CabbageTech head faces up to 20 years in prison over virtual currency fraud
Patrick McDonnell, also known as “Jason Flack,” has been charged with wire fraud in connection with a scheme to defraud investors in virtual currency.
US authorities have apparently accelerated their efforts to tackle virtual currency fraud. Several months after a CFTC case targeting Patrick K. McDonnell and CabbageTech also known as Coin Drop Markets concluded at the New York Eastern District Court, the defendant is now targeted in criminal proceedings.
A nine-count indictment was unsealed on Tuesday in federal court in Brooklyn charging Patrick McDonnell, also known as “Jason Flack,” with wire fraud in connection with a scheme to defraud investors in virtual currency. McDonnell was arrested earlier yesterday.
The indictment states that, between approximately November 2014 and January 2018, McDonnell portrayed himself as an experienced trader in virtual currency, promising customers he would provide trading advice, and purchase and trade virtual currency on their behalf. Starting from approximately May 2016, McDonnell made similar representations through his Staten Island-based company, CabbageTech, Corp., also known as Coin Drop Markets. However, neither McDonnell nor CabbageTech provided investment services. Instead, McDonnell sent investors false balance statements purportedly showing that their investments had been profitable, and stole their money for his personal use. When investors requested refunds, McDonnell initially offered excuses for delays in repayment, and eventually stopped responding at all.
In total, McDonnell defrauded at least 10 victims of at least $194,000 in U.S. currency, 4.41 Bitcoin, 206 Litecoin, 620 Ethereum Classic and 1,342,634 Verge currency.
If convicted, McDonnell faces a maximum sentence of 20 years’ imprisonment.