A Michigan man who admitted defrauding two Missoula residents in a cryptocurrency scam has been sentenced to one year and one day in prison followed by three years of supervised release.
U.S. Attorney Kurt Alme also says that James Matthew Thomas, 35, of Midland, MI, -- who pleaded guilty in October to wire fraud and money laundering -- has been ordered to pay $208,718 restitution.
The prosecution said in court documents filed in the case that the evidence showed Thomas contacted Victim 1, who lives in Missoula, through LinkedIn in March 2018. The two had met several years earlier while working together on the east coast. Thomas asked Victim 1 if he wanted to invest in cryptocurrency for a few days with a rate of return of 30% to 40%. Thomas said he worked with CoinPoint, an internet advertising company that pushed people to participating company websites, and that CoinPoint was looking for investors.
Victim 1 sent Thomas $6,948 worth of virtual currency. A few days later, Thomas sent the victim $9,203 worth of virtual currency, which was about a 30 percent return on the victim’s investment. Based on the return, Victim 1 talked with a second victim and some of his friends and family members. The second victim invested $185,000 with Thomas and the friends and family members agreed to contribute another $500,000.
Much of the money taken in from Victim 1’s friends and family was never converted to virtual currency or forwarded to Thomas. When Victim 1 realized Thomas was scamming him, he was able to return most of that money.
As the scam progressed, Thomas told Victim 1 the investments were doing well and that he was getting rich. Victim 1 asked to be included on communications with CoinPoint and started receiving emails from various purported CoinPoint employees.
The FBI later determined the email addresses were fake and associated with another domain name – coinpointpartners.net – that was not associated with the real CoinPoint. Investigators also determined that Thomas had registered the fake domain name, coinpointpartners.net, the day after Victim 1 asked to be included in communications.
When Victim 1 tried to remove some money from the CoinPoint investment because it was doing so well, he encountered delays and various explanations. Victim 1 independently contacted CoinPoint and received information that led him to believe he had likely been scammed by Thomas.
The FBI interviewed CoinPoint’s owner, who said the company had never worked with Thomas or Victim 1. As part of scam, Thomas used investment proceeds from the victims to buy a vehicle in New Jersey for $10,245.
Assistant U.S. Attorney Tim Racicot prosecuted the case, which was investigated by the FBI.