Arizona Man Pleads Guilty in $13M Crypto Ponzi Scheme Using AI Bot and Fake Recovery Service

A 36-year-old Arizona man has pleaded guilty to orchestrating a $13 million cryptocurrency Ponzi scheme that exploited victims through a combination of fraudulent AI trading bot claims and a fictitious government-backed recovery service. Vincent Anthony Mazzotta Jr. admitted to one count of money laundering and conspiracy to obstruct justice in a California federal court, marking a key development in a multi-year fraud case spanning from 2017 to 2023. Mazzotta operated under aliases like “Director Vinchenzo” and collaborated with co-defendant David Gilbert Saffron, an Australian national, to defraud investors through shell companies such as “Mind Capital” and “Cloud9Capital” [1]. The scheme promised unrealistic returns via non-existent AI-powered trading algorithms, siphoning funds into luxury expenses like private jet charters and high-end real estate in Hollywood [2].

The case took a darker turn with the creation of the “Federal Crypto Reserve,” a fake agency presented as a legitimate recovery service to victims already drained by the initial scam. The defendants charged additional fees to “investigate” the very frauds they had perpetuated, compounding victims’ financial and emotional distress. Karan Pujara, founder of ScamBuzzer, described this tactic as a form of “secondary victimization,” exploiting victims’ guilt and hope for recouping losses. “Scammers prey on the shame of initial mistakes and the desperation to recover funds, often leading to further exploitation,” Pujara explained [2]. His advice to investors includes immediate skepticism toward unsolicited recovery offers and a refusal to engage with AI trading promises that seem too good to be true [1].

Mazzotta faces a potential 15-year prison sentence, with sentencing set for December 15, 2025. The case underscores a broader trend of crypto frauds targeting vulnerable investors, including a $3.4 million church-related scam recently uncovered in Colorado. Law enforcement agencies have highlighted the growing sophistication of such schemes, noting the use of encrypted communications, pseudonyms, and bureaucratic mimicry to obscure criminal activities [2]. The Department of Justice emphasized the international collaboration required to dismantle these operations, citing Mazzotta’s partnership with Saffron across multiple jurisdictions [2].

Experts warn that the psychological manipulation inherent in these scams—leveraging guilt, hope, and technological complexity—makes them particularly insidious. Pujara stressed the importance of critical scrutiny for investors, stating, “If the returns they offer are too good to be true, they likely are” [1]. The case also highlights the urgent need for regulatory frameworks to keep pace with the rapid evolution of digital asset markets, where oversight often lags behind innovation [2].

The guilty plea serves as a cautionary tale for regulators and investors alike, illustrating how fraudsters exploit gaps in both technology and investor education. As crypto markets expand, authorities warn of increasing reliance on layered deception tactics, including fake recovery services, to capitalize on human vulnerability. The Department of Justice’s successful prosecution of Mazzotta signals a growing focus on holding perpetrators accountable, though challenges remain in preventing similar schemes in the future [2].

Source: [1] Arizona Man Pleads Guilty in Alleged Bitcoin Ponzi Scheme Involving Fake Crypto Recovery Service (https://en.coinotag.com/arizona-man-pleads-guilty-in-alleged-bitcoin-ponzi-scheme-involving-fake-crypto-recovery-service/)

[2] Arizona Man Pleads Guilty in $13M Crypto Ponzi Scheme Involving Fake Crypto Recovery Service (https://decrypt.co/332270/arizona-man-pleads-guilty-in-13m-crypto-ponzi-scheme-faces-up-to-15-years)