Alleged Cryptocurrency Fraudster Arrested In Thailand, Charged In Multi-Million Dollar Investment Scheme
Roger Karlsson allegedly defrauded more than 3,500 victims of more than $11 million
SAN FRANCISCO – Roger Nils-Jonas Karlsson, a citizen of Sweden, and his company, Eastern Metal Securities (EMS), were charged with securities fraud, wire fraud, and money laundering, announced United States Attorney David L. Anderson; Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division; and Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Washington, D.C. Field Office. In a complaint filed March 4, 2019, and unsealed today, the defendants were charged with engaging in a scheme to defraud victims of more than $11 million.
According to the complaint, since September 2006, Karlsson used websites to communicate false representations to victims in a scheme to defraud potential investors. For example, one website, www.easternmetalsecurities.com, allegedly was registered to a fictitious person and advertised shares in a product called a “Pre Funded Reversed Pension Plan” (PFRPP). The complaint alleges Karlsson used the website to invite potential investors to purchase shares of the plan for $98 per share in exchange for an eventual payout of 1.15 kilograms of gold per share, even though as of January 2, 2019, 1.15 kilograms of gold was worth more than $45,000. Karlsson also allegedly advised investors that, in the unlikely event that the gold payout did not happen, he guaranteed to them 97% of the amount they invested. According to the complaint, the government found no evidence of any accounts held by Karlsson that would allow him to pay off the investors. Instead, the complaint alleges, the funds provided by victims were transferred to Karlsson’s personal bank accounts and now appear to be tied up in real estate in Thailand.
The complaint further describes how Karlsson allegedly used a second website, www.hci25.com, to make multiple false communications to potential investors. Karlsson allegedly brought the investors in HCI25 together with the investors in the PFRPP and posted multiple communications to delay the moment investors would realize there would be no payout. For example, on one occasion, Karlsson allegedly explained that a payout had not occurred because releasing so much money all at once could cause a negative effect on financial systems throughout the world. Karlsson also falsely represented that EMS was working with the U.S. Securities and Exchange Commission to prepare the way for a payout.
The complaint alleges Karlsson directed his victims to make investments using virtual currencies, such as Bitcoin. Karlsson allegedly defrauded no less than 3,575 victims of more than $11 million.
The complaint charges Karlsson with wire fraud, in violation of 18 U.S.C. § 1343; securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff and 17 C.F.R. § 240.10b-5; and money laundering, in violation of 18 U.S.C. § 1957. Karlsson was arrested June 17, 2019, in Thailand. The United States is seeking his extradition to stand trial in the Northern District of California.
A criminal complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
If convicted, the defendant faces a maximum sentence of 20 years in prison and a maximum $250,000 fine for the wire fraud and securities fraud charges, and 20 years in prison and a $500,000 maximum fine for the money laundering charge. In addition, the court also may order an additional term of supervised release, fines or other assessments, and restitution, if appropriate. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney William Frentzen and Trial Attorney Catherine Alden Pelker of the Department of Justice Criminal Division’s Computer Crime and Intellectual Property Section are prosecuting this case with the assistance of Bridget Kilkenny. This prosecution is the result of an investigation by the IRS-CI Washington, D.C. Cyber Crimes Unit. Significant assistance was provided by the Criminal Division’s Office of International Affairs, the FBI Legal Attaché Office in Thailand, the IRS Criminal Investigation Attaché Office in Hong Kong and the Royal Thai Police Crime Suppression Division.