Two Men Charged in $650 Million OmegaPro Crypto Fraud Scheme

The United States Justice Department has charged two men, Michael Shannon Sims and Juan Carlos Reynoso, for their involvement in a global cryptocurrency fraud scheme known as OmegaPro. The indictment alleges that the defendants operated a fraudulent investment scheme that promised investors extraordinary returns, ultimately defrauding thousands of individuals out of approximately $650 million. The scheme, which was promoted through various means including luxury advertisements, falsely guaranteed returns of up to 300% to lure investors.

The defendants are accused of using a multi-level marketing (MLM) style promotion to attract victims, with advertisements featuring high-end locations such as the Burj Khalifa in Dubai. The funds collected from investors were allegedly funneled into personal accounts and used for lavish lifestyles, rather than being invested as promised. The indictment highlights the deceptive tactics employed by the defendants, including the use of fake investment schemes and luxury lies to maintain the illusion of a legitimate and profitable venture.

Sims, the promoter and founder, and Reynoso, the Latin America and the US operations chief, lied and said that returns would be 300 percent within 16 months. They ensured that the cash was to be managed by the elite foreign exchange traders, and the participants were lured into investing in cryptocurrency. The defendants exploited vulnerable individuals by promising them that their money was safe and assuring them of high returns. The structure of the program was in such a manner that it resembled a genuine investment but in fact it was a pyramid-based fraud.

In January 2023, OmegaPro claimed that hackers had attacked their network and stated that they moved the money to another site, Broker Group. Unfortunately, investors couldn’t cash out on either platform. The prosecutors claim that the money was laundered with the help of cryptocurrency wallets owned by the insiders, which deprived the investors of their money.

The charges against Sims and Reynoso include conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. If convicted, they face significant prison sentences and fines. The case is being prosecuted by the U.S. Attorney's Office for the District of Puerto Rico, with assistance from the Federal Bureau of Investigation (FBI) and the U.S. Secret Service.

This case underscores the growing concern over cryptocurrency-related fraud and the need for increased vigilance among investors. The use of MLM-style promotions and false promises of high returns are common tactics employed by fraudsters in the cryptocurrency space. Investors are advised to conduct thorough due diligence and be wary of schemes that promise unrealistic returns. The Justice Department's action against OmegaPro serves as a reminder of the legal consequences for those involved in such fraudulent activities.

This case is one of the bigger crackdowns on cryptocurrency fraud and the multi-level marketing scams that utilize digital assets. It highlights the risks investors will face from fraudulent crypto-investment programs that promise unrealistic gains. A Turkish court detained OmegaPro co-founder Andreas Szakacs in July 2024 on charges related to the company’s alleged $4 billion fraud, a charge that Szakacs rejected. The Omegapro case brings to the fore the modern challenge that regulators and authorities are facing in combating global crypto fraud. It is a reminder to investors of the dangers of great returns on products in unregulated digital asset markets.