California Man Sentenced for $36.9 Million Fraud Scheme
In a recent ruling, a man from California has been handed a prison sentence of 51 months due to his involvement in a fraud scheme that siphoned off over $36.9 million from investors through an international digital asset scam orchestrated from Cambodia. Alongside the prison term, the court mandated that he compensate victims a staggering sum of $26,867,242.44.
Statements from Officials
Matthew R. Galeotti, Acting Assistant Attorney General at the Justice Department’s Criminal Division, emphasized the severity of the offense, stating:
“The defendant participated in a conspiracy aimed at defrauding American investors under the guise of lucrative digital asset opportunities, ultimately stealing their hard-earned money through Cambodian scam operations. Foreign scam centers have sadly become more common, and the Criminal Division is dedicated to pursuing justice against those who exploit U.S. investors, regardless of their location.”
Bill Essayli, Acting U.S. Attorney for the Central District of California, added:
“This defendant’s lengthy prison sentence reflects the gravity of the conspiracy that resulted in significant financial losses for numerous victims, often stemming from simple, unsolicited messages they received on their phones. It’s crucial for the public to remain cautious and skeptical regarding unsolicited investment offers, as it could jeopardize savings or crucial funds for future needs like education.”
Details of the Fraud Scheme
39-year-old Shengsheng He, a former co-owner of Axis Digital Limited in the Bahamas, pleaded guilty on April 10 to engaging in a conspiracy to operate an unlicensed money transmitting business. Legal documents revealed He was an integral part of a broader international network that deceived American victims into sending money to accounts managed by co-conspirators who would then launder the funds through various channels, including shell companies, international banks, and cryptocurrency wallets.
The tactics employed by the fraudsters included reaching out to victims through unsolicited communications on social media, phone calls, text messages, and even online dating platforms to build trust before promoting bogus digital asset investments. Victims were misled into believing their investments were flourishing, whilst in reality, the money they entrusted to the fraudsters was being stolen. Shockingly, over $36.9 million in victim funds was funneled from U.S. bank accounts to a single account at Deltec Bank in the Bahamas, attributed to Axis Digital Limited. Funds were subsequently converted to the stablecoin Tether (USDT) under directions from He and his accomplices before being transferred to wallets controlled by individuals in Cambodia. From there, the funds traveled to leaders of scam centers across the region.
Co-Conspirators and Ongoing Investigations
So far, eight co-conspirators have entered guilty pleas in connection with the scheme, including Daren Li, a national of China and St. Kitts and Nevis, who has been held in U.S. custody since April 2024, and Lu Zhang, a Chinese national residing illegally in the U.S. who oversaw a network of money launderers. Both Li and Zhang have pleaded guilty to conspiring to commit money laundering.
The case continues to be investigated by the U.S. Secret Service’s Global Investigative Operations Center, with contributions from various agencies including Homeland Security Investigations, Customs and Border Protection, and the Department of State’s Diplomatic Security Service, along with the Dominican National Police and U.S. Marshals Service.
The prosecution involved a team of Assistant U.S. Attorneys from multiple divisions focusing on cybercrime, who have successfully secured convictions against over 180 cybercriminals since 2020 and have recovered over $350 million in victim restitution.
Reporting Scams
If you or someone you know has fallen victim to a similar digital asset investment scam, immediate reporting can be made to IC3.gov for assistance.
