The CEO of New York-based company CabbageTech has been charged with wire fraud in conjunction with a scheme to defraud crypto investors.
Patrick McDonnell, also known as ‘Jason Flack’ from Staten Island, solicited investments through Facebook and Twitter, allegedly stealing the investments for personal use.
The charges were announced by Richard P. Donoghue, US attorney for the Eastern District Court of New York, and Phillip R. Bartlett, Inspector-in-Charge, US Postal Inspection Service, New York Division (USPIS).
As alleged in the indictment, between November 2014 and January 2018, McDonnell portrayed himself as a seasoned trader in crypto and promised his customers he would provide trading advice alongside trading on their behalf.
Beginning in May 2016, McDonnell made similar representations through his Staten Island-based company CabbageTech, otherwise known as Coin Drop Markets.
Reportedly, neither CabbageTech nor McDonnell provided trading services. Instead, McDonnell had allegedly sent investors false bank balances purportedly showing their investments had been profitable.
When victims began requesting their money back, McDonnell reportedly offered excuses for delays in repayment and then stopped responding altogether.
In total, it is believed McDonnell defrauded 10 victims of at least $194,000 in US dollars, 4.41 Bitcoin, 206 Litecoin, 620 Ethereum Classic, and 1,342,634 Verge.
USPIS Special-Agent-in-Charge Phillip Bartlett commented: “The defendant, Patrick K. McDonnell, used smoke and mirrors to allegedly dupe investors into paying his company – CabbageTech – for advice and strategies on cryptocurrency trading.
“However, Postal Inspectors and their federal law enforcement partners unmasked McDonnell and his scheme to defraud investors, and brought him to justice for his alleged criminal actions.”
The report from the Eastern District of New York does stipulate McDonnell is presumed innocent until proven guilty.
If McDonnell is convicted, he could face up to 20 years in prison.
Interested in reading more crypto crime-related news? Discover how Mark Karpeles, former CEO of the defunct Mt Gox exchange, has been given a two-and-a-half year suspended sentence for data tampering.
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