Patrick McDonnell has been sentenced to 33 months in prison by a New York court. The founder and CEO of CabbageTech Corp., a fraudulent crypto trading company, entered a guilty plea last year for defrauding investors. The court also ordered him to pay back the money he defrauded his investors.
McDonnell was first arrested in March last year and charged with fraud. The Staten Island, New York resident was the mastermind behind CabbageTech, otherwise known as Coin Drop Markets, a company he touted as a crypto advisory and trading firm. He posed on social media platforms as an expert trader, promising to make his investors huge profits if they invested with his firm. However, he channeled most of the investment into his personal use.
Following his arrest, McDonnell pleaded guilty to wire fraud. And now, Judge Nicholas G. Garaufis has sentenced him to serve 33 months in prison for his crime. He will also have to pay $224,352 in restitution to his investors.
The U.S. Attorney for the Eastern District of New York Richard Donoghue, who led the prosecution, sounded a warning to other crypto scammers. He stated, “Patrick McDonnell is headed to prison for deceiving investors, using an alias, false promises and false balance statements for one purpose only—so that he could steal their money. This Office will continue to vigorously prosecute white-collar criminals who defraud the investing public.”
McDonnell conducted his scheme between November 2014 and January 2018, the Department of Justice revealed in its press release. He promised his investors that he would offer trading advice and even trade cryptos on their behalf. He ended up doing neither, and instead, he published false financial statement indicating a thriving business. He ended up collecting $194,000 in fiat, 4.41 BTC, 2016 Litecoin, 620 Ethereum Classic and 1.3 million Verge tokens for a total of $224,350.
The Commodities Futures Trading Commission has been instrumental in the McDonnell case, having been the first agency to investigate him. The Commission requested the court to treat cryptos as commodities for this particular case, giving it jurisdiction over the proceedings. McDonnell had argued that the CFTC had no authority to regulate his business, an argument that the judge rejected, ordering him to pay $1.1 million – $290,000 in restitution and $870,000 in penalties.
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