Homero Joshua Garza, the fraudster who scammed more than $9 million from investors in his virtual currency, PayCoin, has been sentenced to jail, the Federal Bureau of Investigation (FBI) announced Monday. Garza will serve 21 months in prison followed by three years supervised release after pleading guilty to one count of wire fraud back in 2017, in addition to paying restitution to his victims.
A cryptocurrency fraudster, who defrauded investors out of millions, was sentenced to prison and ordered to pay restitution to his victims. https://t.co/mwiFznX0Bk
— FBI (@FBI) February 12, 2019
“Guaranteed” Earnings
Garza founded and operated several Connecticut-based businesses, principally GAW Miners, ZenMiner, and ZenCloud, between 2014 and 2015. These businesses sold Bitcoin mining equipment, offered shares in a cryptocurrency mining operation, and created a virtual currency called PayCoin which they sold to the public, where a $20 floor price was guaranteed. Instead, the value of the coin soon collapsed and became worthless. Garza fraudulently drew investors to his enterprises through a series of misleading and false statements about his companies’ capabilities, partnerships, and financial backing, eventually resorting to Ponzi-scheme tactics to delay detection of his fraud.
FBI Gets Involved
The FBI’s attention was drawn to Garza’s operations in late 2015 following a Securities and Exchange Commission (SEC) investigation, prompted by complaints from victims. The SEC’s investigation resulted in a court-issued injunction against Garza and his firms, but Garza’s conduct violated criminal laws, as well as civil securities laws, resulting in an FBI investigation.
During the operation it wasn’t hard to see where Garza’s money way going – he owned a Ferrari, a Lamborghini, and a Maserati, as well as traveling on private jets. Garza was sentenced in September 2018 and can consider himself lucky to be serving only 21 months, as the FBI initially filed three charges against him, but accepted a guilty plea of wire fraud to avoid a court case. Garza’s case is one of the more clear cut cryptocurrency scams, while recent months and years have seen more devious attempts at fraud.
