Two Individuals Face Charges in $25 Million Crypto Ponzi Scheme
The U.S. Department of Justice unveiled an indictment recently charging Australian citizens David Gilbert Saffron, 51, and Vincent Anthony Mazzotta Jr., 52, of Los Angeles. The duo were charged with operating a fraudulent crypto Ponzi scheme that ultimately stole over $25 million from victims.
- The scheme promised victims high returns through an AI-powered automated trading bot.
- Funds were misappropriated for the organizers’ lavish personal expenses.
- Over $25 million was defrauded in promises of profiting from crypto markets.
- Fraudulently solicited further funds from victims by creating a fake “Federal Crypto Reserve” entity that claimed it could help victims recover losses.
Read more: KuCoin Settles With New York, Agrees To Pay $22 Million And Exit
DOJ indictment accuses the duo of promoting bogus investment schemes
The indictment alleges that Saffron and Mazzotta conspired to promote various bogus investment programs. These include programs like “Circle Society” and “Bitcoin Wealth Management” that offered victims exceptionally high yields through cryptocurrency trading.
However, instead of developing automated trading bots or investing the funds, the organizers allegedly misused the victims’ money. These include chartering private jets, funding extravagant hotel stays, renting luxurious mansions, and hiring personal chefs and security details to support their opulent lifestyles.
In order to execute the scheme, Saffron and Mazzotta allegedly conceived of a fictitious entity called the “Federal Crypto Reserve” that defrauded victims even further.
After victims invested in the initial sham trading programs, the defendants purportedly solicited additional funds for this entity by claiming it could investigate and pursue refunds for victims’ losses.
Read more: SBF Defense Lawyer Says It Was Impossible To Win The FTX Case
To evade detection, Saffron allegedly used numerous aliases like “David Gilbert,” “Dave Gabe,” “the Blue Wizard,” and “Bitcoin Yoda” while soliciting victims.
The conspirators also allegedly falsified records, concealed evidence, and utilized cryptocurrency “mixers” to mask the original source of the stolen funds. In addition, the indictment levies charges of conspiracy to commit wire fraud, wire fraud, conspiracy to obstruct justice, conspiracy to commit money laundering, and money laundering.
If convicted on all counts, Saffron and Mazzotta each face maximum sentences exceeding 100 years in federal prison. Officials also claim Saffron committed additional felonies while released on bail.
