Jack Abramoff, Marcus Andrade Charged by SEC with Fraudulent Unregistered Digital Asset Offering, AML Bitcoin

Jack Abramoff is making headlines once again. The notorious political lobbyist has been charged with fraud by the Securities and Exchange Commission (SEC) in an unregistered offering of AML Bitcoin (ABTC). Abramoff, along with NAC Foundation (National Aten Coin) and its CEO Marcus Andrade allegedly sold a digital asset security that was claimed to be a new and improved version of Bitcoin.

Simultaneously, a criminal action has been filed in California regarding Andrade and Abramoff.

Abramoff gained notoriety as part of a massive corruption scandal that saw Abramoff convicted and sent to jail. In 2006, Abramoff was sentenced to six years in prison but he was released in 2010.

The SEC alleges that the Nevada-based NAC Foundation raised approximately $5.6 million from over 2,400 investors by selling tokens that could later be converted to AML BitCoin. The sale took place from around August 2017 through December 2018.

The SEC complaint states:

“During the offering, the Tokens had no practical use. NAC did not have a platform where the Tokens could be used to purchase goods or services or transact any business, they could only be exchanged for other digital assets or fiat currencies on third-party platforms. NAC marketed the Tokens to investors who reasonably viewed the Tokens as a tradeable investment vehicle that might appreciate in value based on NAC’s and Andrade’s managerial and entrepreneurial efforts.”

The SEC alleges that NAC and its CEO portrayed AML BitCoin as superior to the original Bitcoin, with anti-money laundering, anti-terrorism, and theft-resistant technology built into the coin on its own “privately regulated public blockchain.”

In reality, none of the touted capabilities existed, claims the SEC.

According to the SEC complaint, NAC and Andrade falsely claimed that multiple government agencies were negotiating to use AML BitCoin, and Abramoff and Andrade falsely claimed that they were on the verge of advertising AML BitCoin during the Super Bowl in an effort to create interest in the offering.

Abramoff also allegedly arranged for NAC to pay for purportedly independent articles about AML BitCoin that included many of the misleading statements.

The SEC further alleges that Andrade directed a market manipulation strategy to boost the token’s trading volume and price and diverted approximately $1.1 million from the offering for his personal use. Uses include $747,000 to purchase a personal residence, $69,000 to buy a Cadillac Escalade, $60,000 to buy a Ford F250 truck, and $226,150 to buy a property for his father.

“We allege that these defendants repeatedly misled investors into funding non-existent technology, falsely claiming that the technology would make digital asset transactions more secure,” said Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit. “Investors are entitled to truthful information so they can make fully informed investment decisions.”

The U.S. Attorney’s Office for the Northern District of California announced parallel criminal actions against Andrade and Abramoff, charging Andrade with wire fraud and Abramoff with conspiracy to commit wire fraud and lobbying disclosure violations.

The SEC’s complaints, filed in the Northern District of California, charge NAC, Andrade, and Abramoff with violating the antifraud and securities registration provisions of the federal securities laws, and also charge Abramoff with broker-dealer registration violations.

The SEC seeks permanent injunctions, disgorgement, and civil penalties, as well as injunctions prohibiting NAC and Andrade from participating in future securities offerings, and barring Andrade from serving as a public company officer or director. Abramoff has agreed to a settlement imposing permanent and conduct-based injunctions, officer-and-director, industry, and penny stock bars, disgorgement of the $50,000 in commissions he received, plus prejudgment interest of $5,501, and reserves the issue of civil penalties for further determination by the court upon motion of the SEC. The settlement is subject to court approval.


 

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