Patrick McDonnell, also known as “Jason Flack,” has been arrested for allegedly defrauding crypto investors, the U.S. Attorney’s Office of the Eastern District of New York announced. It unsealed a nine-count indictment accusing McDonnell of carrying out a fraudulent scheme.
From Nov. 2014 to Jan. 2018, McDonnell is accused of posing as an experienced cryptocurrency trader offering advice and crypto investment services. However, he allegedly never invested any of the funds he received and never provided actual investment services. Instead, he is accused of using the money for his own purposes. From 2016, he also used his Staten Island-based company—CabbageTech, also known as Coin Drop Markets—to trick possible investors.
According to U.S. Postal Inspection Service Special Agent-in-Charge Philip R. Bartlett, McDonnell “used smoke and mirrors to allegedly dupe investors into paying his company—CabbageTech, for advice and strategies on crypto-currency trading.”
McDonnell used social media for communications with prospective clients. When investors wanted to get their money back, he made excuses regarding pay-back delays and ultimately ceased communications without ever returning the money.
“As alleged, the defendant defrauded investors by making false promises and sending them fraudulent balance statements, hiding the fact that he was stealing their money for his personal use,” said United States Attorney Richard P. Donoghue. “The defendant’s fraud ends now, he will be held responsible for his criminal conduct.”