A law firm representing the victims of an alleged Ponzi scheme that promised high rewards of ‘Gemcoin,’ a fake cryptocurrency, has filed a $100 million class-action lawsuit against 10 defendants involved in the scam.
Merely days after the U.S. Securities and Exchange Commission (SEC) took down and charged Steven Chen, founder of USFIA – the company at the center of the pyramid scheme; a law firm has a $100 million class been filed on behalf of the victims.
Gemcoin was touted as a new cryptocurrency to get investors to put their own money into USFIA. The investors were also encouraged to bring in others to invest with the guarantee of rewards such as luxury goods and money at various investor events.
USFIA claimed to have large amber mines in Latin and South America, with the amber holdings said to secure the virtual currency. As it turned out, investors were given samples of the ‘amber’ that was purportedly from the mines and on appraisal, were deemed worthless.
Thousands of Chinese and Chinese-American investors have been the victims of the alleged scheme and representing them is the Liu Law Group, who filed the complaint at the Los Angeles Superior Court.
The lawsuit named 10 defendants including founder and CEO Steven Chen and John Wuo, a councilman and former mayor of Arcadia. Wuo resigned on Tuesday after intense scrutiny toward his alleged involvement in the scheme. The resignation came from a letter by Wuo citing “health and personal reasons” as the cause for his resignation.
Wuo has publicly endorsed Gemcoin as a “breakthrough in finance” in the past.
Speaking about Wuo’s inclusion in the class action Attorney Long Z. Liu, speaking to the Pasadena Star-News said:
In one particular video clip of Wuo (at a USFIA marketing event,) the first thing he said to the crowd was ‘I am the mayor of Arcadia,’ so obviously that’s important.
Especially to investors in China because if a business is publicly endorsed by a government official, not only is the business legitimate, but the business will make a lot of money.
While Wuo wasn’t included in the charges brought forward by the SEC, Liu was clear about Wuo’s involvement and told the LA Times :
“If we don’t name him as a defendant in the lawsuit, it would be borderline legal malpractice.”
Liu added that he is seeking a minimum of $100 million in damages and that the plaintiff has, since the news of the scheme broke, requested anonymity after alleged death threats.
“I think we can get some of the money back, but getting all of the money back doesn’t seem to be very likely,” he added.
Image from Shutterstock.