Scammer jailed for $9 million cryptocurrency fraud
Homero Joshua Garza faces legal and financial consequences after scamming investors out of more than $9 million.
According to the FBI press release, Garza made misleading statements to his investors, then relied on Ponzi-scheme tactics to delay discovery of the scam. He pled guilty to one count of wire fraud and was sentenced to 21 months in prison and three years of supervised release and to pay restitution to his victims.
Garza established several virtual-currency businesses that sold computer equipment used to mine bitcoin, or purchased mining equipment on behalf of customers and housed them at a data center.
Garza then sold shares to investors. However, his mining center lacked the necessary infrastructure to generate the level of profits needed to support these shares, and returns fell short of what he promised.
Simultaneously, Garza created his own virtual currency, PayCoin. Garza failed to register his currency before offering investment opportunities, and he made false claims regarding partnerships with corporations and a $100 million financial reserve.
The FBI investigation relied on a Securities and Exchange Commission investigation that found Garza violated civil securities and criminal laws. Investigators traced Garza’s companies’ finances and interviewed employees and investors to determine how he defrauded thousands.
This $9 million scam adds up to $1 billion in crypto lost to scams in the U.S. in 2018, and that includes only those cases that were reported/investigated by authorities. The FBI reminds that all crypto-related products are treated as “securities” by the U.S. law and regulated by the Securities and Exchange Commission (SEC).