on the four individuals.
Moreover, a consent letter was issued to Marco A Ruiz Ochoa admitting to his role in the scheme required to pay restitution to others. Thus the total penalty amounts to over 5 million dollars. The accused were banned from registering with the CFTC. The ban also applies to trading in the CFTC-regulated market.
IcomTech was founded as a Bitcoin mining and trading company that promised to provide profit to the investors for purchasing the purported crypto-related investment options. But in reality, they did not engage in crypto trading or mining on behalf of its investors; they were misusing the funds to attract investors, to promote the schemes, and to enrich themselves.
They offered its investors periodic returns of 100%. The scheme was active in 2018-2019 and managed to cheat hundreds of victims. The scheme promised its investors a daily return of 0.9% to 2.8%. IcomTech promoters traveled throughout the US and abroad and hosted expos and community presentations aimed at attracting investors.
The events presented purported investment products and compensation plans. The victims are encouraged to invest their savings as a means of achieving financial freedom by boosting the amount of money they can earn.
Investors invested cash, cheques, wire transfers, and actual cryptocurrency. Victims are provided with access to the online portal where they can monitor the returns. The victims were shown a profit as per the website but were unable to withdraw the amount.
The scheme failed in 2019 because the company could not satisfy the withdrawal request. The company came up with a solution in the form of Icom tokens. The distributed tokens were practically worthless and left the investors with bigger losses.
As per the complaint, the five individuals collected more than $1 million from 190 customers to trade Bitcoin and other cryptos on their behalf. But the money was not used for trading instead the money was inappropriately and left the victims with significant losses. The collected funds were used to bankroll a lavish lifestyle and attract more victims into the scheme.
A civil enforcement action was filed by CFTC initially in May 2023. This led to a significant legal action that included jail sentences and penalties for the culprits. Both the IcomTech founders Carmona and Brend received a sentence of 10 years in jail for their role in the IcomTech Ponzi scheme. Ochoa admitted his involvement in this scheme but received a lighter sentence of 5 years.
In the illicit funds, both Carmona and Ochoa forfeited more than 1.2 million dollars. Carmona surrendered $329,450 from the forfeited funds and Ochoa forfeited $914,000. Brend received a fine of $40000 along with his sentencing. The online portal manager of IcomTech was convicted of creating fraudulent investment packages and manipulating daily returns.
Taking Smart Initiatives for Investor Safety
Investors are worried about crypto scams and subsequent fund loss. It is advisable to take some proactive steps to avoid falling victim to such crypto scams. Here are some of the key factors to consider before investing:
- Have thorough research about the platform before investing. A comprehensive analysis can help you make informed decisions.
- Ensure that the platform has registration with relevant authorities. Avoid getting involved with unregistered platforms.
- Be cautious of high return promises. Such promises are a common characteristic of crypto scams.
- Evaluate their documentation and other significant details. Transparency is really important.
- You have to discontinue your transaction if you feel suspicious. Report the incident to the authorities as soon as possible.
- You can consider discussing this with a financial advisor if required. They can provide you with guidelines and goals for your investment.
