In a significant legal development, the US Attorney for the Southern District of New York, Damian Williams, has announced the sentencing of Pablo Renato Rodriguez, one of the co-founders of AirBit Club, for his central role in orchestrating a global pyramid scheme.
Rodriguez, in collaboration with his co-conspirators, tricked individuals into investing in AirBit Club, a company that claimed to be involved in cryptocurrency mining and trading. They then orchestrated an intricate money laundering scheme to hide their illicit profits from AirBit Club.
Rodriguez’s co-defendants, including Gutember Dos Santos, Scott Hughes, Cecilia Millan, and Karina Chairez, have all pled guilty and are now awaiting their respective sentences. Collectively, Rodriguez and his co-defendants have been ordered to forfeit the fraudulent proceeds derived from their AirBit Club activities.
This forfeiture includes seized or restrained assets valued at approximately $100 million, encompassing U.S. currency, Bitcoin, and real estate holdings.
U.S. Attorney Damian Williams emphasized the grave nature of Rodriguez’s actions, describing him as a co-founder and leader of an international multimillion-dollar pyramid scheme. This scheme primarily lured unsuspecting investors with false promises that their money was going into cryptocurrency trading and mining.
Contrary to these promises, Rodriguez diverted victims’ funds into a complex money laundering operation, employing Bitcoin, an attorney trust account, and various international front and shell companies, all to enrich himself.
Williams underscored the broader issue of cryptocurrency exploitation for fraudulent purposes and expressed hope that this sentencing would serve as a deterrent to potential fraudsters.
The case revolves around the AirBit Club Scheme, which Rodriguez and Dos Santos co-founded in 2015. In this scheme, the perpetrators enticed victim-investors to invest cash in return for membership in AirBit Club, falsely promising them guaranteed profits.
AirBit Club, marketed as a multilevel marketing club in the cryptocurrency industry, falsely assured investors that they would receive profits from cryptocurrency mining and trading, as well as daily returns on their memberships without having to do anything.
Rodriguez, Dos Santos, Hughes, Millan, and Chairez embarked on a global campaign, traveling across the United States and around the world to Latin America, Asia, and Eastern Europe. Their objective was to convince victims to purchase AirBit Club memberships, often collecting payments in cash, including within the Southern District of New York.
Victims were provided with access to an online AirBit Club portal, displaying purported returns, although no actual trading or mining activities occurred. Instead, the perpetrators used victims’ funds to finance luxurious lifestyles and recruit more victims.
Numerous victims faced hurdles withdrawing funds from the AirBit Club Online Portal, such as excuses, delays, and hidden fees, sometimes surpassing 50% of the requested withdrawal. In one instance, a victim received a fabricated notice claiming their account closure due to the COVID-19 pandemic.
To hide their plan and clean the money, the defendants had victims buy memberships with cash, used third-party cryptocurrency brokers, and employed both U.S. and foreign bank accounts, including one managed by Hughes, for illegal financial dealings.
Prior to their involvement in AirBit Club, Rodriguez and Dos Santos were previously subject to legal action by the Securities and Exchange Commission (SEC) due to their involvement in another pyramid investment scheme called Vizinova. In the SEC case, they received a $1.7 million fine.
Hughes, a licensed attorney in California, previously represented his co-conspirators in the lawsuit brought by the SEC. In this recent fraud case, he aided in promoting the AirBit Club Scheme by actively removing negative online information about AirBit Club and Vizinova.
In summary, the sentencing of Rodriguez to 12 years in prison and the substantial forfeiture of assets serves as a clear warning about the severe consequences of cryptocurrency-related fraud. This case underscores the importance of investors exercising caution and the urgent need for comprehensive regulatory oversight within the cryptocurrency industry.
Victims impacted by the AirBit Club fraud can access information on the case and support resources on the U.S. Justice Department’s website .