Reports have emerged today revealing another multi-level marketing, or ‘Ponzi’, scheme that is being investigated in Texas. In an announcement made earlier today, the Commodity Futures Trading Commission (CFTC) filed a complaint against four Texan residents for their involvement in what is believed to have been an illegal investment scheme.
For several months in late 2016, it’s alleged that the four defendants promoted a business as an investment opportunity driven by “master traders” with years of experience in cryptocurrency trading. As is common in multi-level marketing (MLM) scams, potential investors were offered bonuses for bringing on new clients. They were also guaranteed unrealistic returns on their initial investment and coerced into making further investments.
The defendants involved were named as Mayco Alexis Maldonado Garcia, Cesar Castaneda, Rodrigo Jose Castro Molina, and Joel Castaneda Garcia. Details of the scope of the operation involve up to $989,000 in illegally obtained funds from at least 27 unwitting victims.
MLM Scams still rife in Crypto
Despite the case dating back almost four years, the details closely mirror that of recent MLM scams in the cryptocurrency sector. Less than a month ago, the Texas State Securities Board filed action against a South African-based investment scheme called Mirror Trading International, successfully shutting down their activities in the US. Not long after, South Africa’s own Financial Services Conduct Authority (FSCA) began its own investigations into the company.
Despite the glaringly obvious signs of a Ponzi scheme, investors seem to keep falling for these scams. Just like the many before it, MTI also offers its investors unrealistically high monthly returns of 10% and financial incentives to bring on new investors. The company also holds no license to operate and was recently blocked by the broker FX Choice who claimed it has “virtually non-existent” trading activity.
However, despite the damning evidence and ongoing investigation, the MTI website remains operational, with recent reports claiming the company has received over $170 million in client funds.
Taking the rap
Another crypto scammer in the news today Ryan Felton who ran two fraudulent crypto companies in 2017, FLiK and Coinspark, and used rapper T.I for promotions. After stealing $1.3 million in investor funds through an ICO, the companies went bust and Felton disappeared with the money. Despite not receiving any money from the project, T.I today settled a $75,000 fine with the U.S. Securities and Exchange Commission (SEC) for his unwitting part in the scheme.
Felton, on the other hand, allegedly made several extravagant purchases with client funds, including a Ferrari, expensive property, and diamond jewelry. Government agencies are still attempting to recover the funds as Felton has so far managed to evade charges.