Puerto Rico Resident Charged In Alleged Multimillion-Dollar Scheme To Defraud Owners Of Cryptocurrency
Defendant allegedly offered services and instead transferred currency without victims’ knowledge or authority
SAN FRANCISCO- A federal grand jury has indicted Jerry Ji Guo, charging him with eight counts of wire fraud in a scheme to defraud customers of cryptocurrencies, announced U.S. Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
According to the indictment filed November 15, 2018, Guo, 31, whose last residence was San Juan, Puerto Rico, devised a scheme to obtain cash and cryptocurrency from victims by convincing them he would provide marketing and publicity services as a consultant. Guo convinced potential customers to forward up-front fees and retainers by making false statements about his experience and credentials as consultant. Guo allegedly provided no consulting services and instead orchestrated the unauthorized transfer of cash and cryptocurrency out of supposed “escrow” accounts into accounts he controlled.
In addition to the indictment, on November 9, 2018, the government filed a complaint that describes some of the alleged conduct. According to the affidavit, Guo claimed to prospective clients that he would use his company, pressICO LLC, to provide client services as an initial coin offering (ICO) marketing and publicity agency. ICOs are like initial public offerings and are a relatively new way to use cryptocurrencies such as Bitcoin and ether to fund start-ups and projects. The marketing campaign generally plays and important role in a successful ICO. The affidavit alleges that Guo convinced clients to forward to him funds by claiming the services he could provide had value because he had an extensive network of contacts within the cryptocurrency industry, he oversaw the documentation necessary for a $100 million ICO, and his company pressICO raised $165 million in connection with nine ICOs. According to the affidavit, none of these claims was true.
Further, the affidavit describes how Guo allegedly transferred funds from supposed escrow-like accounts to accounts that Guo controlled. Guo convinced clients to deposit funds into the special cryptocurrency accounts in part by assuring the clients that their authority would be required in two ways before funds could be transferred. Specifically, Guo misrepresented to his clients that he would be unable to remove funds from the accounts both without the private passcodes that were given to the clients and without the clients’ approval regarding the account to which the funds would be transferred. In reality, neither was true. Guo maintained a separate set of backup private codes that enabled him to gain access to, and authority to remove funds from, the accounts. Also, Guo set up special pre-approved accounts that were able to receive fund transfers without client knowledge or approval. Further, the affidavit states that on August 19, 2018, Guo executed unauthorized orders transferring funds valued at more than $3.4 million into accounts he controlled.
In sum, Guo is charged with eight counts of wire fraud, in violation of 18 U.S.C. § 1343. The complaint and indictment merely allege crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If found guilty, Guo faces a maximum statutory penalty of 20 years in prison and a fine of $250,000, plus restitution for each count alleged in the indictment. Additional terms of supervised release also may be imposed. However, any sentence after 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.
Guo was arrested in Puerto Rico and made his initial appearance this morning before U.S. Magistrate Judge Sallie Kim. His next scheduled appearance is scheduled for January 22, 2019, at 9:00 am, before the Honorable Beth Labson Freeman, U.S. District Judge in San Jose, California, for a status conference.
Assistant U.S. Attorney Matt Parrella is prosecuting the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the FBI.