Dallas-based crypto fraud scammed $ 13,000 out of $ 24 million before pleading guilty to tax evasion


Ultimately, Bruce Bise and Samuel Mendez defrauded some 13,000 investors out of roughly $ 24 million before pleading guilty to tax evasion earlier this week.

Since 2016, Bise and Mendez have billed Bitqyck, a Dallas-based cryptocurrency company, as a way for “those people who missed out on bitcoin” to keep getting richer, according to marketing materials.

Investors were addicted. The pair promised that Bitqy, the name of the cryptocurrency traded by their company, comes with one-tenth of the company’s shares.

Instead, Bise and Mendez used the funds to purchase cars, luxury homes, and high-end artwork. Both retained 100% of the shares of the company.

In just two years after their fraudulent IPO in 2016, Bise and Mendez raised around $ 9.4 million in shareholder investments, which they used to fund their lush lifestyle.

The duo’s passion didn’t stop with Bitqy.

After launching Bitqy in 2016, Bise and Mendez launched another token called BitqyM, for $ 1 each. They told investors that by purchasing BitqyM tokens, they were joining a cryptocurrency mutual group: a bitcoin facility in Washington state focused on buying and selling cryptocurrency at times itself. – Optimal claiming based on its fluctuating market value would generate huge profits for Bitqy M investors, Bise and Mendez marketing materials promised.

But the installation was fictional, Mendez and Bise admitted in advocacy documents. Instead of pouring investor money into financing the facility they had promised, Mendez and Bise funneled it to a third-party company overseas to mine Bitcoin for themselves.

“Because digital investment assets are a new and exciting technology, they can be very appealing, especially if investors believe they are coming downstairs and will own a portion of the operations.” – David Peavler, SEC

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The two pleaded guilty to tax evasion in federal court. They each face up to five years in federal prison.

Mendez and Bise’s guilty pleas in criminal court this week come more than two years after the SEC reached an $ 8.3 million settlement in civil court.

“Because digital investment assets represent a new and exciting technology, they can be very alluring, especially if investors think they are going downstairs and will own some of the operations,” said David Peavler, SEC director Fort Worth Regional. Office, who helped investigate the civil case against Mendez and Bise.

“We allege that the defendants took advantage of investors’ appetites for these investments and fraudulently raised millions of dollars by lying about their business,” Peavler added.

“Mr. Bise and Mr. Mendez have exploited the growing appeal of digital currency and defrauded thousands of investors who fell victim to millions of dollars that they used to pay for personal expenses, rent, gambling activities and their vehicle and artwork purchases, ”said Ryan L. Korner, special agent in charge of the Los Angeles office of the IRS -Criminal Investigation unit.

Cryptocurrency fraud has exploded in recent years. The Federal Trade Commission received nearly 7,000 complaints of crypto scams between October 2020 and March of this year. The year before, the FTC only received 570.

“As digital currencies continue to emerge as an investment option for taxpayers, we must continue to increase the pressure on anyone trying to take advantage of their investors and taxpayers through fraud and tax evasion,” said Christopher J. Altemus Jr., Special Agent. responsible for the IRS-CI office in Dallas.

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