011: Ponzi Scheme in Diamonds and Cryptocurrency


A businessman raised capital from investors with false promises that he had assets to guarantee their investment—he did not have the collateral that he represented. The businessman also promised to pay investors a high yield. When his scheme began to fail, he launched another deceptive fraud to lure in new investors. Rather than use funds appropriately, he relied upon new investor money to repay old investors and to fund a lavish lifestyle. His crimes represent a classic Ponzi scheme. This Ponzi scheme led to more than $20 million in losses for investors, and a lengthy federal prison sentence for the perpetrator.

All the information in this case study comes from the SEC complaint, the DOJ press release, and criminal information filed on the court docket.