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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Wednesday, April 20, 2022

Man Charged With Defrauding Customers Who Sought To Buy Cryptocurrency-Mining Computers And Miner-Hosting Services

Damian Williams, United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge, New York Division of the Federal Bureau of Investigation (“FBI”), announced the arrest today of CHET STOJANOVICH, a/k/a “Chester J. Stojanovich,” on charges of defrauding more than a dozen victims of more than $1.8 million, through fraudulent misrepresentations that he would provide the victims with specialized cryptocurrency-mining computers (“Miners”), and that he would provide Miner-hosting services that would provide the victims with a lucrative stream of “hash power” convertible into cryptocurrency.  Instead, as alleged, STOJANOVICH deceived his victims, misappropriated his victims’ money, and provided them with almost no Miners, Miner-hosting services, or hash power.  The defendant was arrested early this morning after crossing from Canada into the United States at Champlain, New York.  He is expected to appear tomorrow before U.S. Magistrate Judge Stewart D. Aaron in the Southern District of New York.

U.S. Attorney Damian Williams said: “A great deal of excitement and ‘buzz’ has been generated in recent years about the ‘new world’ of cryptocurrency mining.  But new financial frontiers can also generate fresh opportunities for old-fashioned fraud.  Here, Chet Stojanovich is charged with using those time-worn fraud techniques on a new frontier.”

FBI Assistant Director-in-Charge Michael J. Driscoll said: “As alleged, Mr. Stojanovich induced his victims to invest in his fraudulent cryptocurrency mining schemes, and caused them to incur losses approaching $2 million.  Today's action should serve as an example of the FBI's commitment to rooting out financial fraud, as well as our focus on identifying and investigating emerging threats as they evolve.”

According to the allegations contained in the Complaint, and publicly available information:[1]

Since at least 2019, STOJANOVICH has controlled various companies, including Chet Mining Co. LLC (“Chet Mining”).  Starting in or about March 2019, STOJANOVICH engaged in a scheme to defraud people who were seeking to purchase Miners and Miner-hosting services through which they expected to obtain “hash power” convertible into cryptocurrency and money.  STOJANOVICH defrauded these victims by falsely telling them that: (1) he would purchase, and had purchased, Miners on their behalf; and (2) he would provide them with Miner-hosting services and had already obtained such Miner-hosting services for them.  In fact, STOJANOVICH failed to deliver the promised Miners and Miner-hosting services.

In all, STOJANOVICH induced more than a dozen customer-victims to pay a total of more than $1.84 million to STOJANOVICH and his companies, ostensibly in return for Miners and Miner-hosting services.  Despite fraudulent representations to the contrary, STOJANOVICH: (1) failed to provide many of the Miners that he told customers he had acquired; (2) failed to provide the hosting services and cryptocurrency hash power that he represented that he would provide; (3) employed deceptive practices to create the illusion that such Miners had been acquired and were being used to provide hash power to those customers; and (4) misappropriated his customers’ funds and spent the funds on unrelated and personal expenditures, including by spending a substantial portion those funds on personal expenses, including chartered air flights, hotel rooms, limousines, and private parties.

Defrauding at Least 10 Victims in 2019

In the spring and early summer of 2019, STOJANOVICH fraudulently induced at least 10 customers to pay a total of more than $1.66 million to STOJANOVICH and Chet Mining, in return for Miners and Miner-hosting services.  Between March and July 2019, based on these and other misrepresentations, STOJANOVICH issued at least 15 invoices to these 10 victims, with instructions to make payment to STOJANOVICH or one of his companies.  As directed by STOJANOVICH, these 10 customers paid STOJANOVICH a total of approximately $1,618,000 in bank wires and cryptocurrency transfers.  However, STOJANOVICH failed to provide the Miners and Miner-hosting services that he had agreed to provide and for which he had been paid.

Defrauding 3 More Victims in 2021

In or about August and September 2021, STOJANOVICH induced at least three additional customer-victims to pay him a total of approximately $179,880, as payment for a total of 127 Miners.  Ultimately, STOJANOVICH provided those customers with only 3 of the 127 Miners they had paid for and repaid those customers only approximately $61,000 of the $179,880 they had paid.

The March 2022 Deposition

Several of the victims of the scheme described in the Complaint brought lawsuits against STOJANOVICH in federal court in Manhattan.  In one such lawsuit, Holmes et al. v. Chet Mining, Chet Stojanovich, et ano., Case No. 1:20-CV-04448-LJL (S.D.N.Y.), STOJANOVICH was ordered by the court to appear for a deposition on March 4, 2022.  During that deposition, STOJANOVICH testified falsely on a number of subjects.  For example, in response to several questions, STOJANOVICH testified that he did not know the answers without looking in his personal cellphone, and falsely testified that his phone was downstairs in his rental car or in storage.  The deposition was thereupon adjourned for a half-hour, and STOJANOVICH was instructed to retrieve his cellphone and return to the deposition.  Instead, STOJANOVICH left the deposition and loitered in the vicinity of his car until after everyone else participating in the deposition had left.  Shortly thereafter, he returned to Canada, where he has been residing in recent weeks.

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STOJANOVICH, 37, previously of Manhattan but in recent months apparently residing in Canada, is charged with one count of wire fraud, which carries a maximum penalty of 20 years in prison.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Williams praised the outstanding work of the FBI for its assistance in this investigation.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney David Raymond Lewis is in charge of the prosecution.

The charge contained in the Complaint is merely an accusation, and the defendant is presumed innocent unless and until proven guilty.


[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described therein should be treated as an allegation.

Contact: 
Nicholas Biase Victoria Bosah (212) 637-2600
Press Release Number: 
22-128
Updated April 20, 2022