Texas-Based Crypto Scam
Published On: October 20, 2022

Stoltmann Law Offices is representing clients whose financial advisors have sold fraudulent cryptocurrency investments. In the past year, brokers have increasingly hawked investments that allegedly invest in digital cryptocurrencies. Some of these investments are fraudulent.

The U.S. Securities and Exchange Commission (SEC) recently filed an emergency action to stop an on-going fraudulent and unregistered crypto asset offering targeting Latino investors, run by defendants Mauricio Chavez and Giorgio Benvenuto through a company Chavez founded and controlled, CryptoFX, LLC. At the SEC’s request, a federal court issued a temporary restraining order halting the offering.

The SEC’s complaint alleges that, “in 2020, Chavez began holding paid classes for the ostensible purpose of educating and empowering the Latino community to build wealth through crypto asset trading. However, the complaint alleges Chavez had no background, education, or training in investments or crypto assets.”

According to the SEC, “the seminars were merely conduits for soliciting investors to give their money to CryptoFX, which Chavez would then supposedly use to conduct crypto asset and foreign exchange trading. As alleged, Chavez claimed, among other things, to have earned outsized returns from crypto trading and to have ‘literally made over 5 millionaires in the last year.’”

Chavez also allegedly “provided investors false documents that, among other things, grossly overstated his crypto experience and guaranteed that investors would not bear any losses. The defendants ultimately raised over $12 million from more than 5,000 investors.”

The crypto scheme had the classic hallmarks of a Ponzi Scheme, where brokers pocket investor contributions and lie about investing the funds. The initial pitch is usually about making high returns quickly with little or no risk.

The SEC alleges that “Chavez was actually running a Ponzi scheme; rather than use investor funds for crypto trading, Chavez used more than 90% of investor funds to pay fake returns to investors, support his lifestyle, and purchase and develop real estate that he and Benvenuto controlled. For his part, Benvenuto allegedly solicited a large investor into the scheme and diverted investor funds to himself and a company that he and Chavez owned, CBT Group, LLC. In total, the SEC alleges that Chavez and Benvenuto made approximately $2.7 million in Ponzi payments while diverting almost $8 million for their own use, including nearly $1.5 million that Chavez spent on cars, credit card payments, jewelry, adult entertainment, and a house in his wife’s name.”

The SEC seeks “permanent injunctions, civil penalties, and disgorgement of ill-gotten gains with prejudgment interest against each defendant, as well as bars against Chavez and Benvenuto from serving as officers or directors of any public company. The complaint names CBT Group as a relief defendant and seeks disgorgement of its ill-gotten gains along with prejudgment interest.”

Brokerage firms and investment advisors are legally required by FINRA to monitor what their financial advisors are selling – the investments must be vetted and authorized by the firms – and have an obligation to clients to only recommend suitable investments.  Investors can file FINRA arbitration complaints if these rules are broken.

If you invested with a financial advisor and lost money as a result, you may have a claim to pursue through FINRA Arbitration. Please contact Stoltmann Law Offices, P.C. at 312-332-4200 for a free, no obligation consultation with a securities attorney. Stoltmann Law Offices is a contingency fee law firm which means we do not get paid until you do!

Disclaimer

The posting on this site are mere OPINIONS and NOT statements of fact in any way whatsoever. The information should not be relied upon and there have been no findings made against the firms or individuals referenced on this site. In addition, this Blog is made available for educational purposes only and incorporates information from the web as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and Stoltmann Law Offices (161 N Clark Street 16th Floor Chicago, IL 60601). The Blog opinions should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

PLEASE NOTE THIS IS ADVERTISING AND IT IS NOT A NEWSPAPER ARTICLE OR POST FROM AN INDEPENDENT OR NON-BIASED, NEWS SITE, NEWS SOURCE OR NEWSPAPER.

Chicago Investment Fraud Attorneys Offering Nationwide Representation to Investors

If you have suffered financial losses because of the negligence or fraud of your financial advisor or broker through unsuitable investment recommendations, over-concentration, churning, misrepresenting risks, conversion or selling away, you have legal rights and options to pursue recovery of those losses.

Stoltman Law Securities and Investment Fraud Attorneys