Jack Abramoff, a lobbyist and fraudster who rose to notoriety in the 1990s alongside a powerful conservative movement in Washington, is facing a return to prison after being charged in a criminal conspiracy involving cryptocurrency.
Mr Abramoff has agreed to plead guilty, according to prosecutors, to charges stemming from a scheme that raised $5.6m from small investors through the fraudulent sale of tokens that could be converted into what was supposedly a new and improved form of bitcoin electronic currency. The new currency was known as AML BitCoin.
The tokens were sold through a company called NAC Foundation, based in Nevada, whose chief executive, Marcus Andrade, was also charged. According to the government, Mr Andrade and Mr Abramoff told investors that AML BitCoin had new technology to prevent its abuse for money laundering or terrorist activities. In fact, the technology did not yet exist.
They also falsely claimed NAC — with Mr Abramoff acting as the firm’s lobbyist — was in negotiations to sign several government contracts, and on the verge of agreeing a deal to advertise at the Super Bowl. To fan investor interest in AML BitCoin, Mr Abramoff also paid for seemingly legitimate news coverage.
Mr Abramoff faces up to five years in prison, David Anderson, US attorney for San Francisco, said at a press conference, according to Bloomberg News.
The Securities and Exchange Commission also filed charges against Mr Abramoff, Mr Andrade and NAC. “We allege that these defendants repeatedly misled investors into funding non-existent technology, falsely claiming that the technology would make digital asset transactions more secure,” said Kristina Littman, chief of the cyber unit at the SEC’s enforcement division.
In April, the SEC and the Commodity Futures Trading Commission issued an alert warning the public about investment scams related to digital currencies such as bitcoin.
Mr Abramoff could not immediately be reached for comment. In the 1990s he became one of Washington’s most influential lobbyists by forging close ties with members of the emerging Republican majority in Congress. Among his close contacts was Tom Delay, the former House majority leader from Texas. He often entertained politicians and lobbying clients at his restaurant.
But Mr Abramoff became a disgraced symbol of the Washington influence game after he pleaded guilty in 2006 to defrauding the Native American tribes which had contracted his lobbying services in order to support their casino businesses. He admitted to skimming some $23m from them.
Mr Abramoff, who was a prodigious Republican fundraiser, also admitted to bribing public officials with golf trips to Scotland and other inducements. He served 43 months in prison.
After his release, Mr Abramoff penned a book, Capitol Punishment: The Hard Truth About Washington Corruption from America’s Most Notorious Lobbyist. Last year, he was reportedly helping to raise funds from Republicans opposed to the Green New Deal touted by progressive Democrats.