US citizen charged with running diamond Ponzi scheme, cryptocurrency scam

Crypto currency Diamond

A 51 year-old US citizen has been charged with running a diamond and cryptocurrency based Ponzi scheme.

The US Department of Justice said on Friday that Aman was the operator of a Ponzi scheme from May 2014 to May 2019. Together with his partners, Aman allegedly solicited individuals to invest in “diamond contracts,” in which their money would be used to buy large, rough, uncut diamonds.

These diamonds would then be cut and polished in order to be resold at a profit. To instill trust in the organization, Aman said that funds were backed by his own physical colored diamond stock, apparently worth $25 million.

As is the case with many Ponzi and get-rich-quick schemes, investors expect to see a cut of the profits and without this, Ponzi schemes are exposed and collapse quickly. Therefore, Aman allegedly used investor funds to pay off earlier investment “interest,” and as more investors joined the pool, the transfer of funds down the chain continued without any legitimate profit obtained from diamond purchases.

When funds ran low and the operator was at risk of being exposed, he allegedly created “Reinvestment Contracts” to entice users to roll over their cash into new ‘deals’ in order to buy Aman time to sign up new investors.

However, this could not carry on forever, and US prosecutors say that Aman set up Argyle Coin as the Ponzi scheme was on the verge of collapse. Argyle Coin claimed to be a cryptocurrency project backed by diamond trading, and as a fresh wave of investment poured into the coffers, only a “fraction of the money received” was used to create a cryptocurrency token.

Instead, the DoJ says the majority of the funds were used to pay off investors from the previous Ponzi program, under the names Natural Diamonds Investment Co. and Eagle Financial Diamond Group Inc.

“During the course of the Ponzi scheme, Aman and his partners collected over $25 million from hundreds of investors,” prosecutors say. “Aman allegedly used the money to make purported interest payments to investors, to pay business expenses, to pay commissions to the partners, and to support his own lavish lifestyle.”

Investor funds were allegedly used for purposes including housing rent, horse purchases, and riding lessons.

In 2019, the Securities and Exchange Commission obtained an emergency court order to freeze Argyle Coin’s operations. The US District Court for the Southern District of Florida granted a request for a temporary restraining order and asset freeze while the cryptocurrency organization was investigated.

Aman is facing charges of wire fraud, which could result in up to 20 years behind bars, as well as restitution payments.

Source: zdnet

Venezuelans go after diamond-backed cryptocurrency Ponzi with $30M lawsuit

crypto currency

A group of Venezuelans that moved to the US to “start a new life” are suing a $30 million cryptocurrency Ponzi scheme that allegedly backed its coins with real diamonds.

On Friday last week, a group of Venezuelans submitted a lawsuit claiming they were fraudulently promised massive returns on investments into the supposed diamond-backed cryptocurrency, Argyle Coin, Law360 reports.

The perpetrators, Jose Angel Aman, Harold Seigel, and his son Jonathan Seigel, were reportedly running two diamond companies – Natural Diamonds and Eagle Financial – and an associated cryptocurrency business that offered the diamond-backed digital assets. According to the report, the perps defrauded over 300 investors.

The group of Venezuelans said they were amateur investors and were sucked into the $30 million scheme after being misled by promises of big returns. Natural Diamonds said it would buy and cut raw diamonds to sell on for a 24-percent return.

The Venezuelans initially invested in Eagle Financial, which also leveraged Seigel’s reputation as a supposed diamond expert to trade high-end diamonds.

“[Eagle Financial] and its principals overstated their experience in the diamond and jewelry businesses to lure investors into trusting [Eagle Financial] and its principals with their investment,” the court document reads.

In reality, the funds that were invested in Eagle Financial and Natural Diamonds were being used to repay earlier investors.

Eventually money ran out, so Aman created Argyle Coin to continue luring investors in an attempt to keep the scheme running. Argyle Coin reportedly offered “risk-free” investments into a diamond-backed cryptocurrency.

However, the digital asset was never developed. The funds beguiled from investors were again used to pay off earlier investors of Eagle Financial and Natural Diamonds.

Aman, Seigel, and Seigel allegedly secured the cryptocurrency with a $25 million performance bond and physical diamonds. But the Venezuelan’s calls for evidence of this and for access to digital wallets containing Argyle Coins, went unanswered.

A troubling cryptocurrency
In April, more than a dozen lawsuits were filed by those lured by Aman and his fake diamonds and cryptocurrency, Palm Beach Daily News reported.

In May this year, the Securities and Exchange Commission (SEC) filed a suit against Argyle Coin forcing it to cease trading and freeze its accounts, calling it a Ponzi scheme. The halt also prevented Argyle Coin from undertaking its initial coin offering.

All three of Aman’s firms were charged at the time, The Wall Street Journal reports.

The scheme began in 2014 when Aman began offering investments in Natural Diamonds, promising the return of 24 percent on top of initial investments, within two years.

Aman and his accomplices then sold investment contracts in Eagle Financial in 2015, and used the funds to repay earlier investors, WSJ says. Aman was also said to be using the funds to live a “lavish lifestyle,” another report stated. Eventually Argyle Coin was created to perpetuate the scheme.

The group of seven Venezuelans are the latest to join a growing list of parties going after Argyle Coin and its deceptive “creators.”