Patrick McDonell, the head of CabbageTech is going to jail for his connection with a virtual currency fraud. He could face up to 20 years of imprisonment if found guilty.
Jason Flack’s moment of truth
Patrick McDonnell, known popularly as Jason Flack has been charged with wire fraud owing to his connection with a virtual currency scheme that defrauded investors. McDonnell is the head of the company CabbageTech, also known as Coin Drop Markets. The case against them was registered months ago when US authorities doubled down on their efforts to tackle frauds in cryptocurrencies. The CFTC case concluded at the New York Eastern District Court recently following up with criminal proceedings for the defendant.
The federal court in Brooklyn found Flack guilty of wire fraud in a nine-count indictment. He was arrested earlier that day. According to the indictment, McDonnell posed as an experienced cryptocurrency trader to unsuspecting investors between November 2014 and January 2018. He promised the customers to provide trading advice and said that he would buy and trade digital currencies on their behalf.
He made several false claims to the investors, even claiming that they could make up to 300% investment returns in less than a week. Court documents also revealed that he was working in a Ponzi-like fashion, using money from new investors to pay off old investors. After it was all over, he removed the company website and its social media presence.
Problems came knocking his door
In May 2016, he took his plans a step further by making similar representations through CabbageTech, his company based in Staten Island. Neither McDonnell nor CabbageTech provided investment services. The defendant sent investors false balance statements that would show them that they were making profitable trades. The money these investors poured to his pockets was utilized for personal use. When investors sought refunds, he started offering excuses for delays in repayment. A USPIS special agent-in-charge said that he eventually stopped all communication with the investors.
The complaint suggests that all the money was lost. The defendants were accused of securities and wire fraud, misappropriation, violation of registration and issue of false statements. During the entire period of the fraud, McDonnell defrauded at least 10 victims, gaining $194,000 in the process along with 4.41 Bitcoin, 620 Ethereum Classic, 206 Litecoin, and 1,342,634 Verge coins.