The US Department of Justice has Announce Spokane resident Michael Joseph McIlhenny has been sentenced to more than three years in federal prison for running a fraudulent cryptocurrency investment scheme. The scam, which spanned more than a year, led to several investors being defrauded of more than $350,000.
The ruling, handed down by U.S. District Judge Thomas O. Rice, 41 months in federal prison, three years of supervised release, and restitution totaling $326,119. McElhenney was immediately placed in federal custody after the hearing.
Fraud tactics
The fraudulent scheme revolved around a fake cryptocurrency investment fund, MAC Blockchain Solutions. McIlhenny attracted investors by presenting himself as an “experienced operator” of a successful cryptocurrency investment fund, promising lucrative returns from investments in emerging cryptocurrencies, Ethereum stakes, and liquidity pools.
However, according to a US Department of Justice report, the promised cryptocurrency investments were never implemented, and the funds were instead used for McIlhenny’s expenses, including gambling.
The agency also revealed that McElhenney targeted victims through in-person encounters and online interactions, including meeting individuals via Uber rides, dating apps, and video games like “Call of Duty” under the username “Bing Bong.”
His strategy often involved developing personal relationships to gain trust before soliciting investments. The victims were provided with “fabricated data” through a platform called Coin.FYI, which falsely showed progress and growth in their supposed investments.
Moreover, investors were promised that they could liquidate their investments at any time and receive guaranteed returns. In reality, the funds were “misappropriated” for McIlhenny’s personal use.
The scheme extended beyond cash, with rare works of art and precious metals being defrauded among the assets. When victims tried to withdraw their investments, McElhenney resorted to deception, citing fabricated excuses such as security breaches, theft, and delayed withdrawals.
Despite the victims’ demands for their money, McElhenney continued to perpetuate the scheme by presenting false scenarios and exploiting the trust of his investors.
Comment from the authorities
US Attorney Vanessa Waldrif expressed her sorrow for the victims who suffered financial and emotional losses due to McElhenney’s actions. Waderf noted:
I am devastated for the victims who suffered the financial and emotional consequences of Mr. McElhenney’s scheme, and I am grateful to the skilled investigators of Homeland Security Investigations, the Spokane Police Department, and the dedicated prosecutors in my office who uncovered this scheme and worked diligently to take him into custody. Mr. McElhenney is responsible for his actions.
Meanwhile, Matthew Murphy, acting special agent in charge of Homeland Security Investigations in Seattle, highlighted the ruling as a warning against fraudulent schemes.
He pointed to McIlhenny’s exploitation of digital currency to deceive investors, and reiterated the dedication of law enforcement agencies to pursuing such cases, regardless of the platforms or technology involved.
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