A convicted hedge-fund manager assumed a fake name and wore a disguise to lure investors into a $30m cryptocurrency fraud in New York.
According to the the US Securities and Exchange Commission, Boaz Manor, his business associate Edith Pardo, and two companies, CG Blockchain Inc. and BCT Inc. SEZC, have been charged with violating the anti-fraud and securities registration provisions of the federal securities laws.
The group allegedly raised over $30m in a fraudulent ICO, which had the goal of launching hedge funds testing technology to record transactions on blockchain.
Boaz Manor had darkened his hair, grown a beard and was using aliases to hide his identity as he launched his bitcoin business - called CG Blockchain. His disguises were designed to conceal the fact that he had served a year in prison after pleading guilty to criminal charges arising from the collapse of a large Canadian hedge fund.
"Bo" Manor became notorious in Canada for operating a bogus $730m hedge fund that collapsed in 2005 amid allegations of offshore accounts and missing diamonds and investments. He remained a fugitive for two years before returning to the country, serving four years in prison and being banned from the province's capital markets.
One of the names Manor went by was Shaun McDonald. He would also pretend to be an employee of CG Blockchain rather than the founder.
CG Blockchain owned a product called ComplianceGuard, which promised pension-fund investors a blockchain-based auditing tool to protect their funds.
Among the fraudulent claims were that Pardo and other investors each paid a $1m yearly fee to CG Blockchain.
In 2017, CG Blockchain launched an Initial Coin Offering and began marketing a new product to potential investors called Blockchain Terminal that allowed hedge funds and financial institutions to trade in cryptocurrency. In 2018, CG Blockchain publicly announced it had raised $30m from its initial offering. That's when investors became suspicious.
The 46-year-old has now been indicted by the US Department of Justice along with Edith Pardo, 68, of New Jersey, and accused of "fraudulent misrepresentation". If convicted of conspiracy and wire fraud, Manor and Pardo each face 20 years in prison and a $250,000 fine. The securities fraud charge carries a maximum penalty of 20 years in prison and a $5m fine.