US DOJ Indicts Two Men for Perpetrating $25M Crypto Ponzi Scheme

The United States Department of Justice (DOJ) has indicted two men for perpetrating a crypto Ponzi scheme that defrauded investors of approximately $25 million.

According to a press release from the Justice Department, 51-year-old David Gilbert Saffron of Australia and 52-year-old Vincent Anthony Mazzotta Jr. of California operated a fraudulent crypto investment scheme that lured victims with false promises of high returns.

DOJ Charges Two Men for Operating Crypto Scheme

Per court documents, Saffron and Mazzotta allegedly presented their scheme to investors as programs that used artificial intelligence automated trading bots to trade assets in the crypto market.

The duo promoted the programs under several names, including Bitcoin Wealth Management, Cloud9Capital, Omicron Trust, Circle Society, and Mind Capital. Saffron and Mazzotta created a false entity called the Federal Crypto Reserve, which purported to recover lost digital assets to make the scheme seem legitimate.

The alleged fraudsters created a pattern of inducing the victims to put their money in one of the crypto investment programs and turning around to ask the investors to pay the Federal Crypto Reserve to investigate and recover their losses. Saffron masterminded this strategy by approaching victims under multiple aliases, including David Gilbert and Dave Gabe, under online personas like the Blue Wizard and Bitcoin Yoda.

Destroying and Concealing Evidence

While Saffron and Mazzotta continued the scheme, they used $25 million worth of investors’ crypto assets to fund their luxurious lifestyles. They paid for a personal chef, luxury hotel accommodations, private mansion rentals, security guards, and chartered jet flights.

In addition, the duo conspired to destroy evidence by falsifying records and obstructing official proceedings. They also conspired to conceal the sources and location of victims’ investments by using crypto tumblers and mixers and implementing methods like blockchain hopping.

The Justice Department has charged Saffron and Mazzotta with conspiracy to commit wire fraud, conspiracy to obstruct justice, conspiracy to commit money laundering, and money laundering.

While they each face maximum penalties of 20, 10, and five years in prison for several counts, Saffron faces an additional 10-year jail term for allegedly committing felonies while on pretrial release. He was previously charged in September 2019 by the Commodity Futures Trading Commission with engaging in a fraudulent scheme.

Meanwhile, the DOJ has asked victims of the scheme to reach out via a designated contact line and email.