Swedish crypto conman pleads guilty to $16 million scam
Karlsson was extradited from Thailand and is facing a maximum sentence of 20 years for the wire fraud and securities fraud charges and another 20 years for the money laundering charge.
The Department of Justice has announced a citizen of Sweden, Roger Nils-Jonas Karlsson (47), pleaded guilty to securities fraud, wire fraud, and money laundering charges.
The DOJ indicted Mr. Karlsson of defrauding over 3,500 victims of more than $16 million with a long-running scheme by which Karlsson and his company Eastern Metal Securities (EMS) convinced victims to send funds using a virtual currency exchange.
Also known by several aliases including Steve Heyden, Euclid Deodoris, Joshua Millard, Lars Georgsson, Paramon Larasoft, and Kenth Westerberg, Mr. Karlsson invited potential investors to purchase shares of the plan for less than $100 per share, promising an eventual payout of 1.15 kilograms of gold per share, an amount of gold which as of Jan. 2, 2019, was worth more than $45,000.
He also guaranteed clients 97% of the amount they invested, although he later admitted to the authorities he had no way to pay off the investors. The funds were transferred to Karlsson’s personal bank accounts and he then used proceeds to purchase expensive homes and a resort in Thailand.
He then delayed the moment investors would realize there would be no payout by arguing that a payout had not occurred because releasing so much money all at once could cause a negative effect on financial systems throughout the world.
Karlsson was extradited from Thailand and is facing a maximum sentence of 20 years in prison and a maximum $250,000 fine for the wire fraud and securities fraud charges, and 20 years in prison, and a $500,000 maximum fine for the money laundering charge.
“You either play by the rules or we will shut you down”
Regulatory authorities and the DoJ have become more active and communicative about law enforcement regarding the cryptocurrency ecosystem. The current price of Bitcoin, which hovers the $50,000 area, and its market cap of $1 trillion have probably triggered the new tone.
New York Attorney General Letitia James has recently urged investors “extreme caution when investing in virtual currencies” and added, “we’re sending a clear message to the entire industry that you either play by the rules or we will shut you down.”
The alert to industry members serves as a reminder to brokers, dealers, salespersons, and investment advisors that the State of New York will not tolerate unregistered cryptocurrency operations. They could potentially face “both civil and criminal liability”.
Attorney General Letitia James said: “Too often, greedy industry players take unnecessary risks with investors’ money, but, today, we’re leveling the playing field and issuing alerts to both investors and industry members across the nation. All investors should proceed with extreme caution when investing in virtual currencies. Cryptocurrencies are high-risk, unstable investments that could result in devastating losses just as quickly as they can provide gains”.
“We will not hesitate to take action against anyone who violates the law. Two weeks ago, we filed a lawsuit to shut down Coinseed’s fraudulent operation. Last week, we ended both Bitfinex and Tether’s illegal activities in New York. And now, today, we’re sending a clear message to the entire industry that you either play by the rules or we will shut you down.”