Alleged CabbageTech Crypto Fraudster Indicted on Nine Counts
The operator of allegedly fraudulent crypto investment scheme CabbageTech has been indicted on nine counts of wire fraud by a U.S. District Attorney.
United States Attorney for the Eastern District of New York Richard P. Donoghue unsealed a nine-count indictment against Patrick McDonnell today, according to a press release from the Department of Justice (DoJ) on March 26.
Following his arrest earlier today, McDonnell — the owner and operators of purported investment firm CabbageTech — was charged with nine counts of wire fraud in connection with an alleged plan to defraud cryptocurrency investors. Donoghue said in the press release:
“As alleged, the defendant defrauded investors by making false promises and sending them fraudulent balance statements, hiding the fact that he was stealing their money for his personal use.”
Per the statement, McDonnell used “smoke and mirrors” between November 2014 and January 2018 to defraud investors by portraying himself as an experienced cryptocurrency trader, promising trading advice, and buying and trading crypto on their behalf.
According to the DoJ, neither McDonnell nor CabbageTech provided investment services, rather he allegedly used investors’ funds for his own purposes and sent clients falsified balance records. When clients requested to withdraw their funds, McDonnell purportedly made excuses for why he could not pay them at the time. McDonnell also allegedly operated under an alias as “Jason Flack.”
McDonnell reportedly defrauded investors of $194,000 in U.S. dollars, 4.41 Bitcoin ($17,551), 206 Litecoin ($12,215), 620 Ethereum Classic ($2,914) and 1,342,634 Verge ($9,035). The DoJ states that, should he be found guilty, he faces 20 years in prison.
In the press release, Donoghue notes the participation of the Commodity Futures Trading Commission (CFTC) in the investigation. In August of last year, the CFTC won a court order to permanently ban McDonnell. At trial, the judge ruled that McDonnell was operating a “boiler room” to allegedly defraud investors and ordered him to repay the investments plus penalties.
On the grounds that he could not afford legal counsel, McDonnell reportedly briefly represented himself in court, after which he stopped attending the proceedings altogether.