Fraud and Scams, News & Updates

ICO Fraudster faces Prison Time

Feds seek a “substantial” prison sentence for Robert Farkas, who pleaded guilty to conspiracy to commit securities and wire fraud this summer. A sentencing submission filed by the government with the USDC for Southern District of New York also asks for three-year probation.

Farkas established Centra Tech with Sharma and Trapani in 2017; it raised more than $25M through what the FBI stated was a fraudulent ICO. The company promised to develop a debit card named “Centra Card,” which would work where Visa and Mastercard were accepted. However, the prosecutors alleged that Centra Tech never made any partnership with Visa or Mastercard, and the card was never materialized.

Sharma pleaded guilty to conspiracy counts to commit securities and wire fraud and conspiracy to commit mail fraud. Trapani has pleaded guilty to the same charges. Each charge carries a maximum sentence of five years in prison.

Among Centra Tech’s early backers were DJ Khaled and Floyd Mayweather; they paid a steep price for it. The SEC alleged that Centra paid Mayweather $100,000 to promote its ICO and Khaled $50,000; both celebrities have settled charges for failing to disclose the payments.

For the past two years, the prosecutors have been working to expose the Centra Tech scheme, claiming that Centra invented a non-existent CEO named “Michael Edwards” and other fake members to dupe investors. The government’s case states that the company also falsely claimed to have money transmitter licenses of all sorts in 38 states.

It is not yet known when will be the sentencing date for the three co-founders.

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