In a major case of fraud involving cryptocurrency, two men were sentenced to significant prison time for their involvement in a large-scale Ponzi scheme known as IcomTech. The defendants, David Brend and Gustavo Rodriguez, were sentenced to 10 years and 8 years in prison, respectively, for their roles in defrauding thousands of investors. The sentencing came after a two-week trial earlier this year in which both were found guilty of conspiracy to commit wire fraud.
The IcomTech Scheme: What Happened?
The fraudsters behind IcomTech launched their scheme in 2018. The company promised to help people make money by investing in cryptocurrency. According to the criminals, they would mine and trade cryptocurrencies, using the profits to pay investors daily returns on their investments. However, this was all a lie. IcomTech never engaged in any cryptocurrency mining or trading. Instead, it operated like a classic Ponzi scheme, using money from new investors to pay off earlier investors.
IcomTech promoters, including Brend and Rodriguez, actively traveled to different cities and countries, hosting lavish events to lure people into the scam. These events featured big promises of wealth and financial freedom. They showed off expensive cars, luxury clothing, and lifestyle, all in an effort to make the scam appear legitimate. At these gatherings, they would convince people to invest in the company’s so-called cryptocurrency products.
How Victims Were Duped
Victims of IcomTech were asked to invest by purchasing products that they were told would yield high returns. These investments could be made using cash, checks, wire transfers, or even real cryptocurrencies. Once an investment was made, victims were given access to an online portal where they could see their “profits” growing. However, the profits displayed on the portal were fake. Most victims were unable to withdraw their money or any of the profits, leaving them with nothing in the end.
As more people invested, the fraudsters, including Brend, took large amounts of money from the scheme. They spent this stolen money on things like personal luxuries and promotional expenses for IcomTech. In reality, no actual cryptocurrency trading or mining was ever taking place. IcomTech’s only real activity was taking money from new investors to pay off earlier investors and promote the scam.
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Rodriguez, who was crucial in running the company’s website, worked closely with the scheme’s creator to design the online portal. He also gave advice on how to structure the investment products and compensation plans to maximize the fraud. As the scheme progressed, more and more investors began complaining about being unable to access their money. When these complaints arose, the promoters made excuses, delayed payments, or imposed hidden fees, making it even harder for victims to get their money back.
The Collapse and Consequences
By the end of 2019, IcomTech had completely collapsed. At this point, it stopped paying out any returns to its victims. The company’s promoters, including Brend and Rodriguez, continued to promote the scheme even as the fraud was becoming clear. They even started selling fake cryptocurrency tokens called “Icoms” in an attempt to inject more money into the failing scam. These tokens, however, were worthless, and only led to more financial loss for the victims.
As a result of their actions, both Brend and Rodriguez were convicted of conspiracy to commit wire fraud. The court sentenced Rodriguez, who is 48 years old and lives in California, to eight years in prison. He was also ordered to pay $40,000 in forfeiture, representing the money he personally made from the scheme. Brend, 50 years old and from Florida, received a 10-year prison sentence. Both men will also be required to pay restitution to the victims, though the exact amounts are still to be determined.
This case highlights the dangers of fraudulent cryptocurrency schemes that prey on people’s desire to make quick money. It also serves as a reminder that not all investment opportunities are legitimate, and people should be cautious before parting with their money.
