An Essex County woman was arrested Friday for her alleged role in an online currency fraud scheme that encouraged investors to hand over $30 million, authorities said.
Edith Pardo, 68, of Bloomfield, posed as a wealthy investor who provided millions in seed money to CG Blockchain Inc., according to U.S. Attorney Craig Carpenito.
CG Blockchain owned a product called ComplianceGuard, which promised pension-fund investors a blockchain-based auditing tool to protect their funds, Carpenito said.
ComplianceGuard and CG Blockchain were created by Boaz Manor, 46, of Toronto, Canada, a convicted criminal who served time in prison for a 2003 scam, according to Carpenito.
“While raising money for CG Blockchain, Manor hid his true identity and criminal past from investors and others by using a variety of aliases, including ‘Shaun MacDonald,’” Carpenito said in a statement.
Manor also changed his appearance by darkening his hair and growing a beard, Carpenito said.
Manor secured most of the initial seed money to fund CG Blockchain from a close family member. “In order to conceal the source of this money, Manor recruited Pardo," Carpenito said.
Among the fraudulent claims were that Pardo and other investors each paid a $1 million yearly fee to CG Blockchain, Carpenito said.
In 2017, CG Blockchain launched an Initial Coin Offering and began marketing a new product to potential investors called Blockchain Terminal that allowed hedge funds and financial institutions to trade in cryptocurrency, Carpenito said.
In 2018, CG Blockchain publicly announced it had raised $30 million from its initial offering. That’s when investors became suspicious, Carpenito said.
“When confronted by an investor, Manor admitted that he had hidden his real identity and criminal past because disclosure of that information would have resulted in the company being destroyed,” Carpenito said.
Manor and Pardo were indicted on one count each of conspiring to commit wire fraud, three counts of wire fraud, and one count of securities fraud in connection with a blockchain technology company.
FBI agents quickly arrested Pardo and held her pending an appearance in U.S. District Court in Newark. Manor remains at large, Carpenito said.
If convicted of conspiracy and wire fraud, Manor and Pardo each face 20 years in prison and a $250,000 fine. The securities fraud charge carries a maximum penalty of 20 years in prison and a $5 million fine, Carpenito said.
Carpenito said the U.S. Securities and Exchange Commission has also filed a lawsuit against both suspects.
The SEC’s complaint, filed in federal court, accuses Manor and Pardo of violating the anti-fraud and securities registration provisions of the federal securities laws. The SEC is seeking repayment “of ill-gotten gains plus interest, penalties, and injunctive relief.”
The SEC is also asking for an order barring Manor and Pardo from acting as officers or directors of public companies and from participating in future securities offerings.
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