|
Only have a minute? Listen instead
Getting your Trinity Audio player ready...
|
Three Hidalgo County residents have been charged with running a cryptocurrency company, stealing from its investors for personal use and then attempting to hide the alleged stolen funds by avoiding paying taxes to the federal government.
Authorities arrested Oscar Zarate on Friday and Wilfred Gerard Lowe on Wednesday on a three-count indictment accusing them of the scheme. The name of the third suspect remains redacted in the partially unsealed indictments.
The indictment said that in 2016, Lowe and the unidentified suspect entered into a partnership to create Timi Group, also known as Timi, a company that claimed to be in development of cryptocurrency for sale and exchange.
The following year, Lowe and the unidentified individual presented to potential investors, offering an opportunity to claim equity in the company by purchasing its cryptocurrency, which would be known as Timicoin, “as part of the initial coin offering (ICO) before it was released on the public cryptocurrency market.”
“Timicoin was never fully developed or created,” the indictment stated.
In November 2017, Lowe and the unidentified suspect approached Zarate, who had an existing cryptocurrency clientele, and asked him to recruit investors for Timi. Zarate agreed and began recruiting in 2018, according to the indictment.
On March 20, 2018, the unidentified suspect registered the Timi Group and registered it as a “sole proprietorship,” meaning income related to the operation would be reported in their tax return.
From 2017 through 2019, the suspects received more than $3.8 million from the alleged scheme and they never claimed any of the income on their tax returns for the period.
“It was a purpose of the conspiracy for the Defendants, co-conspirators, and others known and unknown, to defraud the IRS and fail to file tax returns to avoid reporting illicit proceeds from the Timicoin investor scheme,” the indictment stated.
Federal prosecutors say the suspects offered presentations to potential investors in Texas, California and other locations across the nation.
“During these presentations, the Defendants claimed they were in the process of developing a cryptocurrency, and new investors could purchase equity in the company through early access to purchase the cryptocurrency – Timicoin,” the indictment stated.
The investors were told they would receive 70% of the proceeds from their investment in the business. Funds from the investors were deposited and moved through several bank accounts, according to the indictment.
Those funds were then spent by the suspects on personal expenses “and were distributed as what were purported as substantial commissions to Timi investor recruiters.”
Those personal expenses included home renovations, expensive jewelry, luxury vehicles and designer items, according to federal prosecutors.
Lowe made a first appearance in McAllen federal court on Thursday and is being temporarily held without bond pending his arraignment, which is scheduled for next Tuesday.
Zarate was scheduled to make a first appearance Friday morning.
