A significant participant in a cryptocurrency Ponzi scheme that misled victims out of $13 million with assertions of utilizing AI-driven crypto trading bots and a fictitious government body has confessed.
The US Department of Justice revealed on Monday that Vincent Anthony Mazzotta Jr acknowledged his involvement in deceiving investors by guaranteeing high returns through phony investment companies employing AI-based crypto trading bots.
Mazzotta has confessed to money laundering and conspiracy to thwart justice, which together could result in a maximum sentence of 15 years in prison. A judge is yet to finalize the punishment.
The Justice Department initially indicted Mazzotta in late 2023 under a superseding indictment in the agency’s ongoing case against his supposed accomplice, David Saffron. Saffron has entered a plea of not guilty.
David Kagel was also implicated in relation to the scheme and in October received a sentence of five years’ probation and was ordered to reimburse over $13.9 million after admitting guilt to conspiracy to carry out commodity fraud.
Mazzotta employed a counterfeit government agency: DOJ
The DOJ indicated that Mazzotta utilized companies such as Mind Capital and Cloud9Capital to orchestrate the scheme and abscond with millions in investor funds.
It further stated that Mazzotta assisted in the creation of a bogus government body dubbed the Federal Crypto Reserve and charged victims thousands under the pretense of probing his firms, which “had vanished with the victims’ investments.”
Tyler Hatcher, special agent overseeing the IRS Los Angeles Field Office, stated that by utilizing fabricated “US governmental entities to validate their frauds,” it drew the “attention of genuine federal agencies.”
Funds from victims spent on an extravagant lifestyle
The Justice Department asserted in its original indictment that between December 2017 and July 2023, users’ contributions to the firms were laundered through crypto mixers and subsequently spent on a variety of lavish items such as private chartered flight trips, upscale hotel stays, private mansion rentals, a personal chef, and private security personnel.
The defendants allegedly utilized a multitude of fictitious companies while conducting the scheme, including Circle Society, Bitcoin Wealth Management, and Omicron Trust.
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Prosecutors reported that Mazzotta also operated under the aliases Anthony, Delta Prime, and Director Vinchenzo, while Saffron adopted the pseudonyms David Gilbert, Dave Gabe, The Blue Wizard, and Bitcoin Yoda.
“Bitcoin Yoda” set to stand trial
The DOJ mentioned that Mazzotta was encouraged to collaborate with other unnamed co-conspirators to hide and destroy evidence at Saffron’s residence after Saffron was indicted in June 2022.
Mazzotta allegedly destroyed an iPad and fabricated business documents to obscure his participation in the scheme.
Saffron has remained incarcerated since August 2023 and is facing trial on Sept. 16. He is charged with conspiracy to commit wire fraud, wire fraud, conspiracy to obstruct justice, conspiracy to commit money laundering, and money laundering.
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