Two Defendants Sentenced To 10 Years And Eight Years In Prison For Cryptocurrency Ponzi Scheme “IcomTech”

Damian Williams, the United States Attorney for the Southern District of New York, announced that defendants DAVID BREND and GUSTAVO RODRIGUEZ were sentenced to 10 years and eight years in prison, respectively, for their roles in the large-scale cryptocurrency Ponzi scheme known as IcomTech. The sentences were imposed by the Honorable Jennifer L. Rochon following a two-week trial in March of this year, in which BRENDand RODRIGUEZ were both convicted of conspiracy to commit wire fraud.

U.S. Attorney Damian Williams said: "David Brend and Gustavo Rodriguez were central to the IcomTech Ponzi scheme - Rodriguez as the chief architect of its sham website, Brend as a face-to-face salesman who peddled the bogus enterprise and its supposed lucrative returns for investors. Together with others, Brend and Rodriguez defrauded thousands of people out of millions of dollars. Both were found guilty by a unanimous jury. Now they will serve substantial prison sentences for their crimes."

According to the Indictment, public filings, public court proceedings, and the evidence presented at trial:

IcomTech launched in mid-2018, when codefendant David Carmona hired RODRIGUEZ to build a website for the scheme. IcomTech was a purported cryptocurrency mining and trading company that promised to earn its victim-investors ("Victims") profits in exchange for their purchase of purported cryptocurrency-related investment products. Carmona, BREND, and the other promoters of IcomTech, falsely promised their respective Victims, among other things, that profits from the companies' cryptocurrency trading and mining would result in guaranteed daily returns on Victims' investments. In reality, IcomTech did not engage in cryptocurrency trading or mining for its Investors, and BREND and IcomTech's other promoters used Victim funds to pay other Victims, to further promote the schemes, and to enrich themselves.

IcomTech promoters, including BREND, traveled throughout the U.S. and abroad, where they hosted lavish expos and small community presentations aimed at luring Victims to invest in the schemes, including in the Southern District of New York. During larger-scale events, IcomTech promoters presented on purported investment products and the compensation plan, encouraged Victims to invest as a means of achieving financial freedom, and boasted about the amount of money they were earning. IcomTech promoters often showed up at larger-scale events in expensive cars and wearing luxury clothing as a way of exhibiting their purportedly legitimate success from IcomTech.

Victims invested in the IcomTech by purchasing investment products from promoters using cash, checks, wire transfers, and actual cryptocurrency. Following a Victim's investment, a Victim would be provided with access to an online portal where the Victim could monitor the purported returns. While Victims saw "profits" accumulate on the online portal, most Victims were unable to withdraw any of these so-called profits and ultimately lost their entire investments. By contrast, IcomTech's promoters, including BREND, siphoned off, in some cases, hundreds of thousands of dollars in Victim funds, which they withdrew as cash, spent on IcomTech promotional expenses, and used for personal expenditures such as luxury goods and real estate.

RODRIGUEZ worked with Carmona to run IcomTech's website and online portal, where Victims were provided with personal accounts. Carmona and RODRIGUEZ discussed how to structure IcomTech's compensation plan and investment products; for example, RODRIGUEZ advised Carmona on where Carmona should set the purported daily returns on Victims' investment packages and on the size of the investment packages that Carmona should offer for sale.

At least as early as August 2018, Victims who attempted to withdraw money from their online portal accounts had difficulty doing so and, when they complained to promoters, they were met with excuses, delays, and hidden fees, if they were able to make any withdrawals at all. Despite these complaints, IcomTech promoters, including BREND, continued to promote IcomTech and accept Victims' investments, and RODRIGUEZ continued to maintain the website. As complaints mounted, IcomTech began offering a proprietary crypto-tokens for sale as a means of injecting liquidity into IcomTech. Promoters of the schemes claimed that these tokens, known as "Icoms", would eventually be worth a significant amount of money when they were accepted by companies for payment for goods and services. This was false. In reality, "Icoms" were essentially worthless and resulted in further financial loss to Victims. By in or about the end of 2019, IcomTech stopped making payments to Victims and IcomTech collapsed.

* * *

In addition to the prison sentences, RODRIGUEZ, 48, of North Hollywood, California, was ordered to pay forfeiture in the amount of $40,000, which represent RODRIGUEZ's direct proceeds from the crime, and restitution to victims in an amount to be determined. BREND, 50, of Tampa, Florida, was also ordered to pay forfeiture and restitution in amounts to be determined by Judge Rochon at future proceedings.

Mr. Williams praised the outstanding investigative work of Special Agents from Homeland Security Investigations' El Dorado Task Force. Mr. Williams also thanked the Securities and Exchange Commission and the Commodity Futures Trading Commission for their assistance.

The case is being handled by the Office's Illicit Finance and Money Laundering Unit. Assistant U.S. Attorneys Michael D. Maimin, T. Josiah Pertz, Benjamin A. Gianforti, and Cecilia E. Vogel are in charge of the prosecution.

Public link

Please use the above public link if you want to share this noodl on another website.