Lawyer Scott Hughes, 44, of Newport Beach, California, has been accused of helping launder at least $20 million in an alleged cryptocurrency Ponzi scheme. He is a personal injury and criminal attorney, and reportedly represented applicants in workers’ compensation matters in Orange and Los Angeles Counties.
The indictment unsealed Tuesday claims that Hughes and four other defendants promised guaranteed returns for phantom investments in cryptocurrencies through a company called the AirBit Club. Hughes is charged with conspiracy to commit money laundering and conspiracy to commit bank fraud.
Acting United States Attorney Audrey Strauss said: “As alleged, the defendants put a modern-day spin on an age-old investment scam, promising extraordinary rates of guaranteed return on phantom investments in cryptocurrencies. Thanks to HSI, the defendants are in custody and facing serious criminal charges.”
Prosecutors say “those arrested today have not only been charged with running a multimillion-dollar cryptocurrency investment fraud and money laundering ring, but also for allegedly spending their victim’s money on luxury cars, jewelry, and homes. These alleged fraudsters pulled out all the stops to sell their scheme to their victims with enticing recruitment events, then shamelessly used proceeds of their scheme to recruit additional victims through even more aggressive and lavish marketing pitches.
According to the allegations in the Superseding Indictment the defendants participated in a coordinated scheme in which victim-investors were induced to invest in AirBit Club based on the promise of guaranteed profits in exchange for cash investments in club “memberships.”
They marketed AirBit Club as a multilevel marketing club in the cryptocurrency industry, and falsely promised Victims that AirBit Club earned returns on cryptocurrency mining and trading and that victims would earn passive, guaranteed daily returns on any membership purchased.
Attorney Hughes, who is licensed to practice law in California, had previously represented two of the co-defendants in a Securities and Exchange Commission investigation related to another investment scheme known as Vizinova before aiding the two in perpetrating the AirBit Club Scheme by, among other things, helping to remove negative information about AirBit Club and Vizinova from the internet.
In many instances, as early as 2016, Victims who attempted to withdraw money from the AirBit Club Online Portal and complained to a Promoter were met with excuses, delays, and hidden fees amounting to more than 50% of the Victim’s requested withdrawal, if they were able to make any withdrawal at all.