The United States Department of Justice (DOJ) has announced charges against Rashawn Russell – a former Deutsche Bank investment banker – for perpetrating a cryptocurrency investment fraud in the form of a Ponzi-like scheme.
A Ponzi-Like Scheme
As alleged by the DOJ, Russell took part in a scheme to defraud multiple investors by claiming that their money would be used for cryptocurrency investments that would generate huge and sometimes “guaranteed” returns. In reality, a large portion of the investors’ money was used for his personal benefit, to gamble, and to repay other investors.
The department stated that as part of the scheme, Russell made false claims to investors about the status of their investments and fabricated several documents that he sent to investors.
According to the DOJ, the former investment banker sent one investor an altered image of a bank balance displayed on a bank website that claimed to show Russell’s “substantial liquidity” but when another investor sought to recoup their investment, Russell never sent the money and instead sent the investor a “fabricated bank wire transfer confirmation” that purported to show the return of the investor’s money.
“As alleged, Russell turned the demand for cryptocurrency investments into a scheme to defraud numerous investors in order to fund his lifestyle. This Office will continue to aggressively pursue fraudsters perpetrating these schemes against investors in the digital asset markets,” United States Attorney, Breon Peace, said.
$200K Bond Deal
Russell was arrested in Brooklyn on Monday. He is being charged with one count of wire fraud for the alleged scheme, which federal prosecutors said ran from November 2020 through August 2022.
He pleaded not guilty at a Tuesday afternoon hearing in Brooklyn federal court and was released on a $200,000 bond deal, signed by his parents. His next court hearing is scheduled for May 9. As part of the bail agreement, Russell will not contact investors, witnesses, and any other person involved in the case. He was also ordered to surrender his passport.
