A man from Michigan has been ordered to repay about $210,000 for his role in a cryptocurrency scam. The fraudster solicited investments from two people, promising them large returns, but he used the investment proceeds to buy a car. In addition to the restitution, the Attorney's Office of the District of Montana sentenced Thomas to one year and one day in prison followed by three years of supervised release.
What has happened?
A Michigan man has been sentenced to one year in prison after defrauding victims out of more than $200,000.
What does this mean?
According to a press release by the U.S Attorney's Office of the District of Montana, 35-year-old James Matthew Thomas, of Michigan, pleaded guilty in October 2019 to wire fraud and money laundering.
He has been sentenced to one year and one day in prison followed by three years of supervised release, and has been ordered to pay $208,718 restitution.
The prosecution claimed that Thomas had contacted the first victim, who lives in Missoula, through LinkedIn in March 2018, having met several years earlier while working together on the East Coast. Thomas asked him if he wanted to invest in cryptocurrency for a few days with a rate of return of 30% to 40%. He also told the victim that he worked with CoinPoint, an internet advertising company looking for investors.
The first victim sent Thomas $6,948 worth of virtual currency. A few days later, Thomas sent back $9,203 worth of virtual currency, around a 30% return on the investment. Because of the size of return, the first victim told some of his friends, relatives and a second victim about the opportunity.
The second victim invested $185,000 with Thomas, and the friends and relatives agreed to contribute another $500,000.
Much of the money from the first victim's friends and family was never converted to virtual currency or forwarded to Thomas. When the first victim realized Thomas was scamming him, he was able to return most of that money.
As the scam progressed, Thomas told the first victim the investments were performing well. The first victim asked to be included on communications with CoinPoint, and started receiving emails from purported CoinPoint employees.
The FBI later discovered the email addresses were fake and associated with another domain name – coinpointpartners.net – that was not associated with the real CoinPoint. Investigators also found that Thomas had registered the fake domain name, coinpointpartners.net, the day after the first victim asked to be included in communications.
When the first victim tried to withdraw funds from the CoinPoint investment, he encountered delays and various explanations. He then contacted CoinPoint, and the information he received made him believe he had been scammed by Thomas.
The owner of CoinPoint told the FBI he had never worked with Thomas or the first victim.
Thomas used investment proceeds from the victims to buy a car for $10,245.