Las Vegas Business Owner Convicted in $24 Million Cryptocurrency Ponzi Scheme

A federal jury in Las Vegas has convicted a business owner of running a $24 million cryptocurrency Ponzi scheme that took money from at least 400 investors, the Justice Department said on Monday.

Brent C. Kovar owned Profit Connect, a Las Vegas company that from late 2017 until July 2021 claimed to run artificial intelligence software on a supercomputer that mined cryptocurrency and verified transactions on other networks. Investors were promised a fixed return of 15% to 30% a year and a full money-back guarantee, and told the company was backed by hundreds of millions of dollars in crypto reserves.

Prosecutors said Kovar knew Profit Connect was not profitable, held no reserves, could not pay the returns it advertised, and had no way of honoring the guarantee. Money from investors went on running the company, buying gifts for employees and buying Kovar a house, with some of it recycled to earlier investors as though it were mining proceeds.

Kovar also told investors their money was insured by the Federal Deposit Insurance Corporation, according to Ryan Korner, the special agent in charge at the FDIC's Office of Inspector General, whose office investigated the case alongside the FBI and IRS Criminal Investigation.

Kovar was convicted after a nine-day trial on 11 counts of wire fraud, two of mail fraud and two of money laundering. He is due to be sentenced on November 30 and faces a statutory maximum of 280 years, though the actual term will be set by the judge under federal sentencing guidelines.

A scheme first halted in 2021

The SEC shut Profit Connect down five years ago, obtaining a restraining order and asset freeze in July 2021 and putting the losses at up to $12 million from at least 277 investors, half what prosecutors have now established. More than 90% of the company's income came from investors, the regulator said, and none of it was used to trade crypto.

Kovar ran the business with his mother Joy, then 86. The SEC said $1.2 million went into her personal account in ten equal transfers over less than two months, with a further $1.7 million taken out through cash withdrawals, credit card payments and the purchase of a car. Monday's announcement names only Brent Kovar.

The regulator had dealt with him before, filing a civil injunction against him and his father Glenn in 2009 over a pump-and-dump scheme run through a company called Skyway Global, which also cost investors $12 million.