NEWS
NEWS
NEWS
Josh Garza charged by SEC over GAW Miners Bitcoin mining scam
The saga of the GAW Miners and related subsidiaries, including Paybase and the altcoin Paycoin, is finally heading to court, with the United States Securities and Exchange Commission (SEC) filing charges Monday against founder Homero Joshua (Josh) Garza.
In a statement, the commission accuses Garza of having perpetrated fraud through GAW Miners and the lesser known ZenMiner by offering shares in an alleged digital Bitcoin mining operation while never having enough computing power for the mining it promised to conduct.
“So most investors paid for a share of computing power that never existed,” the Commission notes. It adds, “Returns paid to some investors came from proceeds generated from sales to other investors.”
The last line is the pertinent point as it’s the very definition of a Ponzi scam.
“As alleged in our complaint, Garza and his companies cloaked their scheme in technological sophistication and jargon, but the fraud was simple at its core: They sold what they did not own, misrepresented what they were selling and robbed one investor to pay another,” the SEC’s Boston Regional Office Direct Paul G. Levenson said.
Garza’s elaborate Bitcoin mining Ponzi scam is said to have sucked in over 10,000 investors, with most never recovering the full amount of their investments.
Sordid tale
The trouble with Garza and his related entities first emerged back in January when the SEC launched an investigation in GAW Miners amid allegations that it was nothing more than a Ponzi scheme.
By March things went from bad to worse when Garza’s Bitcoin to altcoin front company Paybase ceased trading, with allegations at the time that it had gone “full Mt. Gox,” a reference to the infamous Japanese Bitcoin exchange that collapsed among allegations of hacking in 2014.
Come August things took a turn for the weird, with Garza’s brother Carlos refusing to answer questions despite being subpoenaed by the SEC; at that time the whereabouts of Josh Garza was unknown, and it’s not clear from reports today whether he is even in the country.
The SEC’s complaint is seeking permanent injunctive relief, as well as “the disgorgement of ill-gotten gains plus prejudgment interest and penalties.”
A date for trial has not been set.
The full copy of the complaint is available here (pdf).
Image credit: underpants/Flickr/CC by 2.0
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