The owner of a Massachusetts food truck business pleaded guilty Tuesday to filing fraudulent loan applications to obtain $1.5 million in federal pandemic relief funds, federal prosecutors said, the Associated Press reported. Loc Vo, who was arrested last summer, pleaded guilty to wire fraud. He faces up to 20 years in prison at a sentencing hearing set for May 3. An attorney for Vo said that he acknowledged his applications for pandemic relief contained false statements and will return about $600,000, the remains of the funds he received. Prosecutors say Vo owned Smart Gourmet LLC, a food truck business in Massachusetts, as well as a dormant Maryland company. Between April 2020 and July 2021, Vo submitted loan applications on behalf of the businesses under three Small Business Administration pandemic relief programs, requesting about $1.5 million that was supposed to be used for rent, mortgage interest, payroll, and utilities, among other eligible expenses, prosecutors said. Instead, Vo transferred most of the money to brokerage accounts in his name to invest in the stock market, purchasing shares in an electric car manufacturer and a biotechnology company, among others, authorities said.
The New York Attorney General Letitia James is suing Alex Mashinsky, co-founder and former CEO of bankrupt crypto lender Celsius Network, alleging he defrauded hundreds of thousands of investors, including 26,000 New Yorkers, YahooFinance.com reported. The lawsuit claims that Mashinsky of lying to investors, concealing Celsius’s financial problems, and failing to meet state law registration requirements under his watch. "The law is clear that making false and unsubstantiated promises and misleading investors is illegal," James said in a statement. "Today, we are taking action on behalf of thousands of New Yorkers who were defrauded by Mr. Mashinsky to recoup their losses." Celsius Network was a lending platform that took in crypto and cash deposits from retail investors, and then lent them out to institutional investors to pay customers high rates of interest. In its statement, the New York AG's office said: "Mashinsky repeatedly claimed that Celsius made safe, low-risk investments and only lent assets to credible and reputable entities. However, investors' assets were routinely exposed to high-risk counterparties and strategies, many of which resulted in losses that Mashinsky concealed from investors."
A group of FTX users are asking a U.S. court to make sure they are the first to get repaid in the crypto exchange's bankruptcy proceedings, court filings from Tuesday show, CoinDesk.com reported. A class-action lawsuit filed with the U.S. Bankruptcy Court for the District of Delaware (the same court where the cryptocurrency exchange filed for chapter 11 bankruptcy protection in November) accuses former FTX executives of intentionally misappropriating customers' funds to fund risky strategies and a lavish lifestyle in the Bahamas "in direct violation of FTX’s own customer agreements and terms of service." "FTX executive defendants failed to institute any corporate controls and were therefore able to cause, direct or allow the misappropriation of billions of dollars in customer funds and digital assets deposited or held worldwide at FTX," the filing says. FTX founder Sam Bankman-Fried is facing felony charges in the U.S., and two other executives, Gary Wang and Caroline Ellison, have pleaded guilty to fraud charges. Plaintiffs of the new class-action lawsuit, exchange customers Austin Onusz, Cedric Kees van Putten, Nicholas J. Marshall and Hamad Dar and "all others similarly situated," want FTX customers to have "priority to repayment of customer property," and want the court to declare that any customer property held on behalf of customers don't belong to the company.
Real Housewives of Beverly Hills star Erika Jayne’s husband Tom Girardi faces claims he may have used a “straw” company — designed to appear as a staffing business — to funnel money fraudulently and illegally to himself and others, RadarOnline.com reported. According to court documents, the trustee presiding over the involuntary chapter 7 for Girardi’s now-defunct law firm Girardi Keese has filed a bombshell lawsuit seeking the return of $866,558 in alleged fraudulent transfers in the years before the bankruptcy. Girardi was once a well-respected lawyer in Los Angeles, but that all came crashing down in 2020. Jayne’s husband was accused of running his firm like a Ponzi scheme for years, with many of his former clients claiming he stiffed them on money owed. In bankruptcy court, claims totaling over $500 million were filed in the case, but Girardi had little assets to his name. Jayne has been dragged into numerous legal battles over her husband’s alleged financial misdeeds. The Bravo star has denied all allegations of wrongdoing.
Federal prosecutors are investigating an alleged cybercrime that drained more than $370 million from crypto exchange FTX hours after it filed for bankruptcy, Bloomberg News reported. The criminal probe into the stolen assets, launched by the Department of Justice, is separate from the fraud case against FTX co-founder Sam Bankman-Fried, the report added. A spokesperson for the Manhattan U.S. attorney's office said he could not confirm or comment on the issue, while DoJ and FTX did not immediately respond to a Reuters request for comment. FTX filed for U.S. bankruptcy last month, and Bankman-Fried stepped down as chief executive, after traders pulled billions from the platform in three days and rival exchange Binance abandoned a rescue deal. The U.S. Department of Justice accused Bankman-Fried of causing billions of dollars of losses related to FTX, which a U.S. prosecutor called a "fraud of epic proportions." Bankman-Fried founded FTX in 2019 and rode a boom in the values of bitcoin and other digital assets to become a billionaire several times over as well as an influential donor to U.S. political campaigns.
Sam Bankman-Fried's FTX had customers wire money to North Dimension, a mysterious company with a fake electronics retail website, NBC News reported. Money sent to North Dimension would end up funding Alameda Research's trading activity, the SEC alleged. The North Dimension website has been deactivated, but had misspelled words and claimed to sell laptops and phones. In the sprawling drama of Sam Bankman-Fried's fallen crypto empire, the obscure, low-profile North Dimension played a key role in putting FTX customer funds into the hands of affiliate Alameda Research and SBF's other ventures. And according to NBC News, North Dimension operated a fake online electronics retail shop, which has now been disabled and archived. The website did not disclose any connection to Bankman-Fried or his companies. The SEC complaint against ex-Alameda CEO Caroline Ellison and FTX cofounder Gary Wang — who have admitted to wrongdoing — alleges that FTX told clients to wire funds to North Dimension if they wanted to trade on the crypto exchange. But those were then used to fund Alameda's trading activities. "Bankman-Fried had directed FTX to have customers send funds to North Dimension in an effort to hide the fact that the funds were being sent to an account controlled by Alameda," the SEC said in the complaint. FTX filed for bankruptcy last month as reports surfaced that billions in customer funds were sent to Alameda.
A dual citizen of Sweden and the United Kingdom pleaded guilty to U.S. fraud and money laundering charges on Friday for selling a fake cryptocurrency alongside one of the United States' most-wanted fugitives, a woman referred to as the 'Cryptoqueen,' Reuters reported. Karl Greenwood, 45, was arrested in Thailand and extradited to the United States in 2018 for his role in selling the purported cryptocurrency OneCoin, which federal prosecutors in Manhattan call a pyramid scheme that defrauded investors out of $4 billion. He has been detained since his arrest. The plea comes as prosecutors in the Southern District of New York (SDNY) ramp up enforcement of financial crimes related to digital assets. On Tuesday, prosecutors unsealed an indictment of Sam Bankman-Fried, the founder of the FTX crypto exchange, on charges of stealing billions in customer deposits. "This guilty plea by the co-founder of OneCoin caps a week at SDNY that sends a clear message that we are coming after all those who seek to exploit the cryptocurrency ecosystem through fraud," Damian Williams, the top federal prosecutor in Manhattan, said in a statement. Prosecutors said Greenwood founded OneCoin in Sofia, Bulgaria in 2014 alongside Ruja Ignatova, a German citizen who prosecutors say is also known as the 'Cryptoqueen.' The FBI named her to its top ten most-wanted list in June, and prosecutors said on Friday she remains at large.
U.S. prosecutors on Tuesday accused Sam Bankman-Fried, the founder and former CEO of crypto currency exchange FTX, of fraud and violating campaign finance laws by misappropriating his customers' funds, saying the investigation is ongoing and "moving very quickly," Reuters reported. U.S. Attorney Damian Williams in New York said Bankman-Fried made illegal campaign contributions to Democrats and Republicans with "stolen customer money," saying it was part of one of the "biggest financial frauds in American history." "While this is our first public announcement, it will not be our last," he said, adding Bankman-Fried "made tens of millions of dollars in campaign contributions." Williams declined to say whether prosecutors would bring any charges against other FTX executives, emphasizing that the investigation was ongoing. He also declined to say whether any FTX insiders were cooperating with the investigation. Bankman-Fried made a court appearance on Tuesday in the Bahamas, where he was arrested on Monday and where FTX is based. A lawyer for Bankman-Fried requested that his client be released on $250,000 bail. Bahamian prosecutors have asked that Bankman-Fried be denied bail if he fights extradition. Read more.
In related news, Bahamas government officials worked closely with Sam Bankman-Fried and tried to help him regain access to key computer systems of bankrupt FTX Trading, lawyers for FTX said in a court filing before the failed crypto magnate was arrested on Monday, Bloomberg News reported. Before Bankman-Fried was blocked from FTX systems, the Bahamas asked him to mint new digital coins worth hundreds of millions of dollars and then transfer those tokens to the control of island officials, according to the legal team in control of FTX. The accusations escalate a battle between an American team of restructuring executives trying to collect FTX assets to repay creditors, and officials in the Bahamas. Liquidators in the island nation have asked a U.S. judge for access to FTX data controlled by their American counterparts. “It is a request for live, dynamic access that would be provided immediately to the government of the Bahamas and to Messrs. Samuel Bankman-Fried and Gary Wang, who are located in the Bahamas and working closely with Bahamian officials,” American lawyers wrote in a court filing yesterday. Wang is an FTX co-founder. In attempting to paint a portrait of coziness between Bankman-Fried and Bahamas authorities, the company’s U.S. lawyers called out a Nov. 9 email — just days before the bankruptcy — in which Bankman-Fried said he would be “more than happy” to open up withdrawals for all Bahamanian customers, allowing them to be made whole. “It’s your call whether you want us to do this — but we are more than happy to and would consider it the very least of our duty to the country, and could open it up immediately if you reply saying you want us to,” Bankman-Fried wrote, according to court papers. Read more.
Also, a growing group of non-U.S. customers of FTX.com, which currently counts up to around $1.6 billion in lost funds, has lawyered up and is looking to create an official customer committee in order to protect their rights of ownership over their assets on the exchange, CoinDesk.com reported. The non-U.S. FTX customers, led by Eversheds Sutherland attorneys Sarah Paul and Erin Broderick, had already formed the first FTX ad hoc group. “The rights of the non-U.S. customers and why they’re differently situated is really important,” said Paul, a former federal prosecutor in the U.S. Attorney’s Office for the Southern District of New York. “First, there is an irreconcilable conflict between the interests of the non-U.S. customers and the creditors of the other silos. The starkest example of that is the transfer of the $10 billion to Alameda from FTX.com. The terms of service situate the assets differently, as customer funds, as opposed to property of the estate.” Read more.
U.S. prosecutors, laying the groundwork for a potential fraud case against Sam Bankman-Fried and others involved in the collapse of cryptocurrency giant FTX, are scrutinizing how funds held by the exchange operator moved outside the U.S. as it was hurtling toward bankruptcy, Bloomberg News reported. Prosecutors are closely examining whether hundreds of millions of dollars were improperly transferred to the Bahamas around the time of FTX’s Nov. 11 bankruptcy filing in Delaware, the person said, asking not to be named without authorization to discuss the case publicly. As Justice Department officials embark on a sweeping investigation into how FTX handled customers’ cash and assets, they met this week with FTX’s court-appointed overseers to discuss materials they aim to gather, the person said. They’re also digging into whether FTX broke the law by transferring funds to Alameda Research, the bankrupt investment firm also founded by Bankman-Fried, an area of inquiry that has been reported previously. Bankman-Fried, who’s in the Bahamas and hasn’t been charged with any crimes, has admitted to grievous managerial errors at FTX but steadfastly denied that he ever knowingly misused customers’ funds.
