Two men have been charged in Los Angeles with allegedly operating a cryptocurrency Ponzi scheme that defrauded victims of more than $25 million, officials announced Tuesday.
Vincent Mazzotta Jr., 52, of the Hollywood Hills, and David Saffron, 51, of Australia, allegedly conspired to induce victims to invest in various trading programs that falsely promised to employ an artificial intelligence automated trading bot to trade victims’ investments in cryptocurrency markets and earn high-yield profits, according to the U.S. Attorney’s Office.
Mazzotta and Saffron promoted the investment programs under various names, including Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital and Cloud9Capital, papers filed in federal court state.
Rather than investing victims’ funds in cryptocurrency, the defendants allegedly misappropriated victims’ funds to pay for personal expenses including private chartered jet flights, luxury hotel accommodations, private mansion rentals, a personal chef and private security guards, prosecutors allege.
To execute the scheme, Mazzotta and Saffron allegedly created a fictitious entity called the Federal Crypto Reserve. The indictment alleges that, after inducing victims to invest in one of the cryptocurrency investment programs, the defendants fraudulently solicited victims to pay the Federal Crypto Reserve to investigate and recover the victims’ losses.
To conceal his identity, Saffron often allegedly solicited victims under various aliases, including David Gilbert and Dave Gabe, and under various online personas, including the Blue Wizard and Bitcoin Yoda, according to the U.S. Attorney’s Office.
Mazzotta and Saffron are charged with conspiracy to commit wire fraud, wire fraud, conspiracy to obstruct justice, conspiracy to commit money laundering and money laundering. Saffron is also alleged to have committed felonies while on pre-trial release.
If convicted, they each face up to 20 years in prison for each count of conspiracy to commit wire fraud and money laundering, up to 20 years in prison for each wire fraud count, up to 10 years for each money laundering count, and up to five years for conspiracy to obstruct justice, federal prosecutors said.
Saffron also faces up to 10 years in prison consecutive to any other sentence for committing felonies while on pre-trial release.