Headlines that Matter for Companies and Executives in Regulated Industries
Co-Founder of Fraudulent Cryptocurrency Sentenced to 20 Years in Prison
Karl Sebastian Greenwood, a citizen of Sweden and the United Kingdom and co-founder of the cryptocurrency OneCoin, was sentenced to 20 years in prison for his alleged role in a $4 billion fraud scheme. As described by prosecutors, OneCoin began operations in Bulgaria in 2014 and sold a fraudulent cryptocurrency with the same name through a multi-level-marketing (MLM) scheme. Around 2015, OneCoin began operating in the United States.
The government charged Greenwood and others with making various misrepresentations about OneCoin to secure over $4 billion in investments from approximately 3.5 million investors. These alleged misrepresentations include claiming that OneCoin’s value was based on market supply and demand though the value was actually set arbitrarily without regard to market forces. Greenwood also claimed to have a private blockchain to identify OneCoins and record historical transactions, when no public verifiable blockchain actually existed.
According to the government, OneCoin marketed its cryptocurrency through a global MLM network whereby OneCoin members would receive commissions for recruiting others to purchase cryptocurrency packages. As OneCoin’s top MLM distributor, Greenwood is alleged to have earned 5% of monthly OneCoin sales, totaling over $300 million. In addition to his 20-year prison term, Greenwood was ordered to pay approximately $300,000 in forfeiture. OneCoin’s other co-founder, Ruja Ignatova, remains at large and was added to the FBI’s Top Ten Most Wanted List in June 2022.
A link to the US Department of Justice’s (DOJ) press release can be found here.
Prison Inmate Pleads Guilty in COVID-19 Relief Fraud
Telvin Breaux, an inmate in a California prison, and three other co-defendants pleaded guilty to conspiracy and aggravated identity theft charges for their alleged roles in a $25 million unemployment benefits scheme. According to the DOJ, Breaux and his co-defendants obtained personal identifying information of other inmates, as well as patients and customers at hospitals, dentists’ offices, and other businesses where one of the co-defendants worked or had connections. Breaux and his co-defendants then used this information to submit fraudulent unemployment insurance claims to the California Employment Development Department (EDD). In connection with these false claims, Breaux and his co-defendants also made specific misrepresentations that the individuals whose information they stole were unable to work as a result of the COVID-19 pandemic.
In total, defendants are alleged to have submitted over 400 fraudulent claims totaling over $25 million to the EDD, $5.4 million of which was actually paid out and used by the defendants to purchase luxury vehicles, fund trips to Las Vegas, and pay rent and tuition. Each defendant faces a maximum of 22 years imprisonment as well as fines of $250,000.
A link to the DOJ’s press release can be found here.
Former NYC Non-Profit Finance Director Sentenced to 18 Months Imprisonment
Donna Murray, the former finance director of a New York City-based nonprofit financial services trade association with over 600 members, was sentenced to 18 months imprisonment for allegedly embezzling nearly half a million dollars from the nonprofit. The government alleges that Murray was the nonprofit’s sole finance department employee and was responsible for maintaining the organization’s books and records, handling accounts receivable and payable, and managing financial statements to outside auditors. In addition, Murray is alleged to have been the only employee with the ability to make wire transfers for the organization.
As detailed in the DOJ’s information, Murray was charged with a months-long embezzlement scheme in which she stole over $488,000 from the organization’s bank accounts through 105 unauthorized wire transfers to her personal account. Murray covered up the scheme by creating false entries in the organizations general ledger and transferring less than $10,000 in each transaction to avoid triggering bank reporting requirements. Prosecutors charged Murray with using the misappropriated funds to pay personal loans and purchase luxury items. For her conduct, Murray was sentenced to 18 months in prison.
A link to the DOJ’s press release can be found here.
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