33 Months in Prison for Cheating on Investors
CabbageTech CEO Patrick McDonnell was sentenced to 33 months in prison on Thursday. McDonnell will also be required to return $224,352 to victims as ordered by the New York Eastern District Attorney’s Office.
The 47-year-old New Yorker pleaded guilty in June 2019. Initially, his case was tried in civil and then criminal cases. In both cases, the trial involved the appropriation of more than $200,000 from CabbageTech investors.
According to the indictment, McDonnell acted under the pseudonym Jason Flack and appropriated assets in Bitcoin, Litecoin, Ethereum and Verge from 10 victims, promising them to ensure the return on investment and providing fake financial statements.
CabbageTech began operating operations in May 2016, and in 2018 came into the view of the authorities. In January 2019, the U.S. Commodity Futures Trading Commission (CFTC) filed a civil lawsuit against McDonnell, accusing him of cheating investors. The CFTC reinforced its authority in this matter with the decision of the US Internal Revenue Service in 2014, according to which Bitcoin and other “convertible virtual currencies” are exchange commodities. Previously, this argument has not yet been used in court, but the judge made a case-law in favor of the CFTC, which supported the law enforcement activity of the regulator in the digital asset space. Subsequently, it was decided to recover $1.1 million from McDonnell.
After the CFTC, the Justice Department began to prosecute CEO CabbageTech. It used the existing CFTC findings and secured a guilty plea in June 2019.
Author: Marko Vidrih
Featured image credit: Pixabay