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GAW CEO Miners earns a prison term to defraud customers by $ 9 million

The former CEO of the deceased GAW Miners was sentenced to 21 months in prison for customer fraud of approximately $ 9.2 million.

According to documents from the District Court of Connecticut, Homero Joshua Garza, the former founder and CEO of GAW Miners, GAW, ZenMiner and ZenCloud, cheated clients seeking to invest in cryptocurrency mining operations.

The 33 miners advertised, access to mining operations, the purchase of virtual currency PayCoin and hashlets to the public through its companies, but sales were nothing but part of an elaborate fraudulent scheme.

The United States Department of Justice (DoJ) said that between May 2014 and January 2015, the companies operated what is similar to a Ponzi scheme.

Investors were given access to mining operations that did not exist and to hashlets. Hashlets, claiming rights to the profits made by GAW Miners and ZenMiner cryptocurrency mining operations, were sold far beyond the real mining power present in the company data centers.

As a result, new hashlets were sold to repay old investors, so the scam did not raise suspicions, rather than providing investors with a legitimate share of mining profits.

In order to capture new customers, Garza made a series of false declarations in relation to companies. This included the statement of the former executive that the parent company of GAW Miners had acquired a controlling interest in ZenMiner for $ 8 million.

This would give credence to the legitimacy of both companies, but in reality such a transaction never took place.

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In order to encourage investment in PayCoin. Garza promised to customers that the value of the virtual asset would not fall below $ 20 per currency as the cryptocurrency was underwritten by a legal reserve of $ 100 million.

This funding reserve did not exist.

At its peak, PayCoin was worth just over $ 13. However, virtual currency is now nearing nothingness as a fraud-based currency, and the PayCoin exchange rate has plummeted to $ 0.016.

The collapse of the cryptocurrency is similar to the BitConnect BCC currency, which was worth $ 363.62 at the time the founder of the exchange made a scam at the exit.

BCC is now worth $ 0.67, which is actually useless compared to the previously high price of the currency.

Garza pleaded guilty to a count of telegraph fraud. In addition to the prison sentence, Garza will also have to accept three years of controlled release – including a period of home detention – and pay the return of $ 9,182,000, the amount of the order forces believes that investors all over the world have been defrauded by.

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CNN reports that the original sentence considered for Garza could have been up to 20 years in prison, but The agreement of the condemned to pay back the funds reduced the duration of the imposed sentence.

Legal actions against GAW Miners and ZenMiners were launched by the Securities and Exchange Commission (SEC) in the United States in 2017. The agency won the court case and the president ordered the companies to jointly repay $ 10 , 4 million for cheated investors, plus $ 1 million in damages.

The case against Garza was separated from the complaints filed against the companies.

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Ironically, at the time of the investors' defrauding, the value of Bitcoin (BTC) hovered at $ 450.

If Garza had legitimately invested in the cryptocurrency – even if no mining took place – at the moment, the rapid inflation of Bitcoin's value at today's rates could have ensured that the fraudster had managed to get away with the scheme and customers would not necessarily lose their investment.

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