Robert Farkas Joseph, a Co-Founder of “Centra Tech Inc.” Indicted for Felony, Faces 366days Imprisonment.
Following an announcement on the 15th of December by Ilan T. Graff, the Attorney for the United States, Robert Farkas Joseph bagges one year and one day in prison.
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This is in relation to his involvement in a project to convince victims to invest more than $25 million dollars worth of digital funds in Centra Tech, Inc. (Centra Tech). Centra Tech is a Miami-based company he co-founded and that claimed to offer cryptocurrency-related financial assets.
Mr. Graff said, “Farkas and his co-conspirators created fictitious executives and fabricated business relationships with legitimate institutions to dupe investors into handing over millions of dollars for a fraudulent ICO. We will continue to aggressively pursue frauds like this one, whether they involve traditional securities or newer financial instruments and crypto-Khaled.”
The 34-year old popularly known as “AJ”, successfully solicited $25 million in investment during the 2017 initial coin offering (ICO) boom.
In or about July 2017, Farkas, along with co-defendants Sohrab Sharma and Raymond Trapani, founded a company called Centra Tech that claimed to offer cryptocurrency-related financial products, including a claimed debit card the “Centra Card” that supposedly allowed users to make purchases using cryptocurrency at institutions accepting Visa or Mastercard payment cards.
From approximately July 30, 2017, through October 5, 2017, Farkas and his co-defendants solicited investors to purchase unregistered securities, in the form of digital tokens issued by Centra Tech (Centra tokens) or “CTR tokens”, through a so-called ICO.
The ICO famously included promotion from two celebrities; boxer Floyd Mayweather and musician DJ Khaled.
The celebrities had been involved in promoting Centra Tech’s ICO, but a judge has ruled that the investors who brought the legal action failed to prove they bought tokens as a direct result of the pair’s actions.
However, last November, the U.S. Securities and Exchange Commission (SEC) charged the pair with unlawfully advertising ICO. U.S. SEC claimed Mayweather had failed to disclose a $100,000 payment from Centra Tech, while Khaled failed to disclose the $50,000 he received for promoting the startup.
In a settlement where neither party admitted to nor denied the charges against them, Mayweather was fined more than $600,000, while Khaled was fined in excess of $150,000.
The SEC has previously warned the public that celebrity endorsements of ICOs could be illegal if they fail to reveal the compensation they are receiving for the promotion.
Farkas pleaded guilty in June to two counts of fraud relating to his role in the ICO that bamboozled more than $25 million from investors from July through October 2017 in June of this year.
Centra Tech lied about licensing agreements with Visa, Mastercard and Bancorp to drive unacquainted publicity for its crypto debit card product and ICO, which was promoted with celebrity endorsements.
In a government sentencing submission filed on Oct. 31, the government requested that U.S. District Judge Lorna Schofield sentence Farkas to “a substantial term of imprisonment” to deter other fraudsters from conducting such a scam. Today’s sentence is, consequently, lighter than expected, with one year and a day being the minimum for Farkas to qualify as a felon.
Co-founders, Sohrab Sharma and Raymond Trapani have also pleaded guilty.