By SDCN Staff
San Diego, CA–A Los Angeles man was sentenced in federal court on September 16 to 38 months in prison for his participation in BitConnect, a massive fraudulent cryptocurrency investment scheme, which defrauded thousands of investors from the United States and abroad.
According to court documents, Glenn Arcaro, 44, conspired with others to exploit investor interest in cryptocurrency by fraudulently marketing BitConnect’s proprietary coin offering and digital currency exchange as a lucrative investment. Arcaro and others misled investors about BitConnect’s “Lending Program.” Under this program, Arcaro touted BitConnect’s purported proprietary technology, known as the “BitConnect Trading Bot” and “Volatility Software,” as being able to generate substantial profits and guaranteed returns by using investors’ money to trade on the volatility of cryptocurrency exchange markets.
In truth, however, BitConnect operated a textbook Ponzi scheme by paying earlier BitConnect investors with money from later investors. Furthermore, Arcaro and others ensured up to 15 percent of the money invested into BitConnect went directly into a slush fund to be used for the benefit of the owner and promoters of BitConnect. The BitConnect Ponzi scheme ensnared 4,154 victims from 95 countries making it a true worldwide Ponzi scheme.
“The U.S. Attorney’s Office for the Southern District of California is committed to ensuring justice for victims of this Ponzi scheme. Putting a technical sheen on a vintage scheme will not stop this office’s pursuit of a just outcome,” U.S. Attorney Randy Grossman said.
“Glenn Arcaro and his co-conspirators created a global web of deception and fraud,” said IRS-CI Special Agent in Charge Tyler Hatcher. “IRS-CI and our law enforcement partners diligently unraveled this web of lies, and today’s sentencing is a reminder that fraud does not pay. You will be caught, and you will go to prison.”
Arcaro admitted that he earned no less than $24 million from the BitConnect scheme, all of which, according to court documents, will now be repaid to investors in restitution or forfeited to the government. Arcaro took steps to transmit the BitConnect proceeds that he earned to offshore accounts, transform some of the proceeds into precious metals storage, and obtain foreign passports. Arcaro’s goal was to avoid paying federal and state income taxes on his income earned from the scheme and to shield his assets from collection by the Internal Revenue Service.
Arcaro could receive 20 years in prison, a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greater; forfeiture and restitution.
