Head of Coin Drop Markets pleads guilty to fraud

On June 21, 2019, Patrick McDonnell, also known as “Jason Flack,” pleaded guilty at the federal courthouse in Brooklyn to wire fraud in connection with a scheme to defraud investors in virtual currency. He now faces up to 20 years in prison as well as forfeiture and restitution to his victims. The plea took place before United States District Judge Nicholas G. Garaufis.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS), announced the guilty plea.

According to the Indictment, between approximately November 2014 and January 2018, McDonnell portrayed himself as an experienced trader in virtual currency, promising investors he would provide trading advice and purchase and trade virtual currency on their behalf. Beginning in 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. 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.

Let’s recall that, back in August 2018, the case brought by the Commodity Futures Trading Commission (CFTC) against McDonnell concluded at the New York Eastern District Court. Judge Jack B. Weinstein entered a final judgement in favor of the CFTC and against defendants Patrick K. McDonnell and CabbageTech also known as Coin Drop Markets.

A permanent injunction was issued against the fraudsters. The defendants were also ordered to pay restitution in the amount of $290,429, as well as a civil monetary penalty of $871,287.