FBI Gives PayCoin Crypto Mining Schemer 21 Months in Prison for $9 Million Investor Heist

The multi-million dollar scammer Homero Joshua Garza has been sentenced. The information was released by the Federal Bureau of Investigation (FBI) in an article published on January 11. Garza scammed several investors that lost $9 million in a virtual currency called PayCoin.

Graza will now spend 21 months in prison and three years of supervised release after being considered guilty of scamming people. He has also been ordered to pay restitution to the victims.

The individual operated several businesses based in Connecticut. Some of them were GAW Miners, ZenMiner and ZenCloud. The companies have been operative between 2014 and 2015 selling Bitcoin (BTC) mining hardware. At the same time, he offered shares in a virtual currency mining operation and it has also created the virtual currency PayCoin.

The main problem behind his businesses is that they were not conducted legally. There were some false statements related to his companies and their capabilities and financial backing. Garza started to manage a Ponzi-scheme that ended up in a bad way for both users and him.

Special Agent Mark Munster, who investigated the case for the FBI, commented:

“Garza got into this market at the right time. The interest and enthusiasm for these currencies was high, and he was able to market himself and the business very effectively. The problem was that much of Garza was marketing was a lie.”

In the beginning, Garza wanted to allow individuals without technical knowledge in virtual currencies to have easier access to these digital assets. Users were purchasing mining equipment that was set up at the GAW Miners data centre. After it, the customer could direct the miner’s activities and take the profits.

According to Munster, there were data centers but without the capacity needed to support the shares that he was selling. In order to process Bitcoin transactions, it is necessary to have a lot of computing power, that Garza didn’t have.

The report released by the FBI explains that Garza started to sell his own virtual currency but it failed to register before offering it to the investing public. Garza explained that the company had a financial reserve of $100 million that they would use to prop up the price of PayCoin ensuring that it would never fall below $20 per unit. He has also promoted partnerships with several corporations such as Target and Amazon.

However, nothing of what he said was real. There was no $100 million and the corporate partnerships with popular companies were just fake. Thus, PayCoin plummeted right after everything became known.

The U.S. Securities and Exchange Commission (SEC) one of the most important regulatory agencies in the United States and all over the world, informed the FBI about this scam. The SEC conducted a robust investigation on the matter. Garza violated civil securities laws and also criminal ones.

According to Munster, it was easy to see that the money of these investments was going to luxury cars, expensive trips and other things. Munster went on explaining that there were several investors, some of them overseas while others invested just some few funds.

During the bull run experienced in 2017, when Bitcoin and other digital assets were reaching their all-time high, several projects and ICOs were launched to the market. Each of them was gathering hundreds of thousands or millions of dollars in funds. All of them promised to revolutionize different industries in which they were involved, nevertheless, just a few of them were able to release a working product and keep their operations running.

As the bear market affected the whole industry, most of these projects were not able to fulfill their promises. Several others just run away with users’ funds and other companies were just set up as scams.


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