According to a press release by the United States Department of Justice (DoJ), a nine-count indictment of wire fraud was unsealed on March 26 in a Brooklyn Federal Court, against Mr. Patrick McDonnell, the founder of the crypto-related venture, CabbageTech.
McDonnell who also operated under the alias “Jason Flack” was arrested for masterminding a scheme that defrauded investors of both cash and cryptocurrency. Specifically, the findings alleged that between 2014 and early 2018, McDonnel used “smoke and mirrors” to convince investors to pay his company CabbageTech “for advice and strategies on cryptocurrency trading.”
He also did not stop at providing what he claimed was expert advice but also engaged in buying and selling of cryptocurrencies for clients while in the real sense, neither he or his company had regulatory approval to do so.
When called by clients who wanted to withdraw funds invested with him, the release says that McDonnell will only send them fraudulent balance statements or come up with reasons why he was unable to redeem the funds at that time.
In total, the DoJ alleges that the fraudster defrauded ten investors of at least $194,000 in cash, 4.41 Bitcoin ($17,688), 206 Litecoin ($12,500), 620 Ethereum Classic ($2994), and 1,342,634 ($9398) Verge.
While the charges are still mere accusations until the suspect is proven guilty, the DoJ press release outlines that McDonnell could face a maximum of twenty years imprisonment if the claims are found as true.
Meanwhile, in recent times, McDonnell is not the only U.S resident that has come under scrutiny for crypto-related fraud. Stmarket.co reported that Jared Rice, the founder of the AriseCoin cryptocurrency pleaded guilty to a $4.2 million fraud case while Konstantin Ignatov and his older Ruja Ignatova, founders of OneCoin was also arrested for a similar offense.
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