Two fraudsters have been jailed for their involvement in the sale of shares in a fictitious cryptocurrency, according to the City of London Police.
Ross Jay and Michael Freckleton were found guilty of conspiracy to defraud and sentenced at Southwark Crown Court to six years and three months and six years and six months, respectively.
The scam revolved around the fictional cryptocurrency called “Telecoin,” for which Jay and Freckleton orchestrated a fraudulent sale of shares. Operating under the guise of a company named Digi Ex, they “targeted potential investors through cold-calling, convincing them to part with their funds in exchange for non-existent digital assets”, the City of London Police said.
Between 2015 and 2017, some £509,599 ($654,495, €593,960) was deposited into Digi Ex accounts, with £409,493 traced back as payments from investors. The City of London Police investigation revealed that Jay and Freckleton “exploited the allure of the emerging cryptocurrency market, deceiving victims and siphoning their money for personal gain without providing any credible investment services”.
During the trial, evidence showed that Jay and Freckleton never made any attempts to reinvest the received funds in any form of cryptocurrency. Instead, the money was funnelled directly into their own pockets and those working at Digi Ex, bypassing any semblance of responsible financial management.
In total, the fraudulent duo paid themselves salaries amounting to over £139,000 from investors’ money. Furthermore, they withdrew an additional £145,000 in cash from the Digi Ex business account.
In an attempt to cover their tracks, they set up a shell company under the name “Telecoin”, but investigators discovered that no money was ever used to acquire the cryptocurrency promised to investors.
‘Exploited’
Detective chief inspector Lee Parish, from the fraud operations team at City of London Police, said: “It’s easy for investors, and sadly victims in this case, to be sucked in to what they think is an area of potential and growth for their hard earned cash due to how new the area of crypto investment is.
“Jay and Freckleton exploited this mindset and knowingly chose to simply take the victims’ money for their own financial gain, with no intention whatsoever of providing a service that even resembled a credible investment.
“The sentencing should serve as a reminder to not invest in emerging currencies that have the potential to be unstable in an erratic financial market. Should you wish to invest money, please do your research and go with a company which is FCA registered and is recognised worldwide. If in doubt, contact an accredited financial adviser.”
Confiscation order
In other news, Southwark Crown Court imposed a confiscation order of £562,636 against Richard Faithfull following his conviction in September 2021.
Faithfull was part of a trans-national organised crime group which laundered the proceeds of at least seven professionally run overseas investment frauds.
The court determined that Faithfull’s criminal benefit was around £4.1m, with the confiscation order amount being lower at £562,636, based on the Court’s findings as to his available assets. The confiscated funds will be used to compensate the victims of Faithfull’s crimes.
The court imposed a default prison sentence of four years on Faithfull, meaning that if he does not satisfy the terms of the confiscation order within three months, he will serve this further term of imprisonment in addition to the five years and 10 months he is already serving.
The Financial Conduct Authority (FCA) will now contact the identified victims of Faithfull’s offending to provide further information. The FCA investigation into other suspects linked to the wider organised crime group continues and it will update on any significant developments.
