Chicago scammer sued for $2M digital currency scheme

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A businessman in Chicago is facing charges of fraud and misappropriation of funds after allegedly taking off with $2 million in a digital currency scam. The man is said to have directed most of the money to fund his lavish lifestyle before fleeing to Georgia.

The James Streibich Revocable Trust accused Brock Flagstad of raising over $2 million to invest in digital currencies and instead using it to fund his personal lifestyle. The lawsuit, which was filed in an Illinois court, claimed the “rapacious, self-styled” entrepreneur used some of the money on luxury vehicles and private jets.

Flagstad allegedly reached out to James Streibich back in May 2018, pitching to him a digital currency investment plan that would be conducted by Folding Lights LLC., a company he owned. It would reportedly rely on the company’s proprietary financial trading algorithms. Streibich invested the $2 million and in return, he was promised a preferred interest in the company. Additionally, Flagstad’s lawyer assured him that the money would be exclusively used to trade digital currencies.

Flagstad didn’t keep his promise, the filing alleged. It claimed that within weeks, he had started embezzling funds meant for digital currency trading and using them for personal needs. He did this by transferring the money to his several personal accounts, according to the Trust.

After a few months, the trading team at Folding Lights left to start a new firm. In response, Flagstad reached out to the Trust for a $200,000 loan to revamp the firm, a request which the Trust accepted. A few months later, he stopped making interest payments on the loan and moved to Georgia. He also became “increasingly unavailable.” Upon investigation, the Trust claimed it discovered he had wired $849,000 from Folding Lights’ account to his personal account.

The Trust claimed that Flagstad has these tricks on other investors, especially in the Chicago area. He allegedly owned at least 17 firms, all of which he used in his schemes. It’s seeking compensation for the damages incurred.

Flagstad has denied the allegations, claiming that they are based on hearsay. His lawyer, Stan Sneeringer told Law360, “Anyone can allege anything they want in a complaint, particularly where, as here, the allegations are made ‘on information and belief.’ It is another matter to prove those allegations in a court of law.”