Damian Williams, the United States Attorney for the Southern District of New York, announced that SCOTT HUGHES, CECILIA MILLAN, and KARINA CHAIREZ were sentenced today for their roles in an internationally coordinated fraud and money laundering ring that deceived individuals into investing in AirBit Club, a purported cryptocurrency mining and trading company that was, in reality, a pyramid scheme. HUGHES, an attorney who laundered approximately $18 million in AirBit Club fraud proceeds, was sentenced to 18 months in prison. MILLAN, a senior level promoter of AirBit Club, was sentenced to five years in prison. CHAIREZ, another senior level promoter of AirBit Club, was sentenced to one year and one day in prison. On September 26, 2023, PABLO RENATO RODRIGUEZ, co-founder of AirBit Club with GUTEMBERG DOS SANTOS, was sentenced to 12 years in prison. As part of their guilty pleas, the defendants in this case collectively have been ordered to forfeit their fraudulent proceeds of AirBit Club, which include seized or restrained assets consisting of U.S. currency, Bitcoin, and real estate currently valued at approximately $100 million. U.S. District Judge George B. Daniels imposed the sentences.
U.S. Attorney Damian Williams said: “Hughes, Millan, and Chairez each played a key role in perpetuating the AirBit Club pyramid scheme. At the top-tier of promoters, Millan and Chairez for years aggressively solicited investments from and misled hardworking and unsophisticated investors to line their own pockets. Hughes abused his position as an attorney to launder millions in AirBit Club fraud proceeds and to give AirBit Club the false appearance of legality. Pyramid schemes like AirBit Club would not be possible without facilitators like Hughes, Millan, and Chairez. Today’s sentences send a message that anyone who facilitates cryptocurrency investment schemes — not only those at the very top of the pyramid — will face serious consequences for such crimes.”
According to public court filings and statements made in Court:
RODRIGUEZ, DOS SANTOS, HUGHES, MILLAN, and CHAIREZ participated in a coordinated scheme in which victim-investors (the “Victims”) were induced to invest in AirBit Club based on the false promise of guaranteed profits in exchange for cash investments in club “memberships” (the “AirBit Club Scheme” or the “Scheme”). Beginning in late 2015, AirBit Club, through its founders, RODRIGUEZ and DOS SANTOS, as well as its promoters (the “Promoters”), including MILLAN and CHAIREZ, marketed AirBit Club as a multilevel marketing club in the cryptocurrency industry. Promoters falsely promised Victims that AirBit Club earned returns on cryptocurrency mining and trading and that Victims would earn passive, guaranteed daily returns on any membership purchased.
RODRIGUEZ, DOS SANTOS, HUGHES, MILLAN, and CHAIREZ traveled throughout the United States and around the world to places in Latin America, Asia, and Eastern Europe, where they hosted lavish expos and small community presentations aimed at convincing Victims to purchase AirBit Club memberships. In furtherance of the AirBit Club Scheme, the Victims were fraudulently induced to buy memberships in cash, including in the Southern District of New York. Following a Victim’s investment, a Promoter provided the Victim with access to an online AirBit Club portal to view the purported returns on memberships (the “Online Portal”). While Victims saw “profits” accumulate on their Online Portal, those representations were false; no Bitcoin mining or trading on behalf of Victims in fact took place. Instead, RODRIGUEZ, DOS SANTOS, MILLAN, and CHAIREZ enriched themselves and spent Victim money on cars, jewelry, and luxury homes, and financed more extravagant expos to recruit more Victims.
HUGHES, an attorney licensed to practice law in California, had previously represented RODRIGUEZ and DOS SANTOS in a Securities and Exchange Commission (“SEC”) investigation related to another investment scheme known as Vizinova. He then aided RODRIGUEZ and DOS SANTOS in perpetrating the AirBit Club Scheme by, among other things, helping to remove negative information about AirBit Club and Vizinova from the internet.
In many instances, as early as 2016, Victims who attempted to withdraw money from the AirBit Club Online Portal and complained to a Promoter were met with excuses, delays, and hidden fees amounting to more than 50% of the Victim’s requested withdrawal, if they were able to make any withdrawal at all. In April 2020, another victim received a notice on the AirBit Club Online Portal that his account was closed – and principal investment lost – due to “execution of financial sustainability Reserve, policy #34 of the AirBit Club Terms and Conditions, due to the economic and financial crisis caused by (Covid-19).”
RODRIGUEZ, DOS SANTOS, HUGHES, CHAIREZ, and MILLAN sought to conceal the AirBit Club Scheme, as well as their respective control of the proceeds of that Scheme, by requesting that Victims purchase memberships in cash, using third-party cryptocurrency brokers, and by laundering the Scheme’s proceeds through several domestic and foreign bank accounts, including an attorney trust account managed by HUGHES (the “Hughes Trust Account”). The Hughes Trust Account was ostensibly intended to maintain custody of HUGHES’s law practice’s client funds. Instead, the Hughes Trust Account was used by RODRIGUEZ, DOS SANTOS, HUGHES, CHAIREZ, and MILLAN to conceal the nature and origin of the AirBit Club Scheme’s illicit proceeds. Through that account, HUGHES directed Victim funds to the personal expenses of RODRIGUEZ, DOS SANTOS, CHAIREZ, MILLAN, and himself, and funded promotional events and sponsorships designed to further promote the AirBit Club Scheme.
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HUGHES, 47, of Newport Beach, California, was also sentenced to three years of supervised release. MILLAN, 41, of Greensboro, North Carolina, was also sentenced to three years of supervised release. CHAIREZ, 47, of Modesto, California, was also sentenced to three months of supervised release.
DOS SANTOS, 48, of Panama City, Panama, has pled guilty to charges including wire fraud conspiracy, which carries a maximum potential sentence of 20 years in prison; money laundering conspiracy, which carries a maximum potential sentence of 20 years in prison; and bank fraud conspiracy, which carries a maximum potential sentence of 30 years in prison.
The maximum potential penalties are prescribed by Congress and are provided here for informational purposes only, as the sentencing will be determined by the judge. DOS SANTOS is scheduled to be sentenced on October 4, 2023, at 11:00 a.m.
Mr. Williams praised the outstanding investigative work of Special Agents from Homeland Security Investigations’ El Dorado Task Force. Mr. Williams further thanked the New York Waterfront Commission for its assistance in the forfeiture process and the attorneys and investigators at the SEC whose expertise and diligence were integral to the development of this investigation.
If you believe you are a victim of the AirBit Club fraud, updated information regarding the case and victims’ rights, as well as contact information for the victim witness coordinator, is available here. The U.S. Attorney’s Office will contact victims who have previously contacted the victim witness coordinator regarding the restitution process.
The case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant U.S. Attorneys Kiersten A. Fletcher, Samuel L. Raymond, and Cecilia E. Vogel are in charge of the prosecution.
