The mastermind of what the US Department of Justice calls an “epic proportions” fraud has been sentenced to 10 years in prison. Its crypto program raised over $ 147 million and defrauded 72,000 investors. He is also ordered to pay the US Internal Revenue Service more than $ 1.8 million for tax evasion.
Counterfeit cryptocurrency scams
The US Department of Justice (DOJ) announced Monday that a California man, Steve Chen, had 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 fraud of “epic proportions”.
The DOJ stated that the 63-year-old “carried out a massive investment fraud in which a multinational company issued a fake digital currency allegedly backed by billions of dollars worth of amber and other gemstones.” Chen pleaded guilty last June to a conspiracy to commit wire fraud and a number of tax evasion.
Chen was the owner and CEO of US Fine Investment Arts Inc. (USFIA) and six other companies. The DOJ stated that from July 2013 to September 2015, it fraudulently promoted and solicited investments. He convinced investors that USFIA was a successful multi-level marketing company extracting amber and other gemstones 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 ultimately received approximately $ 147 million from 72,000 victims in one of the largest pyramid schemes ever persecuted in the district.
Investors were lured into buying USFIA packages that allegedly contained amber and other gemstones as well as USFIA points. They were told that these items could be converted into USFIA stock when the company went public, but they never did. Investments range from $ 1,000 to $ 30,000. USFIA offered “other rewards – including cash, travel, luxury cars, homes in the Los Angeles area, and EB-5 visas for immigrant investors” to investors who recruited others to purchase these “packages”, the Justice Department said.
As of September 2014, Chen and other “gem coins” were replacing “gem coins” with items that “weren’t in circulation in any industry, weren’t accepted by any merchant, and had no economic value,” the DOJ continued, adding:
They falsely advertised these “coins” as legitimate digital currency backed by the company’s gem stocks. Chen also falsely stated that these “coins” were already widely used in the jewelry and financial industries.
In addition, Chen committed tax evasion when he reported that his gross income for 2014 was $ 138,015 when it was approximately $ 4,816,193. He therefore owed the US Internal Revenue Service (IRS) $ 1,885,094 – before interest and penalties. The DOJ’s notification comes to the following conclusion:
Judge Walter ordered Chen to reimburse the IRS for $ 1,885,094 for the tax evasion.
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