Homero Josh Garza has been held liable for $9,182,000 USD by a U.S. federal judge. Garza pleaded guilty to one charge of wire fraud for activities relating to Gaw, Gaw Miners, Zenminer, Zencoin, and Paycoin in July. Also Read: Garza Fined $12 Million by SEC for GAW Mining and Zenmining Ponzi Schemes The United States Securities […]
The post Josh Garza Held Liable for $9 Million USD for Wire Fraud appeared first on Bitcoin News.
Homero Josh Garza has been held liable for $9,182,000 USD by a U.S. federal judge. Garza pleaded guilty to one charge of wire fraud for activities relating to Gaw, Gaw Miners, Zenminer, Zencoin, and Paycoin in July.
Also Read: Garza Fined $12 Million by SEC for GAW Mining and Zenmining Ponzi Schemes
The United States Securities and Exchange Commission First Filed a Suit Against Garza in 2015
The CEO of now-defunct cloud mining companies Gaw Miners and Zenminer, Josh Garza, has been held liable for $9,182,000 USD following a U.S. federal judge passed final judgement on the United States vs Homero case. Garza pleaded guilty to wire fraud charges for issuing “hashlets” – which supposedly “entitled an investor to a share of the profits that Gaw Miners or ZenMiner would purportedly earn by mining virtual currencies using the computers that were maintained in their data centers.” Garza is also required to pay $742,774 in prejudgment interest.
The United States Department of Justice stated in July that “between approximately May 2014 and January 2016, Garza, through Gaw, Gaw Miners, ZenMiner, and ZenCloud, companies he founded and operated, defrauded victims out of money in connection with the procurement of virtual currency on their behalf. The companies sold miners, access to miners, and the right to purchase a virtual currency called ‘paycoin,’ as well as ‘hashlets’”.
The release also states that Garza made “multiple false statements related to the scheme, including stating that Gaw Miners’ parent company purchased a controlling stake in ZenMiner for $8 million and that ZenMiner became a division of Gaw Miners”, in addition to claims “that the hashlets GARZA’s companies sold engaged in the mining of virtual currency” – when in reality Garza’s “companies sold more hashlets than was supported by the computing power maintained in their data centers… Garza also stated that the market value of a single paycoin would not fall below $20 per unit because GARZA’s companies had a reserve of $100 million that the companies would use to purchase paycoins to drive up its price. In fact, no such reserve existed.”
The court stated that the amount of $9,182,000 will be “deemed satisfied by the order of restitution that will be entered against him when he is sentenced in the related criminal case.”
Garza Was Originally Facing Three Counts of Violating Securities Laws
The United States Securities and Exchange Commission (SEC) first filed a suit against Garza in December 2015, alleging that he was operating a Ponzi scheme by issuing “hashlets” through Gaw Miners. The company was accused of selling $20 million USD worth of hashlets despite failing to possess the computing power that the hashlets represented.
The director of the SEC’s Boston Regional Office, Paule G. Levenson described the fraud in 2015, stating that “Garza and his companies cloaked their scheme in technological sophistication and jargon, but the fraud was simple at its core: they sold what they did not own, misrepresented what they were selling, and robbed one investor to pay another.” Garza initially was to be tried for three counts of securities frauds – each carrying up to 25 years incarceration, however, his lawyers were able to negotiate a single charge of wire fraud – carrying a maximum penalty of 20 years.
Garza and associates have long been the subject of scrutiny from the bitcoin community, owing to the infamous altcoin Paycoin, in addition to the suspicious products offered by Gaw Miners and Zenminer. In the summer of 2016, Gaw Miners and investor Stuart Fraser became the subject of a civil suit from Gaw customers seeking damages for fraudulent practices. The suit argued that from 2014 to 2016 the “defendants sold a progressive array of products and investment contracts to over 10,000 investors that defendants claimed would yield profits from mining or otherwise investments in virtual currency,” explains the civil suit against Gaw miners.”
Do you know anyone who lost money to Garza’s fraudulent activities? Share your experience in the comments section below!
Images courtesy of Shutterstock, Gaw Miners
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The post Josh Garza Held Liable for $9 Million USD for Wire Fraud appeared first on Bitcoin News.
