Two central figures behind the cryptocurrency Ponzi scheme known as IcomTech have been sentenced to substantial prison terms, according to a recent press release by the US DoJ.

The scheme defrauded thousands of investors out of millions of dollars, leaving financial devastation in its wake. The sentencing marks a major legal conclusion to one of the more prominent cases of cryptocurrency fraud.

Details of the IcomTech Scheme

David Brend and Gustavo Rodriguez, key operators of IcomTech, received prison sentences of 10 and 8 years, respectively, handed down by Judge Jennifer L. Rochon following a March trial where both were convicted of conspiracy to commit wire fraud.

Prosecutors revealed that IcomTech, launched in mid-2018, masqueraded as a cryptocurrency mining and trading firm, promising high daily returns to attract investments. However, in reality, the company did not engage in any legitimate trading or mining activities.

Instead, funds collected from investors were used to pay earlier investors in a “classic Ponzi scheme” fashion. Promoters like Brend flaunted luxurious lifestyles, including expensive cars and designer clothing, to lure victims.

Investors were provided access to an online portal to monitor alleged profits, but most were unable to withdraw their money, ultimately losing their entire investments.

The US DoJ also reveals that Brend and Rodriguez’s scheme didn’t end there. When complaints heightened amongst the investors, they restrategized and “began offering proprietary crypto-tokens for sale as a means of injecting liquidity into IcomTech.”

However, the token dubbed “Icoms”, was also nothing other than a sham. The US DoJ wrote in the press release:

Promoters of the schemes claimed that these tokens, known as “Icoms”, would eventually be worth a significant amount of money when they were accepted by companies for payment for goods and services. This was false. In reality, “Icoms” were essentially worthless and resulted in further financial loss to Victims. By in or about the end of 2019, IcomTech stopped making payments to Victims and IcomTech collapsed.

Legal and Financial Repercussions

Gustavo Rodriguez, who managed IcomTech’s website and crafted compensation plans, was ordered to pay $40,000 in forfeiture, representing his direct proceeds from the scheme, with restitution amounts to be determined.

David Brend, a promoter of the scheme, also faces pending restitution and forfeiture determinations. U.S. Attorney Damian Williams noted:

David Brend and Gustavo Rodriguez were central to the IcomTech Ponzi scheme – Rodriguez as the chief architect of its sham website, Brend as a face-to-face salesman who peddled the bogus enterprise and its supposed lucrative returns for investors. Together with others, Brend and Rodriguez defrauded thousands of people out of millions of dollars. Both were found guilty by a unanimous jury. Now they will serve substantial prison sentences for their crimes.

Assistant U.S. Attorney Damian Williams, representing the Southern District of New York, commended the investigation led by Homeland Security’s El Dorado Task Force, alongside contributions from the SEC and CFTC.

Williams highlighted the gravity of the defendants’ actions, noting that they exploited their positions to enrich themselves at the expense of thousands of victims.