Damian Williams, United States Legal professional for the Southern District of New York, and Michael J. Driscoll, Assistant Director-in-Cost, New York Division of the Federal Bureau of Investigation (“FBI”), introduced the arrest immediately of CHET STOJANOVICH, a/okay/a “Chester J. Stojanovich,” on expenses of defrauding greater than a dozen victims of greater than $1.8 million, via fraudulent misrepresentations that he would supply the victims with specialised cryptocurrency-mining computer systems (“Miners”), and that he would supply Miner-hosting providers that would supply the victims with a profitable stream of “hash energy” convertible into cryptocurrency. As a substitute, as alleged, STOJANOVICH deceived his victims, misappropriated his victims’ cash, and offered them with virtually no Miners, Miner-hosting providers, or hash energy. The defendant was arrested early this morning after crossing from Canada into the USA at Champlain, New York. He’s anticipated to seem tomorrow earlier than U.S. Justice of the Peace Choose Stewart D. Aaron within the Southern District of New York.
U.S. Legal professional Damian Williams mentioned: “Quite a lot of pleasure and ‘buzz’ has been generated in recent times concerning the ‘new world’ of cryptocurrency mining. However new monetary frontiers can even generate contemporary alternatives for old style fraud. Right here, Chet Stojanovich is charged with utilizing these time-worn fraud methods on a brand new frontier.”
FBI Assistant Director-in-Cost Michael J. Driscoll mentioned: “As alleged, Mr. Stojanovich induced his victims to put money into his fraudulent cryptocurrency mining schemes, and triggered them to incur losses approaching $2 million. Right now’s motion ought to serve for example of the FBI’s dedication to rooting out monetary fraud, in addition to our deal with figuring out and investigating rising threats as they evolve.”
Based on the allegations contained within the Grievance, and publicly obtainable data:[1]
Since a minimum of 2019, STOJANOVICH has managed numerous firms, together with Chet Mining Co. LLC (“Chet Mining”). Beginning in or about March 2019, STOJANOVICH engaged in a scheme to defraud individuals who have been looking for to buy Miners and Miner-hosting providers via which they anticipated to acquire “hash energy” convertible into cryptocurrency and cash. STOJANOVICH defrauded these victims by falsely telling them that: (1) he would buy, and had bought, Miners on their behalf; and (2) he would supply them with Miner-hosting providers and had already obtained such Miner-hosting providers for them. In reality, STOJANOVICH did not ship the promised Miners and Miner-hosting providers.
In all, STOJANOVICH induced greater than a dozen customer-victims to pay a complete of greater than $1.84 million to STOJANOVICH and his firms, ostensibly in return for Miners and Miner-hosting providers. Regardless of fraudulent representations on the contrary, STOJANOVICH: (1) failed to offer most of the Miners that he instructed clients he had acquired; (2) failed to offer the internet hosting providers and cryptocurrency hash energy that he represented that he would supply; (3) employed misleading practices to create the phantasm that such Miners had been acquired and have been getting used to offer hash energy to these clients; and (4) misappropriated his clients’ funds and spent the funds on unrelated and private expenditures, together with by spending a considerable portion these funds on private bills, together with chartered air flights, resort rooms, limousines, and personal events.
Defrauding at Least 10 Victims in 2019
Within the spring and early summer season of 2019, STOJANOVICH fraudulently induced a minimum of 10 clients to pay a complete of greater than $1.66 million to STOJANOVICH and Chet Mining, in return for Miners and Miner-hosting providers. Between March and July 2019, based mostly on these and different misrepresentations, STOJANOVICH issued a minimum of 15 invoices to those 10 victims, with directions to make fee to STOJANOVICH or one in every of his firms. As directed by STOJANOVICH, these 10 clients paid STOJANOVICH a complete of roughly $1,618,000 in financial institution wires and cryptocurrency transfers. Nevertheless, STOJANOVICH failed to offer the Miners and Miner-hosting providers that he had agreed to offer and for which he had been paid.
Defrauding 3 Extra Victims in 2021
In or about August and September 2021, STOJANOVICH induced a minimum of three extra customer-victims to pay him a complete of roughly $179,880, as fee for a complete of 127 Miners. In the end, STOJANOVICH offered these clients with solely 3 of the 127 Miners they’d paid for and repaid these clients solely roughly $61,000 of the $179,880 they’d paid.
The March 2022 Deposition
A number of of the victims of the scheme described within the Grievance introduced lawsuits in opposition to STOJANOVICH in federal court docket in Manhattan. In a single such lawsuit, Holmes et al. v. Chet Mining, Chet Stojanovich, et ano., Case No. 1:20-CV-04448-LJL (S.D.N.Y.), STOJANOVICH was ordered by the court docket to seem for a deposition on March 4, 2022. Throughout that deposition, STOJANOVICH testified falsely on numerous topics. For instance, in response to a number of questions, STOJANOVICH testified that he didn’t know the solutions with out wanting in his private cellphone, and falsely testified that his telephone was downstairs in his rental automotive or in storage. The deposition was thereupon adjourned for a half-hour, and STOJANOVICH was instructed to retrieve his cellphone and return to the deposition. As a substitute, STOJANOVICH left the deposition and loitered within the neighborhood of his automotive till after everybody else collaborating within the deposition had left. Shortly thereafter, he returned to Canada, the place he has been residing in latest weeks.
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STOJANOVICH, 37, beforehand of Manhattan however in latest months apparently residing in Canada, is charged with one depend of wire fraud, which carries a most penalty of 20 years in jail.
The utmost potential sentence on this case is prescribed by Congress and is offered right here for informational functions solely, as any sentencing of the defendant will probably be decided by a choose.
Mr. Williams praised the excellent work of the FBI for its help on this investigation.
The case is being prosecuted by the Workplace’s Advanced Frauds and Cybercrime Unit. Assistant U.S. Legal professional David Raymond Lewis is answerable for the prosecution.
The cost contained within the Grievance is merely an accusation, and the defendant is presumed harmless until and till confirmed responsible.
[1] Because the introductory phrase signifies, the whole thing of the textual content of the Grievance, and the outline of the Grievance set forth herein, represent solely allegations, and each truth described therein must be handled as an allegation.
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