The US Attorney’s Office in the Eastern District of New York recently announced a nine-count indictment against a Staten Island resident, named Patrick McDonnell.
According to an investigation by the US Department of Justice (DoJ), McDonnell had allegedly solicited investments on Twitter and Facebook. However, the DoJ noted in a press release that the “defendant reportedly stole the money for personal use.”
“Wire Fraud In Connection With Scheme To Defraud Investors"
As detailed in the release, the federal court in Brooklyn, New York charged McDonnell - who also used the alias “Jason Flack” - with “wire fraud in connection with a scheme to defraud investors” in cryptocurrency. The defendant was taken into police custody and an arraignment was held later in the day before the US Magistrate Judge Sanket J. Bulsara.
Charges formally announced against the defendant were as follows: “Defrauding investors by making false promises and sending them fraudulent balance statements, hiding the fact that he was stealing their money for his personal use.”
Attorney Richard P. Donoghue, who announced the charges with Philip R. Bartlett, the Inspector-in-Charge at US Postal Inspection Service in New York, further noted:
The defendant’s fraud ends now, he will be held responsible for his criminal conduct.
Using “Smoke And Mirrors” To Dupe Investors
Acknowledging the “cooperation and assistance” from the US Commodity Futures Trading Commission (CFTC) in investigating the case, Bartlett stated:
The defendant, Patrick K. McDonnell, used smoke and mirrors to allegedly dupe investors into paying his company—CabbageTech, for advice and strategies on cryptocurrency trading.
Despite the defendant’s persistent efforts to bypass authorities in order to engage in fraudulent activities, Bartlett noted that US “Postal Inspectors and their federal law enforcement partners unmasked McDonnell and his scheme to defraud investors.” Moreover, the defendant has now been “brought ... to justice for his alleged criminal actions,” case prosecutors stated.
According to the indictment against McDonnell, between November 2014 and January 2018, the defendant had “portrayed himself as an experienced [cryptocurrency] trader.” McDonnell had also “promised customers he would provide trading advice, and purchase and trade [cryptocurrency] on their behalf.”
In May 2016, McDonnell made “similar representations through his Staten Island-based company, CabbageTech, Corp.” - which was commercially known as “Coin Drop Markets.”
Although the defendant claimed on several occasions his firm, CabbageTech offered crypto-related investment services, “neither McDonnell nor CabbageTech provided investment services,” the court documents stated.
Making Over $190,000 and 4 BTC, Among Other Cryptos
While not providing financial services, McDonnell reportedly “sent investors false balance statements purportedly showing that their investments had been profitable, and stole their money for his personal use.”
When his clients asked that their funds be reimbursed, McDonnell allegedly made "excuses for delays in repayment, and eventually stopped responding at all,” case prosecutors noted. According to court filings:
In total, McDonnell defrauded at least 10 victims of at least $194,000 in [USD], 4.41 Bitcoin (BTC), 206 Litecoin (LTC), 620 Ethereum Classic (ETC) and 1,342,634 Verge (XVG).
As mentioned, the charges against McDonnell are presently “allegations, and the defendant is presumed innocent unless and until proven guilty.” However, McDonnell “faces a maximum” 20-year prison sentence if found guilty.