Satish Kumbhani has been indicted by a Grand Jury in San Diego.

Kumbhani, an Indian national, is the founder of the notorious BitConnect Ponzi scheme.

As per a DOJ press-release issued earlier today;

As alleged in the indictment, however, BitConnect operated as a Ponzi scheme by paying earlier BitConnect investors with money from later investors.

In total, Kumbhani and his co-conspirators obtained approximately $2.4 billion from investors.

The indictment further alleges that, after operating for approximately one year, Kumbhani abruptly shut down the Lending Program.

BehindMLM documented BitConnect’s collapse in January 2017.

Kumbhani then directed his network of promoters to fraudulently manipulate and prop up the price of BitConnect’s digital currency, a commodity known as BitConnect Coin (BCC), to create the false appearance of legitimate market demand for BCC.

Kumbhani (right) working to evade US financial regulations, is also part of the charges leveled against him.

At time of publication Kumbhani’s indictment isn’t publicly available. I’m expecting the case will show up on Pacer early next week.

Kumbhani is charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodity price manipulation, operation of an unlicensed money transmitting business, and conspiracy to commit international money laundering.

If convicted of all counts, he faces a maximum total penalty of 70 years in prison.

Conspiracy to Commit Wire Fraud—Title 18, U.S.C., Section 1349

Maximum penalty: Twenty years in prison, forfeiture, restitution, and $250,000 fine

Wire Fraud—Title 18, U.S.C., Section 1343

Maximum penalty: Twenty years in prison, forfeiture, restitution, and $250,000 fine

Conspiracy—Title 18, U.S.C., Section 371

Maximum penalty: Five years in prison, and $250,000 fine

Operation of Unlicensed Money Transmitting Business—Title 18, U.S.C., Section 1960

Maximum penalty: Five years in prison, forfeiture, and $250,000 fine

Money Laundering Conspiracy—Title 18, U.S.C., Section 1956(h)

Maximum penalty: Twenty years in prison, forfeiture, and $250,000 fine

I’ll follow up with an article detailing specifics of the Kumbhani’s indictment when that happens.

In the meantime Kumbhani’s status is unclear. The DOJ’s press-release states he’s “at large”.

In January an SEC filing revealed Kumbhani fled India a few years ago.

In October 2021, the Commission staff learned that Kumbhani had likely relocated from India to an unknown address in a different country.

The Commission has sought assistance from that country’s financial regulatory authorities in locating Kumbhani, so that the Commission may serve him, and Bitconnect through him.

The Commission has not yet received any such address and is unable to estimate how long it will take to obtain one.

BehindMLM learned Kumbhani relocated to Dubai in 2018.

Due to limited extradition treaties and non-cooperation with foreign authorities, the UAE has created a safe haven for scammers.

BehindMLM recognizes Dubai as the MLM scam capital of the world.

“Today’s indictment reiterates the FBI’s commitment to identifying and addressing bad actors defrauding investors and sullying the ability of legitimate entrepreneurs to innovate within the emergent cryptocurrency space,” said Special Agent in Charge Eric B. Smith of the FBI’s Cleveland Field Office.

“Dressing up a tried-and-true fraud scheme with a new twist and basing it overseas will not deter the resolve and dedication of the FBI to meticulously investigate and bring such fraudsters to justice.”

The SEC filed a civil fraud lawsuit against Kumbhani last year. That case is still playing out.

Whether a $2 billion MLM Ponzi scheme is enough to make Dubai’s authorities take fraud seriously remains to be seen.

 

Update 15th September 2022 – The SEC has provided some insight into service on Kumbhani;

Subsequent to the Court’s May 26, 2022 order, in response to the Commission’s formal request for assistance from the foreign country’s authorities for information as to Kumbhani’s whereabouts, that country’s government reported to the Commission that it has been unable to
locate an address for Kumbhani or confirm that he is located there.

The Commission is currently undertaking additional efforts to request the assistance of another foreign country to locate Kumbhani.

That was part of an August 24th filing, requesting an extension to serve Kumbhani if he’s located in the US (unlikely).

The court granted the SEC’s request on August 25th.

 

Update 14th March 2023 – As at the time of this update, the SEC is still trying to initiate service on Kumbani.

This is from a filed March 2nd Status Report;

In the Commission’s most recent prior status report to the Court, the Commission reported that it was undertaking additional efforts to request the assistance of a second foreign country to locate Kumbhani, after its prior efforts to find him in a different
country were unsuccessful.

Since the Commission’s most recent status report, the Commission received information from regulatory authorities in that second country, but unfortunately that information did not reveal new or current information as to Kumbhani’s whereabouts.

The SEC requested an additional 90 days to serve Kumbhani, which was granted on March 3rd.

90 days puts us at June 1st, at which time another Status Report is expected from the SEC.