A disgraced American lobbyist, businessman and movie producer, who was played by actor Kevin Spacey in a movie about his life, has been charged over his role in a fraudulent bitcoin scheme.
Jack Abramoff, who in 2006 was sentenced to six years in federal prison for mail fraud, bribing public officials and tax evasion, has now been charged with conducting a fraudulent, unregistered offering of what he claimed was a new and improved version of bitcoin.
Abramoff only served 43 months in jail for his prior sentence, during which he wrote an autobiographical book about being "America's most notorious lobbyist". The corruption investigation of which he was at the center saw 21 people plead guilty, including two White House officials, an Ohio politician, and several other lobbyists and congressional aides.
His lobbying and the scandals that surround it are the subject of two Hollywood films, Casino Jack and the Unites States of Money and Casino Jack, with Abramoff played by Spacey.
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The SEC alleged Nevada-based NAC Foundation and its chief executive Marcus Andrade, along with Abramoff, raised at least US$5.6 million from more than 2400 investors by selling AML BitCoin tokens.
The regulator found NAC and its chief executive had portrayed the AML BitCoin as being superior to the original cryptocurrency, arguing it boasted anti-money laundering, anti-terrorism and theft-resistant technology.
In reality, none of these capabilities existed and AML BitCoin and its blockchain were in very early stages of development, the SEC's complaints allege.
NAC and Andrade also falsely claimed that multiple government agencies were negotiating to use the bitcoin, while Abramoff claimed they were on the verge of advertising AML BitCoin during the Super Bowl.
"Abramoff also allegedly arranged for NAC to pay for purportedly independent articles about AML BitCoin that included many of the misleading statements," the SEC said.
Meanwhile Andrade directed a strategy to manipulate and boost the token's trading volume and price, diverting $1.1 million from the offering for his personal use, it alleged.
"We allege that these defendants repeatedly misled investors into funding non-existent technology, falsely claiming that the technology would make digital asset transactions more secure," SEC enforcement division cyber unit chief Kristina Littman said.
"Investors are entitled to truthful information so they can make fully informed investment decisions."
The US Attorney's office also announced parallel criminal actions against Andrade and Abramoff, with charges relating to wire fraud and lobbying disclosure violations.
SEC charged NAC, Andrade and Abramoff with "violating the antifraud and securities registration provisions of the federal securities laws, and also charge Abramoff with broker-dealer registration violations," it said.
"The SEC seeks permanent injunctions, disgorgement, and civil penalties, as well as injunctions prohibiting NAC and Andrade from participating in future securities offerings, and barring Andrade from serving as a public company officer or director," the regulator said.
Subject to court approval, Abramoff has agreed to a settlement imposing permanent injunctions, officer and director, industry and penny stock bars.
He will be forced to pay back the US$50,000 in commissions he received, plus interest of US$5501, and awaits further civil penalties to be determined by the court.