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posted by Fnord666 on Sunday September 16 2018, @03:13PM   Printer-friendly
from the different-kind-of-bars dept.

Submitted via IRC for SoyCow1984

A man who, according to federal authorities, ran a fake cryptocurrency Ponzi scheme and pleaded guilty last year to one count of wire fraud is now headed to prison.

On Thursday, Homero Joshua Garza, also known as Josh Garza, has now been sentenced by a federal judge in Hartford, Connecticut, to 21 months in prison, three years of supervised release, and more than $9 million in restitution. The news was first reported Thursday by CoinDesk.

In their sentencing memorandum filed before the hearing, prosecutors were blunt in their assessment of Garza, saying that he "lied to investors and customers and took their money" to the tune of $9 million in losses spread across thousands of people worldwide.

Source: https://arstechnica.com/tech-policy/2018/09/man-who-swindled-9m-in-wannabe-bitcoin-ponzi-scheme-headed-to-prison/


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  • (Score: 4, Insightful) by RandomFactor on Sunday September 16 2018, @04:59PM (4 children)

    by RandomFactor (3682) Subscriber Badge on Sunday September 16 2018, @04:59PM (#735692) Journal

    In August 2015, Garza’s brother, Carlos Garza, a former GAW employee, was ordered to respond to a subpoena as part of the Securities and Exchange Commission's investigation into the company. When Carlos Garza appeared before SEC lawyers in Boston, not only did he refuse to answer almost every question, but he provided the same answer nearly verbatim each time: "I’m very scared. I don't understand, these type of questions, this type of law at all. I want to help, but l'd have to have an attorney present. I can’t afford one at this time, but if I were to get appointed counsel, or retain counsel, then I’d absolutely come back and help."

    As SEC lawyers pointed out, the government does not appoint counsel in civil cases.

    This strikes me as odd, you can be forced to appear under oath and under legal threat by the government and if you can't afford a council it is just too bad?
     
    In no way defending these guys, but I think the brother has an actual point here.
     
    Maybe some legal types have more perspective on this?

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  • (Score: 0) by Anonymous Coward on Sunday September 16 2018, @05:12PM (1 child)

    by Anonymous Coward on Sunday September 16 2018, @05:12PM (#735695)

    same thing with speeding laws, at least in my state. they make speeding a criminal offense but don't provide a public defender(maybe because they know they are holding traffic court illegally to begin with, but that's another matter.) and private attorneys won't bother with traffic cases, unless maybe you're in a large city where they can appear for several clients in one day or something. so, you are left without representation. judges, DA's and cops are just criminals in costumes.

    • (Score: 4, Interesting) by PartTimeZombie on Sunday September 16 2018, @09:12PM

      by PartTimeZombie (4827) on Sunday September 16 2018, @09:12PM (#735742)

      If my sister gets a speed camera ticket, she always writes back to say she intends pleading not guilty, and could they please send her the maintenance records for the camera they used so that she can pass it on to her lawyer.

      100% of the time they withdraw the charge.

      Not in the US, so that might not be of any use to you, but it is interesting.

  • (Score: 3, Insightful) by zocalo on Sunday September 16 2018, @05:32PM

    by zocalo (302) on Sunday September 16 2018, @05:32PM (#735701)
    IANAL, but the key things here appears to be that's a civil case and the interview was with a material witness (the brother) rather than the actual accused. It's a subtle distinction, especially given the SEC's connection to the goverment, but the combination does seemingly get the government off the hook for providing counsel for a witness that cannot afford one, although perhaps not the the actual accused.

    I don't doubt that the SEC lawyers are correct in their assertion, nor am I defending the Garza's, but have to agree that this seems like a particularly nasty legal gotcha for someone to be in. Maybe if you have no real association with the accused that wouldn't be a problem - no different from being called to give evidence in any other trial - but given that were are talking about an immediate family member and given the level of jailtime and financial restitution that can clearly result, it does seem particularly harsh.
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  • (Score: 2) by bzipitidoo on Sunday September 16 2018, @11:31PM

    by bzipitidoo (4388) on Sunday September 16 2018, @11:31PM (#735770) Journal

    Is this a civil case, or a criminal case? I thought a basic distinction is that prison is not a factor in civil cases. If found guilty, the perps can be fined, put under a restraining order, and things of that sort, but not imprisoned.

    However, fraud and theft are criminal matters. Anyone who tries a Ponzi scheme is breaking criminal law. That's what these Paycoin bandits did. I'm guessing the original complaint was a civil one, which was not satisfactorily addressed. It may have boiled down to "sorry to imply you might not know what you're doing (or could even be (gasp!) white collar criminals), but show how this particular cryptocurrency is not a Ponzi scheme". Had they come clean then, possibly the whole thing could have been stopped before any investors were hurt, and they would get off with a wrist slapping. It was basically a warning, and a snare for criminals. Probably they had to make statements on the record, about things that couldn't be shown at that time, but could and would be checked later when there was a track record. And if those things turned out not to be true, they would be guilty of criminal fraud. They gave the SEC a load of crap, and kept on running their scheme, possibly with minor changes. They may have danced this dance several times, and each time the net got tighter. Then it finally caught up with them.

    They tried to play stupid. But, you know, lots of criminals try that angle.

    Whenever there's lots of money, the roaches swarm out of the woodwork. Cryptocurrencies are the big fad in white collar criminal circles this decade. Last decade it was home mortgages. Next decade, who knows?