Chandler won’t give up bitcoin, Dluca deletes incriminating emails
The FTC’s lawsuit against Scott Chandler, Louis Gatto, Eric Pinkston and Thomas Dluca is turning into a bit of a circus.
At the heart of the theatrics are two core issues; Scott Chandler handing over his illgotten bitcoin and Thomas Dluca deleting incriminating emails.
As per the granted preliminary injunction back in April, Scott Chandler was required to turn over any bitcoin held for liquidation.
Chandler isn’t too happy about this, based on an unsupported assertion that he’s ‘been investing legitimately in cryptocurrency (Bitcoin) since prior to the‘ FTC’s case.
The FTC meanwhile are having none of it, and filed a show cause for contempt hearing motion against Chandler on October 6th.
Citing the need to hold Chandler accountable for his “serial
promotion of deceptive schemes”, the FTC argues that by not turning over his bitcoin, Chandler has and continues to violate the preliminary injunction.
It also appears that Chandler may have deleted relevant emails
in violation of Section VII, which requires production of relevant electronically stored information, and Section XII, which requires preservation of evidence.Accordingly, this Court should hold Defendant Chandler in contempt for violating the Preliminary Injunction.
Forensic analysis of a laptop Chandler turned over to the FTC revealed one of the email accounts contained 47 unread messages as of February 13th.
When the FTC was given access to the account on June 14th, the email account contained only five messages.
Analysis of the laptop also revealed Chandler’s use of additional emails, none of which were declared or turned over.
Pertinent to Chandler’s claim of “legitimate investment” in bitcoin, the FTC linked Chandler to several cryptocurrency Ponzi schemes – in addition to those cited in their original compliant.
Chandler also had accounts at various websites that appear to contain electronically stored information about his participation in those money-making schemes, including accounts associated with the following relevant schemes: Jet-Coin, Hashcoinex, Gladiacoin, Bit90x, CoinXL, WalletPllus, Yota.biz/Vista Network, Ormeuscoin, and MyDigitalBTC.
Various social networks Chandler used to participate in fraudulent schemes are also cited, none of which Chandler has declared or given the FTC access to.
It’s pretty obvious Chandler’s acquisition of bitcoin is primarily through fraudulent schemes.
I suspect when pressed Chandler will be entirely unable to convince the court of legitimate bitcoin investment. At least not any significant amount.
As per his October 15th and 16th filings, Chandler has asked for a hearing to “flesh out” ‘the legitimate v. alleged illegitimate cryptocurrency issue/controversy‘.
The FTC has stated it doesn’t object to Chandler’s motions, so I suspect a hearing will be scheduled to hear both the FTC’s show cause and Chandler’s stay motions together.
Returning to the topic of deleting emails, the FTC has also taken Thomas Dluca to task for trying to hide evidence.
Dluca has been required to preserve electronically stored information and business records since the March 12th TRO.
At the time the TRO was granted, the FTC were aware of
emails that likely related to the operations of Bitcoin Funding Team, My7Network, Fund My Cause, Magic 10, 25 Dollar Legacy, and various other money-making opportunities.
Instead of preserving the emails however, Dluca instead “deleted all emails” from the account before granting the FTC access.
Whereas Chandler is fighting the FTC though, Dluca has acknowledged his violation of the TRO and preliminary injunction.
As per a stipulated order was filed on October 11th, the FTC and Dluca have asked the court to accept the deleted emails would have
- been relevant and unfavorable to Dluca;
- supported the FTC’s factual allegations; and
- tended to negate Dluca’s filed affirmative defenses.
The proposed order goes on to state Dluca will be barred from introducing any evidence of the contents of the deleted emails. Good faith and mootness defenses Dluca has filed in answer to the FTC’s complaint will also be struck.
As at the time of publication a decision on the FTC’s and Chandler’s respective motions has yet to be made. As previously stated I’d expect a hearing to be scheduled at some point.
Dluca’s sanctions order is more straight forward, requiring only approval from the court (yet to be given as of October 17th).
Stay tuned…
Update October 24th 2018 – Scott Chandler’s Motion for Reconsideration has been denied.
Oz can we please get a summary of what has happened for dummies? These guys have not been arrested or charged criminally yet?
They refuse to give the money and deleted evidence. Whats happening now?
The fight between them was the main reason their schemes feel apart? I might be confused, apologize for that.
It’s a civil lawsuit brought about by the FTC so no arrests etc. The use of “incriminating” with respect to Dluca’s emails pertains to his winning or losing.
Why the various scams they’ve promoted and/or run fell apart is not part of the lawsuit.
Right now the FTC is trying to hold the defendants accountable as per the preliminary injunction. Chandler doesn’t want to give up his ill-gotten bitcoin.
Once adhering to the preliminary injunction is settled the case will proceed to trial.
I can’t see the defendants winning so in all likelihood there will be a settlement once Chandler has been stripped of his bitcoin.
How did the FTC find out about them? I am surprised they have not forced him to give up his bitcoins. By now he could have moved it offshore and the FTC does not know how many he has.
Why is the FBI/SEC not charging them criminally yet? Esp with the FTC on their asses.
There was a legit crypto called jetcoin that i had invested in. And the fake jetcoin they made ruined the legit one’s reputation quite a bit.
You’d have to ask the FTC how they found out about them.
The FTC is trying to force Chandler, hence the show cause contempt motion. Basically if Chandler can’t show cause as to why he’s violating the preliminary injunction, he’ll be hit with additional sanctions.
Violating an injunction can lead to prison. I can’t speak to what the FTC does or doesn’t know but the filing does mention transactions between various exchanges so I think they have some idea.
Again, you’d have to ask them.
I think prison isn’t necessarily worth it for scammers like this lot. The admins, sure but it’s just as satisfying to see lower-tier scammers stripped of everything they’ve stolen over the years.
These are low tier scammers? (Promoters?) who was the admins u think?
I thought this was a serial ponzi gang doing a new scam after another until they die of a heart attack or prison.
Ponzi gifting group sure but to what extent they were involved in the running of the ten or so scams the FTC has brought up now I can’t say.