A 62-year-old Florida woman was charged for her role in a nationwide cryptocurrency scam, Massachusetts’ secretary of state, William Galvin, said Thursday.
Susan Jeanne Barrows was charged with defrauding at least one Massachusetts victim out of $20,000 as part of an investment scheme that involved a fictional cryptocurrency trading platform that has gone by the names Nexus One and CryptoBit Markets, according to Galvin, that state’s chief securities regulator.
But the scheme is believed to be part of a larger scam network in which many more people have been bilked out of their money. That network “involves dozens of individuals and companies and tens of millions of dollars stolen from investors around the country,” according to the complaint filed in Boston.
While “masquerading” as a member of Nexus One, Barrows “received hundreds of thousands of dollars into her personal bank account” and bank accounts registered to her, doing business as E-Vest Miners, the complaint said.
“This case has all the hallmarks of a classic scheme, in which a victim is convinced to invest their hard-earned money by a fraudster who then comes up with a series of excuses explaining why the victim cannot access the profits showing in their account, and then ultimately disappears with the money when the victim becomes too suspicious to hand over any more money,” Galvin said in a statement announcing the complaint.
The victim cited in the complaint was a 67-year-old Marlborough man, who was approached by an individual on an online cryptocurrency investment forum. Via email, the individual connected the victim with Nexus One, which claimed to have proprietary trading software programmed to make investment decisions for those who bought licenses, according to the complaint. The individual promised the victim that Nexus One could guarantee a 10% return on investment, the complaint stated.
The complaint further alleged that Barrows, claiming to be from the “Deposit Department” of Nexus One, solicited investments of $20,000 from the victim, who was told to wire the money to an account in Barrows’ name. She then tried to hide the money stolen from the victim by buying anonymously held assets including Bitcoin from localbitcoins.com user “Guillermex” and precious metals from a California company named Monarch Metals brokers, according to the complaint, which noted Guillermex and Monarch bank records revealed Barrows was part of a “much larger network of scams that span the globe.”
Searches of several corporate record databases revealed that Nexus One, which later claimed to the victim that it was rebranding as CryptoBit, doesn’t exist.
When the victim started asking about withdrawing funds from his account, individuals from Nexus One provided various excuses, claiming multiple reasons why the money couldn’t be withdrawn, according to the complaint.
At the time the complaint was filed, the victim hadn’t been able to recover any profits or principal funds, according to Galvin, who noted the Securities Division is seeking a cease and desist order to bar Barrows from any additional violations of state securities laws, along with restitution for the victim and an unspecified administrative fine.
The “innocent appearance” of Barrows “belies her true nature, allowing her to convince investors to trust her before she accepts their investments with no intent to return their money,” the complaint stated, adding: “Capitalizing on the growing interest in the seemingly sophisticated cryptocurrency market, Barrows solicited investments in unregistered securities on behalf of multiple false companies that guaranteed investors profits by utilizing propriety trading software that purportedly could never fail.”
Because the Securities Division strongly suspected there were “far more victims who have been scammed by the people involved in a large scam network,” Galvin said: “I strongly urge anyone who has had contact with Nexus One or CryptoBit, or any similarly suspicious entities to contact my office immediately.”
Anybody who believes they may have been a victim of investment fraud was encouraged to contact the Securities Division at 1-800-269-5428 or 617-727-3548.
— Check out State Regulators Bust ICOs in ‘Operation Cryptosweep’ on ThinkAdvisor.