Federal Judge Slaps 71-Month Prison Term on IcomTech Fraud Promoter Mendoza

Magdaleno Mendoza, a senior promoter of the IcomTech crypto Ponzi scheme, has been sentenced to 71 months in federal prison. The sentence marks the latest legal consequence for individuals involved in the fraudulent operation, which targeted primarily Spanish-speaking investors across the U.S. Mendoza pleaded guilty in July to conspiracy to commit wire fraud and illegal reentry into the country.

U.S. Attorney Jay Clayton for the Southern District of New York emphasized Mendoza's role in exploiting vulnerable communities. He described how Mendoza used trust and the allure of "crypto" to defraud working-class investors, many of whom were unfamiliar with the financial market. The sentence also includes illegal reentry charges, as Mendoza had been deported multiple times previously.

Mendoza's punishment follows prison terms for other IcomTech leaders. IcomTech founder David Carmona received a 10-year sentence in October 2024, while former CEO Marco Ruiz Ochoa was sentenced to five years in January 2024. These convictions highlight the growing federal focus on crypto-related fraud, particularly schemes that target less experienced investors.

The IcomTech Scheme and Its Victims

IcomTech operated as a crypto mining and trading company from mid-2018 to the end of 2019. It promised guaranteed returns but instead functioned as a classic Ponzi scheme, using new investor money to pay early participants and fund promoters' lavish lifestyles. The scheme defrauded at least 190 individuals across the U.S. and other countries, with losses in the millions.

Investors initially believed they were receiving consistent returns from crypto mining and trading. However, by August 2018, withdrawal requests were met with excuses, delays, and hidden fees. IcomTech attempted to mask the problem by introducing its own token, "Icoms," which was ultimately worthless. This further compounded the financial losses for victims.

Mendoza was one of IcomTech's most senior promoters. He coordinated with the founder and held promotional events across the U.S., often at his own restaurant in the Los Angeles area. Promoters traveled in luxury cars and wore designer clothes, creating a façade of legitimacy while investors saw only phantom profits.

The Legal and Financial Consequences

In addition to prison time, Mendoza has been ordered to pay $789,218.94 in restitution and forfeit $1.5 million according to court records. He also must relinquish his interest in a Downey, California, home purchased using funds from the scheme. The financial penalties reflect the scale of the fraud and the intent to restore some of the losses to victims.

The sentence also addressed Mendoza's history of illegal reentry. Prosecutors noted that he had been removed from the U.S. four times, including once under a false identity. Despite this, he continued promoting crypto Ponzi schemes after IcomTech collapsed, demonstrating a pattern of exploitation.

Industry experts have observed that repeat promoters like Mendoza remain a significant challenge in crypto fraud as the industry evolves. These individuals move between schemes, rebranding their pitches and targeting new communities. The IcomTech case demonstrates that even when they resurface, their histories eventually catch up with them.

A Broader Trend in Crypto Enforcement

The IcomTech case is part of a broader trend in federal enforcement targeting crypto fraud according to regulatory reports. Authorities have increasingly focused on the real-world impact of such schemes, particularly on immigrant and working-class communities. The U.S. Attorney's Office has emphasized the need to hold perpetrators accountable for stealing from vulnerable investors.

Ari Redbord, a former U.S. attorney, noted that courts are now treating large-scale crypto fraud with traditional legal frameworks. They are less focused on the "crypto" label and more on factors like scale, duration, and the level of harm to victims. This shift reflects a growing understanding of how digital assets can be exploited through fraudulent means.

As the crypto industry continues to evolve, enforcement agencies are tightening their grip on fraudulent operators. The IcomTech convictions and sentences signal that regulators and prosecutors are committed to protecting investors and maintaining trust in the digital asset ecosystem.