Pablo Renato Rodriguez, a pivotal figure behind the extensive crypto-centric pyramid scheme known as AirBit Club, has been handed a 12-year prison sentence by US District Judge George B. Daniels.
Rodriguez, in collaboration with associates like Gutemberg Dos Santos, masterminded the AirBit Club deception. They enticed naive investors with assurances of assured returns stemming from cryptocurrency mining and trading activities, as disclosed by the US Attorney’s Office for the Southern District of New York on Tuesday.
Rodriguez’s endeavors resulted in the fraudulent extraction of approximately $100 million from unsuspecting investors.
Sale of club ‘memberships’
Investors were enticed into the scheme through the promise of purchasing club “memberships” using cash, with the expectation of receiving daily returns on their investments.
The brains behind the operation, including its founders and promoters, positioned it as a multilevel marketing (MLM) venture that would profit from its engagements in cryptocurrency activities.
However, the truth was starkly different. No genuine cryptocurrency mining or trading was being conducted. Instead, the culprits misused the funds for their personal enrichment.
These deceitful operators traveled the world, orchestrating events and showcases to persuade individuals into buying into the AirBit Club. Victims who tried accessing their funds met with obstructions, concealed charges, and a myriad of excuses.
To further conceal their malevolent operations, the schemers adopted multiple strategies. This included laundering their illicit profits via various bank accounts and an attorney trust account overseen by Scott Hughes, a legal practitioner based in California.
Ordered to forfeit $100 million
The collaborators of the scheme are now mandated to surrender around $100 million, which were the fraudulent gains. This sum encompasses assets such as Bitcoin (BTC), US dollars, and real estate holdings.
US Attorney Damian Williams emphasized that the sentencing of Rodriguez stands as a clear cautionary message for those contemplating exploiting investors through cryptocurrency-related deceptions.
Not the first time
Rodriguez and Dos Santos have previously run afoul of the Securities and Exchange Commission (SEC), facing lawsuits over another deceptive pyramid-style investment venture named Vizinova. The duo was subsequently required to pay $1.7 million in disgorgement and penalties.
Hughes, in his capacity as a practicing attorney, facilitated the removal of adverse content about both scams from the internet. This, in turn, paved the way for Rodriguez and Dos Santos to persist in their deceitful activities, duping investors yet again.
To date, Dos Santos, Hughes, Cecilia Millan, and Karina Chairez have all admitted guilt to a slew of charges, which encompass wire fraud conspiracy, conspiracy to launder money, and conspiracy to commit bank fraud.
While they await their respective sentences, Rodriguez has been directed to part with $65 million and cede a range of assets and real estate properties.
In response to the developments, US Attorney Damian Williams stated, “Rodriguez is emblematic of the growing trend of individuals leveraging cryptocurrencies to perpetrate fraud. The verdict handed down today stands as a stern warning, aimed at discouraging potential wrongdoers from attempting to deceive others with alluring yet deceptive cryptocurrency investment pitches.”