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DOJ charges Utah man, 2 of his companies with multiple counts of digital asset fraud

The United States Attorney’s Office of the District of Utah has taken James Wolfgramm to court on charges of financial fraud involving digital assets. Wolfgramm’s two companies, Bitex LLC and Ohana Capital Financial (OCF), are parties to the criminal matter.

Wolfgramm is charged with seven felonies, five counts of wire fraud, and two counts of money laundering, according to the Department of Justice (DoJ) statement. His fraudulent schemes were directly responsible for costing investors over $2 million in losses, many of whom had limited knowledge of dealing with digital assets.

Wolfgramm is accused of luring victims into his scheme using multiple aliases on social media, where he posed as a multi-millionaire. In one of his schemes, he posted luxury items, including expensive cars, wristwatches, and a suitcase filled with cash which investigators believe were lifted from other social media accounts.

Authorities said Wolfgramm and Bitex scammed two individuals off $1.7 million by selling a fake “high-powered cryptocurrency mining machine” dubbed the Bitex Blockbuster. To fool investors, Wolfgramm displayed one of the machines in his office connected to a screen that showed a pre-recorded mining loop that gave off an impression of the machine’s effectiveness.

Using his other company, OCF, Wolfgramm lured investors in a scheme that allowed individuals ineligible for traditional bank accounts to receive financial services from his company, according to investigators.

“Under these pretenses, OCF received millions of dollars from customers who believed that their money would be kept on deposit until the customers directed the release of their funds,” read the DOJ’s statement. “Instead, Wolfgramm and OCF spent these funds on unrelated business expenses, including in one instance, providing a refund to a prior, unrelated depositor.”

The rise of digital asset fraud

Digital asset fraud has steadily risen over the last few years. A Federal Bureau of Investigation (FBI) security update to U.S. citizens has warned them to be wary of romance scams involving using Bitcoin ATMs to transfer funds.

A security advisory was also issued for residents to be on high alert for malware targeting health and educational institutions. According to the FBI’s statement, the modus operandi of the bad actors involves using virtual currencies to receive ransoms.

Over the last couple of months, the DoJ has charged several fraudsters in court over their roles in defrauding Americans. Some defendants have pleaded guilty to the charges, while others have entered into plea bargain agreements with prosecutors to return the stolen funds to aggrieved investors.

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