The United States Department of Justice has announced that it has charged operators of cryptocurrency-based ponzi scheme AirBit Club with fraud and money laundering.
Five people have been charged for their alleged roles in the operation of the fraudulent money laundering ring which defrauded people around the world into investing in AirBit Club, which purported to be a cryptocurrency mining and trading company.
The five people charged with allegedly running the illicit operation are Pablo Renato Rodriguez, Gutemberg Dos Santos, Scott Hughes, Cecilia Millan and Jackie Aguilar.
Acting United States Attorney for the Southern District of New York Audrey Strauss said the work carried out by the US Homeland Security Investigations (HSI) was crucial in bringing charges against the five alleged operators:
“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.”
Operators bought luxury cars, jewelry and real estate
According to HSI special agent Peter Fitzhugh, the operators allegedly used proceeds from the law-breaking operation to buy luxury cars, jewelry and real estate:
“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.”
It is reported that over $20 million was laundered through the operation.
The allegations of the indictment claim that Rodriguez, Dos Santos, Hughes, Millan and Aguilar took part in the scheme that duped investors into promises of guaranteed profits from memberships in the AirBit Club scheme.
Dating back to the end of 2015, the operation was touted as a multilevel marketing club in the cryptocurrency industry in which members would earn passive daily returns on cryptocurrency mining and trading.
The five accused operators allegedly travelled around America as well as to countries in South America, Asia and Eastern Europe hosting ‘lavish expos’ and presentations promoting AirBit Club memberships.
Prospective members had to purchase their memberships in cash and could only see their daily returns through an online AirBit Club portal. Members could view their ever increasing profits in the portal but it’s reported that these numbers were completely false and that no cryptocurrency mining or trading actually took place.
It is also alleged that Hughes, who is a licensed attorney in California, previously represented Rodriguez and Dos Santos in a Securities and Exchange Commission investigation into another shady investment scheme.
Victims struggled to withdraw funds
The Department of Justice filing also reports that victims struggled to withdraw money from their AirBit Club online portals from 2016 onwards.
The scheme’s promoters offered various excuses and slapped on exorbitant ‘hidden fees’ that amounted to almost half of withdrawals processed being misappropriated by the scheme.
As late as April this year, one victim was notified through the AirBit Club Online Portal that their account had been closed and their entire investment lost due to the financial difficulties caused by the COVID-19 pandemic – which executed a specific clause in the Airbit Club Terms and Conditions.
Rodriguez, Millan and Dos Santos each face charges of one count of conspiracy to commit wire fraud, one count of conspiracy to commit bank fraud, and one count of conspiracy to commit money laundering.
Hughes is charged with one count of conspiracy to commit bank fraud and one count of conspiracy to commit money laundering while Aguilar is charged with one count of conspiracy to commit wire fraud.
The wire fraud and money laundering charges carry maximum sentences of 20 years in prison while the bank fraud charges can end in a 30 year maximum prison sentence.