The pyramid scheme that the United States began dismantling in 2022 has been revealed to have far-reaching dimensions. The U.S. Securities and Exchange Commission (SEC) announced charges against 17 more individuals involved in the case, expanding on the initial two charged, related to a scam orchestrated through the firm CryptoFX. This scheme promised significant returns through cryptocurrencies, amassing over $300 million, primarily targeting the Latino community in the United States, affecting more than 40,000 individuals.
Mauricio Chavez, the mastermind behind the scheme, presented himself as a cryptocurrency expert offering Latino investors the opportunity to achieve high returns. However, instead of investing the funds as promised, Chavez diverted most of the money towards payments to lend credibility to the Ponzi scheme, self-investments such as real estate, jewelry, and personal expenses, including lavish spending at nightclubs.
CryptoFX, based in Houston, Texas, solicited funds from investors across at least 10 U.S. states and two foreign countries. The scheme operated from May 2020 to October 2022, involving additional indicted individuals from Texas, California, Louisiana, Illinois, and Florida, ranging in age from 28 to 60. These individuals solicited investments by promising returns ranging from 15% to 100% through trading cryptoassets and currencies.
Gurbir S. Grewal, director of the SEC’s Division of Enforcement, described CryptoFX as a $300 million Ponzi scheme that targeted Latino investors with false promises of financial freedom and guaranteed returns. The scheme attracted victims mainly through seminars, Zoom meetings, and social networks, promoting investments as risk-free with insurance coverage even in extreme scenarios like world wars or blackouts.
The perpetrators incentivized victims to bring in more investors, offering commissions of 7% for each recruited investor and additional bonuses for larger investments. Millions of dollars were spent on commissions to fuel the pyramid scheme.
Despite the SEC’s intervention in September 2022, some defendants, including Gabriel Ochoa and Dulce Ochoa, continued to illegally raise funds. Others, like Maria Saravia, misled investors by claiming the SEC indictment was false.
Mauricio Chavez’s extravagant spending habits were highlighted, with funds diverted for personal use, including luxury cars, hotels, travel, restaurants, and adult entertainment establishments. These revelations underscore the scale of the scheme and the devastating impact on its victims.