{"id":50495,"date":"2022-08-01T13:33:18","date_gmt":"2022-08-01T20:33:18","guid":{"rendered":"https:\/\/cjnotebook.com\/?p=50495"},"modified":"2022-08-01T13:33:40","modified_gmt":"2022-08-01T20:33:40","slug":"two-men-who-conned-investors-out-of-1-9-million-via-cryptocurrency-sent-to-federal-prison","status":"publish","type":"post","link":"https:\/\/cjnotebook.com\/?p=50495","title":{"rendered":"Two Men Who Conned Investors Out of $1.9 Million Via Cryptocurrency Sent to Federal Prison"},"content":{"rendered":"<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\"><strong>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0SANTA ANA, California\u00a0\u2013 <\/strong><\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-50477 alignleft\" src=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/qtq80-79ONyS-300x200.jpeg\" alt=\"\" width=\"366\" height=\"244\" srcset=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/qtq80-79ONyS-300x200.jpeg 300w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/qtq80-79ONyS-1024x683.jpeg 1024w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/qtq80-79ONyS-768x512.jpeg 768w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/qtq80-79ONyS-1536x1024.jpeg 1536w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/qtq80-79ONyS-2048x1365.jpeg 2048w\" sizes=\"auto, (max-width: 366px) 100vw, 366px\" \/>Two Orange County men were each sentenced Monday to federal prison for conning more than 2,000 investors into purchasing a cryptocurrency, officials stated.<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">The cryptocurrency purportedly provided exclusive access to a profitable trading program, according to authorities.<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">The men used most of the $1.9 million raised to line their own pockets, officials stated.<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 U.S.District Judge Cormac J. Carney sentenced\u00a0 Jeremy David McAlpine, 26, of Fountain Valley, to three years in prison.<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-50357 alignright\" src=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/40657-300x300.jpg\" alt=\"\" width=\"300\" height=\"300\" srcset=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/40657-300x300.jpg 300w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/40657-1024x1024.jpg 1024w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/40657-150x150.jpg 150w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/40657-768x767.jpg 768w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/40657.jpg 1280w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/>\u00a0Also, in a separate hearing Monday, Judge Carney sentenced Zachary Michael Matar, 29, of Huntington Beach, to 30 months in federal prison. <\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">Judge Carney scheduled a September 26<b>\u00a0<\/b>restitution hearing in this case.<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 McAlpine and Matar each pleaded guilty in August 2021 to one count of securities fraud.<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In 2017, McAlpine and Matar founded Dropil Inc., a Belize-based company operating out of Fountain Valley. Dropil provided and managed investments in digital assets, including a cryptocurrency called DROPs that McAlpine and Matar developed. <\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-50324 alignleft\" src=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/wyxqqpyfnk8-200x300.jpg\" alt=\"white and black printer paper\" width=\"200\" height=\"300\" srcset=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/wyxqqpyfnk8-200x300.jpg 200w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/wyxqqpyfnk8-683x1024.jpg 683w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/wyxqqpyfnk8-768x1152.jpg 768w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2022\/07\/wyxqqpyfnk8.jpg 800w\" sizes=\"auto, (max-width: 200px) 100vw, 200px\" \/>McAlpine and Matar were also primarily responsible for the development of Dropil\u2019s digital asset trading program, an automated trading bot called \u201cDex,\u201d which could be used exclusively with DROPs.<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 McAlpine and Matar induced investors to purchase DROPs by making false claims about DROPs, the functionality, and profitability of Dex, and the number of investors and volume of investment in DROPs that had purportedly already been achieved and purportedly enhanced \u2013 through the operation of supply and demand \u2013 the value of DROPs. <\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">Dex was said to provide an \u201cexpertly managed portfolio balancing algorithm [that] manages risk,\u201d according to information published on Dropil\u2019s website. <\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-6172 alignright\" src=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/09\/FBI-Insider-Trading-300x228.jpg\" alt=\"\" width=\"300\" height=\"228\" srcset=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/09\/FBI-Insider-Trading-300x228.jpg 300w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/09\/FBI-Insider-Trading-45x35.jpg 45w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/09\/FBI-Insider-Trading.jpg 500w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/>The DROP tokens were said to \u201censure privacy while also offering added value and exclusivity.\u201d Dropil further promised that Dex\u2019s trading would generate profits that would be distributed as additional DROP tokens every 15 days.<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Beginning in late 2017, McAlpine and Matar began an unregistered offer and sale of DROPS on Dropil\u2019s website. In January 2018, the defendants launched an initial coin offering (ICO) for the sale of DROPs, again through Dropil\u2019s website, which continued through March 2017. <\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">Neither McAlpine, Matar nor Dropil was registered with the Securities and Exchange Commission (SEC) as a broker or dealer.<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-229 alignleft\" src=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2013\/12\/FBI-300x165.png\" alt=\"\" width=\"300\" height=\"165\" srcset=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2013\/12\/FBI-300x165.png 300w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2013\/12\/FBI.png 615w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/>To induce investors to purchase DROPs, McAlpine and Matar made a series of false statements to investors in a \u201cWhite Paper.\u201d The &#8220;White Paper&#8221; was published on Dropil\u2019s website and on its Twitter account, promoting the cryptocurrency\u2019s supposed success, officials stated.<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">Among other false statements, the White Paper asserted that trading with Dex would produce average annual returns of between 24% and 63% depending on the \u201crisk profile\u201d selected by the investor.<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In response to investigative subpoenas from the SEC, the defendants manufactured fake Dex profitability reports, giving the false appearance that Dex was operational and profitable. <\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-1073 alignright\" src=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/02\/criminal_justice_jurisprudence-2.jpg\" alt=\"\" width=\"299\" height=\"188\" srcset=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/02\/criminal_justice_jurisprudence-2.jpg 299w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/02\/criminal_justice_jurisprudence-2-120x76.jpg 120w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/02\/criminal_justice_jurisprudence-2-265x168.jpg 265w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/02\/criminal_justice_jurisprudence-2-284x180.jpg 284w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/02\/criminal_justice_jurisprudence-2-274x173.jpg 274w\" sizes=\"auto, (max-width: 299px) 100vw, 299px\" \/>Defendants also fabricated an investor spreadsheet for the SEC that purported to show that Dropil had successfully raised $54 million from 34,000 investors both foreign and domestic. <\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">In fact, the ICO raised under $2 million from fewer than 2,500 investors.\u00a0 McAlpine also provided false sworn testimony to the SEC about the amount of money raised in the ICO, as well as about Dex and it purportedly profitable trading activity.\u00a0<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">In total, the defendants obtained approximately $1.8 million from 2,472 investors through the sale of approximately 629 million DROPs. McAlpine and Matar used the invested money to fund disbursements to themselves and their associates.<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">In sentencing memoranda, prosecutors argued that the defendants\u2019 \u201coffenses were serious and troubling: They caused significant financial harm to an extremely large number of victims and entailed efforts to derail law enforcement\u2019s attempts to root out and address wrongdoing.\u201d<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">As part of the settlement of a separate civil case brought by the SEC, Dropil Inc., McAlpine and Matar in July 2021\u00a0<a href=\"https:\/\/www.sec.gov\/litigation\/litreleases\/2021\/lr25136.htm\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">agreed to permanent injunctions<\/a> barring further fraudulent conduct and prohibiting them from directly or indirectly participating in the offer, purchase, or sale of digital securities, according to officials.<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">The FBI investigated this matter.<\/span><\/p>\n<p class=\"yiv0450262897MsoNormal\" style=\"text-align: center;\"><span style=\"font-size: 24px;\">Assistant U.S. Attorney Ranee A. Katzenstein, Chief of the Major Frauds Section, prosecuted this case.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0SANTA ANA, California\u00a0\u2013 Two Orange County men were each sentenced Monday to federal prison for conning more than 2,000 investors into purchasing a cryptocurrency, officials stated. The cryptocurrency purportedly provided exclusive access&#8230;<\/p>\n","protected":false},"author":1,"featured_media":50496,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3256],"tags":[],"class_list":["post-50495","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-federal-courts-cases"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Two Men Who Conned Investors Out of $1.9 Million Via Cryptocurrency Sent to Federal Prison<\/title>\n<meta name=\"description\" content=\"\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0SANTA ANA, California\u00a0\u2013 Two Orange County men were each sentenced Monday to federal prison for conning more than 2,000 investors into\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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