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Bitcoin Ponzi Scheme Perpetrator Fined $40 Million

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#1 Rossman01



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Posted 20 September 2014 - 09:22 AM



A Texas man charged with defrauding consumers through an illicit investment vehicle has been ordered to pay more than $40m in fines by a federal judge.

The Thursday ruling brought to close a case launched last July that drew headlines at a time when many in the mainstream US media were only first learning about bitcoin and its related technology.

Trendon Shavers, the founder and operator of Bitcoin Savings and Trust (BTCST) had reportedly accrued more than 700,000 BTC in customer funds, worth roughly $64m at the time of his arrest.


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#2 Vis


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Posted 20 September 2014 - 09:56 AM

Only 40 mill?



At a press time price of $399.02, the 700,000 BTC Shavers earned from investors is worth roughly $279m.


Make it 250 mill at least!

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#3 dollicoin



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Posted 20 September 2014 - 07:35 PM

I wonder if this is likely to have an effect on others running HYIPS? (assuming that's what BTCST was). 

What is the opinion of members here on the legality of these schemes?

#4 Vis


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Posted 21 September 2014 - 06:48 AM

Personally, I'd put those scheme in the same category as Hyips.

Practically no legality whatsoever.

#5 zapsa



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Posted 21 September 2014 - 01:06 PM

There are legal ponzi schemes... Madoff, Lemon brothers... (not paying/scam :angry: ), and many other active (paying :D )...


and illegal ponzi schemes... HyipLand... 


This differs from country to country according to their laws


Its just a question of laws and  and their application in the territory

Is still very difficult to apply the laws in the virtual world ...

#6 Rossman01



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Posted 22 September 2014 - 10:54 AM

And a related story from Reuters - 


(Reuters) — Bank of Montreal was sued Thursday by a trustee liquidating two Florida funds that claimed to have lost money in a Ponzi scheme operated by Minnesota businessman Thomas Petters.

The lawsuit seeks to recoup $23.6 billion, more than six times the estimated $3.65 billion size of Mr. Petters' fraud, based on sums transferred by Mr. Petters over five years to an account at Marshall & Ilsley Bank, which Bank of Montreal now owns.

"There is no merit to these claims and we will defend ourselves vigorously," Carey Allen, a spokeswoman for Bank of Montreal's BMO Harris Bank unit, said in an emailed statement.

The case was brought by Barry Mukamal, a trustee liquidating two funds known as Palm Beach Finance.

These funds filed for bankruptcy protection in November 2009, just over a year after Mr. Petters' fraud was uncovered and his businesses were put into receivership.

Thursday's lawsuit was filed with the U.S. District Court in West Palm Beach, Florida, nearly six years after Mr. Petters' offices were raided by the FBI in September 2008.

Mr. Petters, now 57, was convicted in December 2009 on all 20 criminal counts he faced, including fraud and money laundering, and is serving a 50-year prison term.

Prosecutors accused him of using one of his companies to bilk investors who thought he was using their money to buy consumer electronics for resale to retailers such as Costco Wholesale Corp. and BJ's Wholesale Club Inc.

In his lawsuit, Mr. Mukamal said Marshall & Ilsley Bank knew the "astronomical" activity in Mr. Petters' account bore no relationship to Mr. Petters' alleged business and that Mr. Petters was involved in money laundering on an "unprecedented scale."

But he said the Milwaukee-based bank did nothing, hoping instead to expand its "important" and "substantial" relationship with Mr. Petters. The trustee also said Marshall & Ilsley did not use good faith in handling money flows.

Bank of Montreal bought Marshall & Ilsley in 2011.

Florida lies within the 11th federal judicial circuit, which also includes Alabama and Georgia.

In 2010, the federal appeals court in that circuit said an initial recipient of a debtor's fraudulently transferred funds can avoid liability for the transfer if it served merely as a "conduit" for the debtor, was an "innocent participant" in the transfer, and acted in good faith.

"Tom Petters ran the third-largest financial fraud in United States history through a single bank account at M&I Bank," the trustee's lawyer Solomon Genet said. "We look forward to proceeding before a Florida jury."

The case is Mukamal v. BMO Harris Bank NA, U.S. District Court, Southern District of Florida, No. 14-01660.