"Las Vegas Man Charged in $24M AI-Mining Ponzi Scheme"

A Las Vegas man, Brent C. Kovar, has been charged by the U.S. Department of Justice for his involvement in a $24 million Ponzi scheme. Kovar, the founder of Profit Connect, allegedly used artificial intelligence mining as a cover to defraud at least 400 investors. He promised fixed annual returns of 15%-30% and falsely claimed that the investment was FDIC insured. In reality, the funds were used to pay off old investors, purchase homes, and provide gifts for non-investment purposes.

Kovar faces 12 counts of wire fraud, 3 counts of mail fraud, and 3 counts of money laundering. If convicted, he could face up to 330 years in prison. The case is scheduled for trial on April 8, 2025. The FBI, FDIC OIG, and IRS-CI conducted a joint investigation, and the case is being prosecuted by U.S. Assistant Attorney Daniel Schiess.

The Ponzi scheme, also known as a "Ponzi game," is a fraudulent investment operation where the operator, in this case Kovar, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate investment or business activity. The scheme relies on a constant flow of new investments to continue providing returns to older investors. However, when new investments stop, the scheme collapses, and investors lose their money.

Ponzi schemes have been around for centuries, with the first known example occurring in the 18th century. The most famous Ponzi scheme in recent history is the one orchestrated by Bernie Madoff, who defrauded thousands of investors out of billions of dollars. Madoff's scheme collapsed in 2008, and he was sentenced to 150 years in prison.

The case of Brent C. Kovar serves as a reminder of the dangers of investing in unregulated or poorly regulated investment schemes. Investors should always do their due diligence and be wary of promises of high returns with little risk. The U.S. Securities and Exchange Commission (SEC) and other regulatory bodies provide resources and guidance to help investors identify and avoid Ponzi schemes.