Founder of GemCoin Steve Chen was sentenced to 10 years in prison on Monday in California court. The crypto scheme defrauded 70,000 investors.
This was one of the largest early crypto investments schemes which targeted vulnerable investors and promised unrealistically high returns. Steve Chen defrauded investors of over $147 million.
Steve Chen, also known as “Li Chen” and “Boss”, pleaded guilty in Jun 2020 to one count of conspiracy to commit wire fraud and one count of tax evasion.
Chen was the owner and CEO of US Fine Investment Arts, Inc. (USFIA) and six other companies that used the same address. Between Jul 2013 and Sep 2015, Chen fraudulently promoted and solicited USFIA investments in one of the largest pyramid schemes ever prosecuted in this district.
He claimed that USFIA extracted amber and other gemstones from non-existent mines it “owned” in the United States, the Dominican Republic, Argentina and Mexico.
He ultimately managed to obtain $147 million from 72,000 victims spread globally.
The Department of Justice described USFIA as a “multi-level marketing program” which compensated investors for recruiting other investors with new USFIA investors’ payments
Prosecutors wrote in their sentencing memorandum:
"Because the primary focus was on recruiting other investors, rather than selling USFIA products to retail customers, the vast majority of investors were destined to lose money – while making Chen very wealthy."
Chen was also found guilty of tax evasion. He reported a gross income of $138,015 for 2014 when in fact it was actually around $4,816,193 and Chen owed $1,885,094 – before interest and penalties. The court ordered Chen to pay restitution of $1,885,094 to the IRS.
Reprinted from Leaprate, the copyright all reserved by the original author.