CONSUMER ALERT: New York Department of State’s Division of Consumer Protection Reminds New York Taxpayers to Stay Vigilant Against Scammers During Tax Season

 

Tips To Help Protect New Yorkers From Scammers During Tax Season and Year-Round

Secretary Robert J. Rodriguez: “I urge all New Yorkers to stay vigilant while preparing their taxes this year, and follow our Division of Consumer Protection’s tips so you can outsmart these bad actors year round.”

Follow the New York Department of State on Facebook, Twitter and Instagram for “Tuesday’s Tips” – Practical Tips to Educate and Empower New York Consumers on a Variety of Topics

For this week’s “Tuesday’s Tips,” the New York Department of State’s Division of Consumer Protection (DCP) shares important tips to help New York taxpayers stop identity thieves and tax fraudsters from stealing their identity and hard-earned money. DCP urges New Yorkers to stay vigilant against scams targeting taxpayers not only during tax season, but also year-round.

“Fraudsters are always finding new ways to steal money and personal information from innocent people, and unfortunately, tax filings are full of personal information they want to get a hold of,” said New York State Secretary of State Robert J. Rodriguez. “I urge all New Yorkers to stay vigilant while preparing their taxes this year, and follow our Division of Consumer Protection’s tips so you can outsmart these bad actors year round.”

Acting Commissioner of Department of Taxation and Finance, Amanda Hiller said, “Always keep your guard up when it comes to your personal information. This is especially important during tax filing season. If you’re doing your own taxes, be especially careful when mailing or electronically filing your returns. If you’re using a tax service, know your rights under the state’s Bill of Rights for those who use a tax preparer.” 

While taxpayer scams can take on a variety of forms, the following tips include some examples of scams to look out for:

File early! File promptly using e-file and direct deposit of your tax refund. Filing your tax returns as soon as possible can reduce the likelihood that an identity thief will be able to claim a fraudulent tax refund using your stolen information. Filing electronically is also safer, faster and more efficient than sending paper returns through the mail.

Mail your tax returns from a secure location.  If mailing, mail directly from the post office. Never leave mail in your home mailbox for pickup by your letter carrier. Do not allow the tax preparer to mail your return. 

Avoid Phishing Scams and Government Impersonators. Scammers use email, text messages or calls to trick you into giving your personal or financial information. Remember, the IRS and NYS will typically first initiate contact with a taxpayer concerning a tax issue via regular mail. Government agencies do not request personal or financial information through email and will not ask for credit card numbers over the phone. Government agencies also don’t send tax refunds by email or text. For more tips, check out this recent press release from the Federal Trade Commission.

Beware of scam artists posing as tax preparers. If you choose to file your tax return using a tax preparer, take precautions to protect your refund and prevent identity theft by keeping the following tips in mind:

• Work only with tax preparers whom you have researched thoroughly. Avoid preparers who claim they can obtain larger refunds than other preparers can, as well as those who base their fee on a percentage of your refund.

• Make sure your tax preparer is willing to sign your return and provide their IRS Preparer Tax Identification Number (PTIN). The preparer must also provide you with a copy of the return.

• Look over your return carefully – you are legally responsible for what’s on it. Similarly, never sign a blank return.

For tips on choosing a tax preparer, check out these resources: 

• Internal Revenue Service’s Tips to Help Choose a Reputable Tax Preparer  and 
• NYS Department of Taxation and Finance’s Consumer Bill of Rights Regarding Tax Preparers

To report fraudulent activity by a tax preparer, contact the NYS Tax Department’s Office of Professional Responsibility at (518) 530-HELP (option #2) or file a tax preparer complaint online. 

About the New York State Department of State’s Division of Consumer Protection

The New York State Division of Consumer Protection provides resources and education materials to consumers on product safety, as well as voluntary mediation services between consumers and businesses. The Consumer Assistance Helpline 1-800-697-1220 is available Monday to Friday from 8:30am to 4:30pm, excluding State Holidays, and consumer complaints can be filed at any time at www.dos.ny.gov/consumer-protection.

Follow the New York Department of State on Facebook, Twitter and Instagram and check in every Tuesday for more practical tips that educate and empower New York consumers on a variety of topics. Sign up to receive consumer alerts directly to your email or phone here.

For more consumer protection tips, follow the Division of Consumer Protection on Facebook and Twitter.

KRVC - Book Signing at 505BX Tomorrow Evening -- More Events Coming Up

 

Wednesday, January 31st at 7pm

"I read this in three days. What a find! Funny and yet soulful, reading about Sarah's adventures in the city." "A marvelous 'back to the future' ride through the '90's fashion, beauty and magazine advertising days." "A smart, well-observed, often hilarious first novel about a young woman trying to make it in the cut-throat 90’s New York City fashion world." CaraKagan.com Wednesday, February 7th  Book Club 1-3pm we will be discussing Remarkably Bright Creatures by Shelby Van Pelt ​NAMED A BEST BOOK OF SUMMER by: Chicago Tribune * The View * Southern Living * USA Today A charming, witty and compulsively readable exploration of friendship, reckoning, and hope that traces a widow's unlikely connection with a giant Pacific octopus​. We Recurring Events at 505BX Meditation, Karaoke, Book Club, Medicare Workshops Look forward to seeing you! 505BX.org

One Iranian and Two Canadian Nationals Indicted in Murder-for-Hire Scheme

 

One Iranian and two Canadian nationals have been charged with conspiracy to use interstate commerce in the commission of a murder-for-hire plot.

According to court documents, from December 2020 through March 2021, Naji Sharifi Zindashti, 49, Damion Patrick John Ryan, 43, and Adam Richard Pearson, 29, conspired with each other in a plot to murder two residents of the state of Maryland. The defendants, one of whom is based in Iran, used an encrypted messaging service called “SkyECC” to recruit individuals who would travel into the United States to carry out the killings, to discuss the identities and locations of the would-be victims, to plan logistics and mechanics of how to carry out the murders, and to negotiate payment for completion of this “job” in Maryland. The intended victims of this plot, who at the time resided in Maryland, had previously fled to the United States after one of them defected from Iran.

Concurrent with this indictment, the Treasury Department took action against Zindashti’s criminal network that targets Iranian dissidents and opposition activists for kidnapping and assassination at the direction of the Iranian regime. Pursuant to this designation, Zindashti and several of his key associates are prohibited from engaging in any transaction or dealing that involves a U.S. person or occurs in the United States.

“To those in Iran who plot murders on U.S. soil and the criminal actors who work with them, let today’s charges send a clear message: the Department of Justice will pursue you as long as it takes – and wherever you are – and deliver justice,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division.

“As alleged, Mr. Zindashti and his team of gunmen, including a Minnesota resident, used an encrypted messaging service to orchestrate an assassination plot against two individuals,” said U.S. Attorney Andrew Luger for the District of Minnesota. “Thanks to the skilled work of federal prosecutors and law enforcement agents, this murder-for-hire conspiracy was disrupted and the defendants will face justice.”

“These charges show a pattern of Iranian groups trying to murder U.S. residents on U.S. soil,” said Assistant Director Suzanne Turner of the FBI’s Counterintelligence Division. “Mr. Zindashti and his accomplices’ alleged plot is reprehensible, and the FBI will not tolerate such acts against U.S. residents, and we will continue to pursue these individuals until they are brought to the U.S. to face justice.” 

As alleged in the indictment, between December 2020 and January 2021, Zindashti and Ryan communicated about “jobs,” “equipment,” “tools” and plans to “make some money.” In January 2021, they discussed a job in the United States, with Ryan noting that doing a job in the United States was challenging, but that he “might have someone to do it.” That same day he messaged Pearson about a “job” in Maryland. Pearson stated, “shooting is probably easiest thing for them,” and that he was “on it.” Ryan recommended “2 guys go with proper equipment.” Pearson said he would encourage the recruits for the job to “shoot [the victim] in the head a lot [to] make example” and that he would tell them “we gotta erase his head from his torso.”

On or about Jan. 30, 2021, Zindashti messaged Ryan on SkyECC seeking an update on the job. Ryan responded that he was getting “things in order” and that he would need money. A few days later, Zindashti told Ryan that Zindashti’s organization was ready to move forward. Zindashti and Ryan then agreed on a $350,000 payment for the “job,” in addition to $20,000 to cover expenses.  After Zindashti introduced Ryan to Co-Conspirator 1, Ryan responded: “We have a 4 man team ready.”

Over the days that followed, Ryan and Co-Conspirator 1 continued to correspond on SkyECC about the plot. Specifically, Co-Conspirator 1 sent Ryan information about the would-be victims, including their photographs and images of a map that highlighted the victims’ known address. In or around March 8, 2021, Co-Conspirator 1 facilitated a $20,000 payment to Ryan for purposes of covering travel expenses associated with the plot.    

All three of the defendants are charged with one count of conspiracy to use interstate commerce facilities in the commission of murder-for-hire. Pearson is also charged with one count of possession of a firearm by a fugitive from justice and one count of possession of a firearm by an alien unlawfully in the United States.

Zindashti currently resides in Iran. Ryan and Pearson are currently incarcerated in Canada on unrelated offenses.

The FBI is investigating the case with valuable assistance from the Canadian Security Intelligence Service and the Royal Canadian Mounted Police.

Assistant U.S. Attorney Andrew R. Winter for the District of Minnesota, Trial Attorney Menno Goedman of the National Security Division’s Counterintelligence and Export Control Section, and Trial Attorney Joshua Champagne of the National Security Division’s Counterterrorism Section are prosecuting the case.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law

Comptroller Lander Launches Online Form for Public to Aid Investigation into 60-Day Shelter Limit for Asylum Seekers

 

New portal will confidentially collect verified stories & insights detailing impacts of Adams Administration’s policy forcing families to leave shelter after 60 days

New York City Comptroller Brad Lander announced the launch of a new online form to serve as a dedicated platform to share insights and first-hand observations on the impacts of the Adams Administration’s imposition of a 60-day shelter limit for asylum-seeking families this winter. Open to individual New Yorkers, advocacy groups, and community organizations, the form is located on the “Accounting for Asylum Seeker Services” section of the Comptroller’s Office website.

“As our office investigates the City’s implementation of its 60-day shelter limit, a vital way to fully understand the real impact of this policy on the lives of families is to gather feedback from asylum seekers themselves and the communities who interact, live, and witness the day-to-day experience of newly arrived families. Firsthand accounts are a crucial and integral part of the information-gathering process to fully delve into how the 60-day limit impacts shelter, schools, and stability,” said Comptroller Brad Lander.

The 60-day rule, implemented by the Adams Administration in October 2023, mandates families in New York City shelters to leave within 60 days. Families receiving this notice must find alternative shelter, potentially facing displacement to different locations and schools.

Today’s update to the Comptroller’s Office’s asylum seeker resource is an extension of Comptroller Lander’s January 9 announcement, where he initiated an investigation into the City’s handling of the 60-day rule, expressing concerns about fiscal implications, case management distribution, potential impacts on work authorization and immigration status, and the overall costs associated with uprooting families. Comptroller Lander sent a letter outlining the investigation to Mayor Eric Adams, requesting detailed information from relevant agencies involved in implementing the rule.

 The Comptroller’s office created this online form to collect on-the-ground perspectives on the challenges faced by asylum seekers in light of recent policy changes. Participants can submit information anonymously as personal identification is not required. Any information in this form will not be voluntarily disclosed by the Comptroller’s office and no identifying information will be included in any published investigation report.

The “Accounting for Asylum Seeker Services” resource, launched this past August, brings together the most comprehensive publicly available set of the City’s known emergency contracts, budget projections, and high-level data on the asylum seeker population.

The Comptroller’s Offices encourages advocacy groups, community organizers, and individuals to submit their experiences securely and confidentially via the form.

Read Comptroller Lander’s letter to Mayor Adams.

Explore the “Accounting for Asylum Seekers” resource.

Submit observations and insights through the new online form.

Governor Hochul Announces $160 Million Federal Investment From the National Science Foundation to the New Energy New York Storage Engine to Lead the Nation in Battery Technology and Manufacturing

 

Designation Anchored by Binghamton University Further Establishes Southern Tier Region as National Hub for Growing Energy Storage Industry

Federal And NYS Investments Complement “Southern Tier Soaring” — The Region's Comprehensive Strategy to Revitalize Communities and Grow the Economy

Governor Kathy Hochul today announced that the U.S. National Science Foundation has designated the New Energy New York (NENY) Storage Engine as a Regional Innovation Engine (NSF Engine) as a part of President Biden’s Investing in America agenda. The NENY Storage Engine, anchored at Binghamton University in New York’s Southern Tier Region, will receive up to $15 million for two years and up to $160 million over 10 years to establish a hub that will accelerate innovation, technology translation and the creation of a skilled workforce to grow the capacity of the domestic battery industry. Through Empire State Development, New York State will match up to 20 percent for the first five years of the project as well as provide support through established programs. The NENY Storage Engine was chosen for its diverse, cross-sector coalition that will build a leading ecosystem driving battery technology innovation, workforce development and manufacturing to support U.S. national security and global competitiveness.

“With this transformative National Science Foundation grant, we are putting Binghamton and all of New York State back at the cutting edge of manufacturing and innovation,” Governor Hochul said. “The modern era of battery technology was born right here in New York, and thanks to Majority Leader Schumer, President Biden and New York’s congressional delegation, the CHIPS and Science Act is helping to ensure that the future of batteries is built here as well.”

Today’s designation builds upon prior federal and State combined investments of $113.7 million through Binghamton University to support the creation of Battery-NY, a cutting-edge technology development, manufacturing, and commercialization energy storage hub. In addition to $50 million in State funding first announced by Governor Hochul in her 2022 State of the State address, Binghamton University was selected by the U.S. Commerce Department's Economic Development Administration to receive $63.7 million in federal funding from the American Rescue Plan's Build Back Better Regional Challenge, a national competition that is providing transformative investments to develop and strengthen regional industry clusters across the country, that also enhance economic equity, create good-paying jobs and further the United States' global competitiveness. Binghamton University was one of 21 chosen out of more than 500 applications originally which were narrowed to 60 applicants in round two of the challenge.

New York State's Nation-Leading Climate Plan

New York State's nation-leading climate agenda calls for an orderly and just transition that creates family-sustaining jobs, continues to foster a green economy across all sectors and ensures that at least 35 percent, with a goal of 40 percent, of the benefits of clean energy investments are directed to disadvantaged communities. Guided by some of the nation’s most aggressive climate and clean energy initiatives, New York is on a path to achieving a zero-emission electricity sector by 2040, including 70 percent renewable energy generation by 2030, and economywide carbon neutrality by mid-century. A cornerstone of this transition is New York's unprecedented clean energy investments, including more than $40 billion in 64 large-scale renewable and transmission projects across the State, $6.8 billion to reduce building emissions, $3.3 billion to scale up solar, nearly $3 billion for clean transportation initiatives, and over $2 billion in NY Green Bank commitments. These and other investments are supporting more than 170,000 jobs in New York’s clean energy sector as of 2022 and over 3,000 percent growth in the distributed solar sector since 2011. To reduce greenhouse gas emissions and improve air quality, New York also adopted zero-emission vehicle regulations, including requiring all new passenger cars and light-duty trucks sold in the State be zero emission by 2035. Partnerships are continuing to advance New York’s climate action with 400 registered and more than 100 certified Climate Smart Communities, nearly 500 Clean Energy Communities, and the State’s largest community air monitoring initiative in 10 disadvantaged communities across the State to help target air pollution and combat climate change.

Attorney General James Reminds Consumers It's Easier Than Ever to Get Electronics Repaired in New York

 

NYS Digital Fair Repair Law Makes it Easier for Consumers to Repair Broken Electronics at Independent Repair Shops Statewide

AG James Provides More Info on the Law and Encourages New Yorkers to Report Businesses Overcharging for Repairs of Electronics

New York Attorney General Letitia James today reminded New Yorkers that the New York State Digital Fair Repair Act recently went into effect statewide, making repairs of cell phones, tablets, and other electronics simpler and more affordable. The law makes it easier to get electronics repaired at independent shops or do repairs at home by requiring manufacturers doing business in New York to make certain documents, tools, and parts widely available. Limited access to documents, tools, and parts previously meant fewer options for repairs, resulting in higher prices and longer wait times. Businesses that fail to follow the new rules could face civil penalties.  

“Phones and computers are lifelines for many New Yorkers, and getting them fixed is now more affordable and convenient than ever before,” said Attorney General James. "For too long, companies made it impossible for New Yorkers to fix their own electronics without paying excessive prices for repairs. This new law gives consumers the freedom to repair their own devices and allows independent repair shops to compete with lower prices. My office will hold any manufacturer accountable that fails to follow this new law."  

The New York Digital Fair Repair Act (Repair Act), General Business Law 399-nn, provides New York consumers with increased options to repair digital products. The Repair Act went into effect on December 28, 2023 and requires manufacturers to make diagnostic and repair information for digital electronic parts and equipment available to independent repair stores. 

What does the Repair Act Require?  

The Repair Act requires original equipment manufacturers (OEMs) of digital electronic equipment “to make diagnostic and repair information available to independent repair providers and consumers if such parts and repair information are also available to OEM authorized repair providers.” Manufacturers must offer access to owners of the covered products as well as independent repair providers.  

Access to documents and many tools must be provided on “fair and reasonable terms.” For documents, this means at no charge. For parts and certain tools, it means offering them at the same cost as they are offered to manufacturer-authorized and affiliated businesses.  

What products are covered?   

The Repair Act applies to “digital electronic equipment” which means any product over $10 that depends on digital electronics to function. This includes many toys, phones, computers/printers, televisions, home entertainment systems, cameras, tools, or other products that use or rely on digital electronics. The Repair Act only applies to products made or sold in New York after July 1, 2023, and does not require manufacturers to share trade secrets. The new law also excludes certain products, including motor vehicles, home appliances, medical devices, off-road equipment, farm equipment, yard or garden equipment, construction equipment, power tools, and public safety communications equipment.   

Enforcement by the New York Attorney General 

Under the Repair Act, the Office of the Attorney General (OAG) is tasked with enforcing the new law and is authorized to investigate potential violations and take action when appropriate, including seeking restitution and civil penalties.  

Consumers and repair shops can contact the manufacturer for the documents, tools, and parts necessary for repairs. Anyone who has reason to believe the Repair Act is being violated can file a complaint with OAG’s Consumer Frauds Bureau. 

Two More Men Charged With Hacking Fantasy Sports And Betting Website

 

One Defendant Committed the Initial Hack, and Both Defendants Sold Access to Stolen Accounts

Damian Williams, the United States Attorney for the Southern District of New York, and James Smith, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a six-count criminal Complaint charging NATHAN AUSTAD, a/k/a “Snoopy,” and KAMERIN STOKES, a/k/a “TheMFNPlug,” in connection with a scheme to hack user accounts at a fantasy sports and betting website (the “Betting Website”) and sell access to those accounts in order to steal hundreds of thousands of dollars from them.  AUSTAD was arrested in Farmington, Minnesota, and is expected to be presented before U.S. Magistrate Judge David T. Schultz in the District of Minnesota.  STOKES was arrested today in Memphis, Tennessee, and is expected to be presented before U.S. Magistrate Judge Annie T. Christoff in the Western District of Tennessee. 

 

U.S. Attorney Damian Williams said: “As alleged, Nathan Austad and Kamerin Stokes were involved a scheme to hack into the accounts of tens of thousands of victims and then to sell access to those stolen accounts online.  Our office is relentless in tracking down the perpetrators of cybercrime.  Earlier this month, we announced an SDNY Whistleblower Pilot Program to encourage early and voluntary self-disclosure of criminal activity.  To all cybercriminals: call us before we call you.” 

FBI Assistant Director in Charge James Smith said: “Cyberattacks are growing increasingly more sophisticated, targeting all manner of businesses and posing a great risk to economic security.  Nathan Austad and Kamerin Stokes were allegedly part of a cyber intrusion that resulted in hundreds of thousands of dollars being stolen from victims’ accounts.   As these defendants found out, if you conduct a cyberattack for profit, you can bet the FBI can and will bring you to justice.”

As alleged in the Complaint:[1]

On or about November 18, 2022, AUSTAD, Joseph Garrison, and others launched a “credential stuffing attack” on the Betting Website.  During a credential stuffing attack, a cyber threat actor collects stolen credentials, or username and password pairs, obtained from other large-scale data breaches of other companies, which can be purchased on the darkweb.  The threat actor then systematically attempts to use those stolen credentials to obtain unauthorized access to accounts held by the same user with other companies and providers, in order to compromise accounts where the user has maintained the same password.  Here, in connection with the attack on the Betting Website, there was a series of attempts to log into the Betting Website accounts using a large list of stolen credentials.

AUSTAD and Garrison successfully accessed approximately 60,000 accounts at the Betting Website (the “Victim Accounts”) through the credential stuffing attack.  In some instances, the individuals who unlawfully accessed the Victim Accounts were able to add a new payment method on the account, deposit $5 into that account through the new payment method to verify that method, and then withdraw all the existing funds in the Victim Account through the new payment method (i.e., to a newly added financial account belonging to the hacker), thus stealing the funds in the Victim Account. 

Access to the Victim Accounts were sold on various websites that traffic in stolen accounts, which are frequently referred to as “Shops.”  AUSTAD and Garrison sold some of the Victim Accounts on shops that they each directly controlled, and AUSTAD’s shop was named after the character Snoopy from the Peanuts comic strip.  A photo of AUSTAD’s Shop website with victim companies redacted is below:

As to other of the Victim Accounts, AUSTAD and Garrison sold them in bulk to co-conspirators, who in turn sold them on their own Shops.  STOKES controlled his own Shop, used the alias “TheMFNPlug,” and purchased Victim Accounts in bulk from Garrison.  Garrison and STOKES messaged each other as to what prices STOKES should charge and what Garrison’s cut of the sales should be.  Garrison provided STOKES with Victim Accounts with a total listed account value of over $125,000.

Photos from STOKES’s Instagram account advertising the availability of Victim Accounts for purchase on his Shop are below, with the name of the Betting Website redacted:

On or about December 2, 2022, AUSTAD messaged about the existence of this investigation, “everyone 3hould’ve been prepared for this before cashing out lol,” and a co-conspirator replied, “lol fbi can’t do shit.”  On or about May 19, 2023, AUSTAD messaged about the existence of this investigation, “like we I know the risk when we started lol . . . everyone knows their committing fraud.”

In order to advertise the success of his Shop that sold stolen accounts, AUSTAD used artificial intelligence image generation tools to create images using the following prompts: “8k hyper-realistic digital art snoopy hacking into 8k hyper-realistic computer with hacker stuff on the screen,” “8k hyper realistic snoopy designed jet but instead of smoke trails it has money trails,” and, “100 bill hyper realistic but instead of the president its snoopy.”  AUSTAD also controlled cryptocurrency accounts that received cryptocurrency worth approximately $465,000, and those accounts appear to be proceeds of his credential stuffing attacks and sale of stolen accounts.

Ultimately, AUSTAD, STOKES, Garrison, and others stole approximately $600,000 from approximately 1,600 Victim Accounts.

Garrison was previously arrested in connection with the attack on the Betting Website, and, on November 15, 2023, he pled guilty to conspiracy to commit computer intrusion in connection with that attack.  Garrison’s sentencing is scheduled for February 1, 2024, at 4:00 p.m. before U.S. District Judge Lewis A. Kaplan.

AUSTAD, 19, of Farmington, Minnesota, and STOKES, 21, of Memphis, Tennessee, are each charged with (i) conspiracy to commit computer intrusions, which carries a maximum sentence of five years in prison; (ii) unauthorized access to a protected computer to further intended fraud, which carries a maximum sentence of five years in prison; (iii) unauthorized access to a protected computer, which carries a maximum sentence of five years in prison; (iv) wire fraud conspiracy, which carries a maximum sentence of 20 years in prison; (v) wire fraud, which carries a maximum sentence of 20 years in prison; and (vi) aggravated identity theft, which carries a mandatory minimum sentence of two years in prison. 

The minimum and maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Mr. Williams praised the outstanding work of the FBI.  Mr. Williams also thanked the New York City Police Department, U.S. Secret Service, and the U.S. Attorney’s Offices for the District of Minnesota and the Western District of Tennessee for their assistance in the investigation.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Kevin Mead and Micah Fergenson are in charge of the prosecution.

The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described therein should be treated as an allegation.

Three Individuals Charged for Roles in $1.89B Cryptocurrency Fraud Scheme

 

The Justice Department today announced charges against two individuals and the guilty plea of a third individual for orchestrating a $1.89 billion cryptocurrency fraud scheme.

Sam Lee, 35, an Australian citizen residing in Dubai, United Arab Emirates, was charged in an indictment unsealed today for allegedly co-founding HyperFund, also known as HyperTech, HyperCapital, HyperVerse, and HyperNation. Rodney Burton, 54, of Miami, and Brenda Chunga, 43, of Severna Park, Maryland, were promotors of HyperFund.

“The defendants are charged with defrauding investors to the tune of $1.89 billion. As alleged in court documents, the defendants falsely represented that investors would receive substantial returns paid from cryptocurrency mining operations, which did not in fact exist,” said Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division. “With our partners in Homeland Security Investigations and IRS Criminal Investigation, we are committed to uncovering sophisticated frauds involving cryptocurrency and digital assets and bringing those who perpetrate them to justice.”

“The level of alleged fraud here is staggering,” said U.S. Attorney Erek L. Barron for the District of Maryland. “Whether it’s cryptocurrency fraud, or any other financial frauds, if it sounds too good to be true, it probably is. This office and our law enforcement partners will hold perpetrators accountable for these and other fraud schemes.”

According to court documents, from June 2020 to November 2022, Lee and his co-conspirators allegedly offered and sold investment contracts to the public through HyperFund’s online investment platform. HyperFund’s promotional materials allegedly made various false claims, including that investors who purchased HyperFund “memberships” would receive between 0.5% to 1% daily in passive rewards until the company either doubled or tripled the investor’s initial investment. To convince investors that HyperFund could make such payments, HyperFund allegedly claimed that its payments would be disbursed in part from its revenues from large-scale crypto mining operations, when in truth, HyperFund did not have such operations. Beginning in at least July 2021, HyperFund allegedly began to block investor withdrawals.

“Today’s charges are a testament to the incredible work of HSI New York’s El Dorado Task Force,” said Acting Special Agent in Charge Erin Keegan of Homeland Security Investigations (HSI) New York. “I commend our law enforcement partners, including those at HSI Baltimore, for their outstanding collaboration. HSI will continue to protect American investors from financial predators.”

“The illegal activity alleged in this case is precisely the type of conduct IRS Criminal Investigation and our law enforcement partners are committed to deterring,” said Acting Special Agent in Charge David Meisenheimer of the IRS Criminal Investigation (IRS:CI) Washington, D.C. Field Office. “These charges send a clear message that we have the tools and internal fortitude to protect our financial systems by diligently investigating, prosecuting, and holding accountable those who seek to defraud the American public.”

Lee is charged with one count of conspiracy to commit securities fraud and wire fraud. If convicted, he faces a maximum penalty of five years in prison. Burton is charged by criminal complaint with one count of conspiracy to operate an unlicensed money transmitting business and one count of operating an unlicensed money transmitting business. He also faces a maximum penalty of five years in prison on each count. Chunga pleaded guilty today to one count of conspiracy to commit securities fraud and wire fraud. She faces a maximum penalty of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

HSI New York’s El Dorado Task Force and IRS:CI are investigating the case.

Trial Attorney Tian Huang of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Aaron S.J. Zelinsky and Spencer Todd for the District of Maryland are prosecuting the case.  

If you believe you are a victim in this case, please contact the Fraud Section’s Victim Witness Unit toll-free at (888) 549-3945 or by email at victimassistance.fraud@usdoj.gov. To learn more about victims’ rights, please visit www.justice.gov/criminal/criminal-vns/victim-rights-derechos-de-las-v-ctimas.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.