Today, the Commodity Futures Trading Commission (CFTC or Commission) filed a Complaint in the U.S. District Court for the Central District of California against David Carmona (a/k/a/ David Segundo Carmona a/k/a Wuilver Segundo) (Carmona), Juan Arellano Parra (Arellano), Moses Valdez (Valdez), David Brend (Brend), and Marco A.  Ruiz Ochoa (Ruiz) (together, Defendants), charging the Defendants with defrauding more than 170 individuals—a group of predominantly Spanish-speaking investors—out of hundreds of thousands of dollars.

According to their marketing materials, Defendants operated a digital asset commodity trading business under the name “Icomtech” that enabled a cash-for-Bitcoin and other digital assets trading platform.  Marketing materials promised exceptional returns, commissions, and referral bonuses.  One presentation promised that customers could,

 (i) “…EARN 20% for each package [they] sell” and “…EARN 3% foreach package that [a] direct affiliate sells”; and (ii) “bonus points” earned for recruiting others to invest could be used to obtain prizes, including iPhones, Rolex watches, trips (to Las Vegas, Hawaii or Dubai), luxury cars (e.g., a Mercedes Benz), or exchange for as much as $20,000 in cash.[1]

It appears that Defendants never acquired any assets—digital or otherwise—on behalf of their customers.  They did not trade Bitcoin or any other coins or tokens—digital or traditional on behalf of customers—instead, evidence suggests that they simply misappropriated customer funds.  Unfortunately, this recurring theme is all too common.[2]

Despite the high-tech gloss, Defendants are accused of engaging in garden variety fraud and running an old-school Ponzi scheme.  As I have previously noted,

This age-old sleight of hand gained its contemporary moniker “Ponzi scheme” from the 1920’s financial fraud perpetuated by Charles Ponzi.[3]  For proof of the enduring and pernicious legacy of fraudsters such as Ponzi and his predecessors, recall the revelation of Bernie Madoff’s $50 billion Ponzi scheme.[4]  Prosecutors continue to work today—a decade after Madoff confessed that his investment advisory fund was “all just one big lie” —to compensate victims.[5]

See Statement of Commissioner Kristin N. Johnson Regarding CFTC Action Against Retail Forex Ponzi Scheme Targeting Spanish Speakers in Puerto Rico and the Continental United States (Johnson Ponzi Statement), Feb. 14, 2023, https://www.cftc.gov/PressRoom/SpeechesTestimony/ johnsonstatement021423.

I am deeply committed to raising alarms regarding fraud that targets vulnerable investors based on relationships, kinship, or other social network connections.  Affinity-based fraud schemes targeting vulnerable individuals within a specific community based on a shared characteristic seek to exploit the trust generated within the community.  This type of misconduct is distinctly problematic because:

[D]efendants in such fraud actions often target vulnerable individuals within a specific community based on their shared faith, heritage, culture, or native language.[6]  Affinity-based fraud schemes all-too-often seek to exploit the trust generated within a community.  Perpetrators target the identified communities because they are familiar with the fears and challenges that may deter investors from reporting or effectively communicating the details of the fraud to law enforcement or regulatory authorities.

Johnson Ponzi Statement, supra.  Investor education and enforcement actions are critical to our efforts to prevent fraudsters from bilking hard-working investors.[7]  Accordingly, I strongly encourage all members of the public to stay informed about the potential scams and abuses in digital assets markets by visiting our investor advisory page.[8]  Fraudsters offering guaranteed, or unusually high, returns—or both—should in particular prompt scrutiny and additional diligence before transferring any funds.

I applaud the efforts of the CFTC’s Division of Enforcement and would like to recognize the staff bringing this litigation:  Kara Mucha, James Deacon, Kathleen Banar, and Rick Glaser.