The 13th of September is a day to remember for Homero Joshua Garza. The CEO of the U.S. crypto firm GAW Miners, which has ceased its existence, has been sentenced to 21 months in prison for carrying out a massive investor fraud, reports Hartford Business. The ruling put an end to a years-long saga which began in 2014.
To remind, GAW Miners, which stood for Geniuses at Work, was initially a reseller and distributor of mining equipment. Then, it became a hosted mining business and ultimately a Ponzi scheme selling more cryptocurrency mining processing power than actually possessing. In 2014, the company began to pitch the so-called Hashlet or a slice “of purported mining profits, that would “always make money.”
Later on, Garza broke the news that he purchased the BTC.com domain name for $1 million concurrently announcing the launch of Paycoin which he said “will be established as the new dominant global online currency.” He subsequently guaranteed a $ 20-floor price for PayCoin claiming that the company bought an $8 million stake in the affiliated ZenMiner and that the two had a $100 million reserve to maintain that price.
Troubles in the fraud paradise began when a Mississippian power company won a default judgment against GAW: the company failed to foot the electricity bills. In December 2015, the SEC sued Garza, GAW and ZenMiner for the unlicensed sale of securities and operating a Ponzi scheme. It turned out that Gaw did not buy the abovementioned domain name but concluded a finite long-term agreement. Nor did he purchase an $8 million stake in ZenMiner. The leaked emails demonstrated that the company was indeed experiencing troubles and that the SEC’s investigation had been launched, even though the company denied it officially. They also revealed that the company sold more mining processing power than it actually possessed.
Eventually, Garza and his company captured the attention of the Justice Department which examined the company in parallel with the SEC. And the mountain of lies began to crumble. In 2017, a Connecticut judge “levied a $9.9 million civil judgment against Garza.” Both GAW Miners and ZenMiner had been previously ordered to pay $11.4 million — the SEC’s bid for a default judgment against the companies.
In July 2017, Graza pleaded guilty “on a wire fraud charge related to the creation and sale of a cryptocurrency called PayCoin.” The coin is still on the market and is currently trading at $0,016.
The prosecutors stated that Garza ran a nine-month scheme that resulted in investors losing close to $9.2 million — an amount which he will have to pay as restitution. He will serve two years in prison beginning January 4th 2019. Then he will be released and supervised for another three. That will include six months spent in home confinement.
The story of Garza is not unique in the crypto world. Every now and then cases of outrageous scams are disclosed, exposing the truth behind people and companies like Michael Stollaire, the so-called blockchain evangelist, Bitconnect and even potentially Hashflare and Tezos.