Daily fraud update: 8th June

Chris Lee

SEC in asset freeze over alleged crypto fraud

A leading US regulator has received an asset freeze on a pair of firms accused of carrying out crypto fraud – and on the people allegedly behind it.

The Securities and Exchange Commission (SEC) said that it had secured the freeze on a group of men accused of carrying out a fraud worth over $12m.

The men have been named, with one being Daniel F. Putnam, of the US state of Utah.

Jean Paul Ramirez Rico, of Colombia, has also been named.

Angel A. Rodriguez, also of Utah, was the third.

The complaint against them was unsealed in a federal court in the Utah city of Salt Lake City last week.

It is alleged that Putnam in particular ran a multi-level marketing scheme called ‘Modern Money Team’, which, according to the SEC, “sold interests” in what the scheme claimed was a crypto mining business.

A multi-level marketing scheme is a scheme in which participants tend to be made offers of payment provided that they recruit others to join and invest in it also.

It is understood that almost 200 investors signed up to the scheme.

In a statement, the regulator shared more details about what the men – and the firms they operated – are alleged to have done.

“According to the complaint, Putnam misappropriated some of these investor funds and spent them on a condominium and other personal expenses,” it said.

“The complaint alleges that Putnam, Ramirez, and Rodriguez, then raised additional funds by offering so-called ‘cryptocurrency trading packages’ to investors with the potential for high returns.”

However, according to the SEC’s allegations, the cash was then used for personal ends – and to also make some basic repayments back to earlier investors, which is a hallmark of a Ponzi scheme.

“In reality, as alleged, the defendants misappropriated investor funds for personal use and to make Ponzi-like distributions to earlier investors,” the SEC added.

“According to the complaint, the defendants conducted these fraudulent schemes through two Utah companies controlled by Putnam, MMT Distributions, LLC and R & D Global, LLC.”

It went on to say that the trio and their firms were being charged with a range of crimes.

They are all accused of breaking certain parts of the Securities Act of 1933 and the Securities Exchange Act of 1934.

Various combinations of the defendants are accused of breaking other parts of the Securities Act.

Putnam’s father, Richard T. Putnam, has been named as a “relief defendant”.

The regulator has so far secured an asset freeze and a variety of other emergency relief measures.

However, it also said that it was looking for a range of other common punishments for those who are found to have committed fraud in situations like this.

One such move could be permanent injunctions, while another could be civil penalties.

It is also looking for “disgorgement of ill-gotten gains with prejudgment interest”.


Chris Lee

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