Assistant U.S. Attorneys Carl Brooker, Lisa Sanniti, and Mark Pletcher
SUMMARY OF PRESS RELEASE—September 16, 2022
SAN DIEGO — A Los Angeles man was sentenced in federal court today to 38 months in prison for his participation in BitConnect, a massive cryptocurrency investment fraud scheme that defrauded thousands of investors from the United States and abroad.
According to court documents, 44-year-old Glenn Arcaro conspired with others to exploit investor interest in cryptocurrency by fraudulently marketing BitConnect’s proprietary coin offering and currency exchange as a lucrative investment. Arcaro and others misled investors about BitConnect’s ‘loan program‘. As part of this program, Arcaro touted BitConnect’s alleged proprietary technology, known as “BitConnect Trading Bot” and “Volatility Software”, as being capable of generating substantial profits and guaranteed returns using the money. investors to trade on the volatility of cryptocurrency exchange markets.
In truth, however, BitConnect operated a classic Ponzi scheme by paying early BitConnect investors with money from later investors. Additionally, Arcaro and others have ensured that up to 15% of money invested in BitConnect goes directly into a slush fund to be used for the benefit of BitConnect’s owner and promoters. The BitConnect Ponzi scheme has trapped 4,154 victims from 95 countries, making it a truly global Ponzi scheme.
US Attorney Randy Grossman said, “The US Attorney’s Office for the Southern District of California is committed to ensuring justice for the victims of this Ponzi scheme. Putting a technical shine on a vintage scheme won’t stop this office’s pursuit of fair results. Grossman praised the work of the FBI’s field office in Cleveland, as well as the IRS-CI’s Financial Investigations and Border Crimes Task Force – a multi-agency task force based in San Diego and the counties. imperial which is funded by the Treasury Executive Office of Asset Forfeiture.
“Identifying and investigating criminals who commit complex financial crimes under the guise of a sound investment strategy is an FBI priority,” said Gregory Nelsen, FBI Special Agent in Charge of Cleveland.
“The global reach and thousands of victims affected by Mr. Arcaro underscores the fact that tax crimes that combine the allure of cryptocurrency with new technologies and a savvy marketing strategy are borderless and often start with a relationship. based on trust, hope and promise. The FBI, together with our federal, state, and local partners, will continue to work tirelessly to ensure that criminal accomplices no longer pose a threat to individuals or businesses in our society.
“Glenn Arcaro and his co-conspirators have created a global web of deception and fraud,” said IRS-CI Special Agent in Charge Tyler Hatcher. “IRS-CI and our law enforcement partners have diligently unraveled this web of lies, and today’s sentencing reminds us that fraud doesn’t pay. You will be caught and go to jail.
Arcaro admitted to earning no less than $24 million from the BitConnect program, which court documents say will now be refunded to investors in restitution or confiscated from the government. Arcaro has taken steps to transfer the BitConnect proceeds it earned to offshore accounts, turn some of the proceeds into precious metals storage, and obtain foreign passports. Arcaro’s goal was to avoid paying federal and state income taxes on his earnings from the scheme and to protect his assets from collection by the Internal Revenue Service.
Assistant U.S. Attorneys Carl Brooker, Lisa Sanniti, and Mark W. Pletcher of the Southern District of California and Attorney Kevin Lowell of the Criminal Division’s Fraud Section prosecuted the case. The Department of Justice’s Bureau of International Affairs and the United States Postal Inspection Service provided invaluable assistance to the investigation.
RESPONDENT Case number 21CR2542-TWR
Glenn Arcaro Los Angeles, California Age: 45
FEES SUMMARY
Conspiracy to Commit Wire Fraud – Title 18, USC, Section 1349
Criminal Forfeiture – Title 18, USC, Section 982
Maximum penalty: twenty years in prison, $250,000 fine or double the gross gain or loss resulting from the violation, whichever is greater; confiscation and restitution
AGENCIES
FBI
IRS Criminal Investigation – Financial Investigations and Border Crimes Task Force
United States Postal Inspection Service
