Crypto-Currency Scam Targets Physicians busted by SEC

Michael Volpe

After spending a decade in finance, Michael Volpe has been a freelance investigative journalist since 2009. His work has been published locally in the Chicago Reader, Chicago Crusader, Chicago Heights Patch, and New City. Nationally, Volpe's work has appeared in a wide variety of publications including the Washington Examiner, the Daily Caller, Crime Magazine, the Southern Christian Leadership Conference Newsletter, and Counter Punch. Volpe has been recognized by whistleblowers as leading the charge in getting their stories out. His first book Prosecutors Gone Wild was published in October 2012, his second book The Definitive Dossier of PTSD in Whistleblowers was published in February 2013 and his third book Bullied to Death was published in August 2015.

Cryptocurrencies

Crypto-Currency Scam Targets Physicians

February 14, 2020

The Securities and Exchange Commission (SEC) announced it has busted a crypto-currency scammer who targeted physicians. Here is part of their press release.

“The Securities and Exchange Commission today filed charges against an Ohio-based businessman who allegedly orchestrated a digital asset scheme that defrauded approximately 150 investors, including many physicians.

“The SEC alleges that Michael W. Ackerman, along with two business partners, raised at least $33 million by claiming to investors that he had developed a proprietary algorithm that allowed him to generate extraordinary profits while trading in cryptocurrencies. According to the SEC’s complaint, physicians in particular made investments in two entities, Q3 Trading Club and Q3 I LP, when they were introduced to the digital currency investment opportunity by one of the business partners who also is a physician. The SEC’s complaint alleges that Ackerman misled investors about the performance of his digital currency trading, his use of investor funds, and the safety of investor funds in the Q3 trading account. The complaint further alleges that Ackerman doctored computer screenshots taken of Q3’s trading account to create the illusion that Q3 was highly invested in cryptocurrencies and was extraordinarily profitable, holding assets of as much as $310 million. In reality, as alleged, at no time did Q3’s trading account hold more than $6 million and Ackerman was personally enriching himself by using $7.5 million of investor funds to purchase and renovate a house, purchase high end jewelry, multiple cars, and pay for personal security services.”

SEC Kik
SEC

“As alleged in our complaint, Ackerman lured investors, many in the medical profession, into falsely believing that he generated extraordinary profits from his algorithmic trading strategy,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “Ackerman exploited popular interest in digital assets as a means to obtain millions of dollars for his personal use.”

The SEC complaint explained further.

“To lure investors to make initial and repeated investments, Ackerman knowingly or recklessly materially misrepresented the success of his trading, the Q3 Companies’ assets, the safety of the investment, and how the Q3 Companies would use investor money.

“Specifically, Ackerman, the principal trader of the Q3 Companies, directly or indirectly told potential investors he developed and used a proprietary trading algorithm (the “Algorithm”) that allowed him to take advantage of the volatility of cryptocurrencies when trading investor funds and earn profits while minimizing risks.

“In truth, Ackerman invested no more than $10 million of the $33 million raised from investors in cryptocurrencies and the profits generated by the Algorithm were minimal, at best.”

In its press release, the SEC noted that the scam used techniques common to many such scams.

In a previous investor alert, the SEC noted investors should do these things to avoid being defrauded.

  • Don’t check your common sense at the door, and don’t assume that people you have something in common with can necessarily be trusted.  Remember the saying:  trust, but verify.
  • Even if you know the person offering the investment offer, research the seller and the investment.  Do this no matter how honest you think the person seems.  And remember that the person telling you about the investment may also have been fooled into believing that the investment is real when it isn’t.
  • If someone recommends an investment, get more information.  Don’t make your decision without learning more.  Be even more careful with online recommendations, like those you see in a chat room or bulletin board for people with similar interests.  Those are common places for fraud.
  • Don’t fall for investments promising spectacular profits or “guaranteed” returns.  More likely than not, they are frauds.  Also, watch out for investments claiming to have “no risks.”  Investments have risks.  Promises of quick and high investment returns, without risk, are classic warning signs of fraud.
  • Don’t trust an investment offer if you can’t get it in writing.  Fraudsters often avoid putting things in writing.  Steer clear if someone tells you they “don’t have time” to write down the details.  Also, walk away if you are told to keep the investment opportunity confidential or a secret.
  • Don’t be rushed into buying.  Research the “opportunity” before you decide.  Just because someone you know made money, or says they did, doesn’t mean you will.  Be especially suspicious of investments pitched as “once-in-a-lifetime” opportunities, particularly when the seller claims the recommendation is based on “inside” information.

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