The telltale warning to investors in crypto-investment platform USI Tech should have been when its chief executive, Horst Jicha, told them: “Now you might be thinking this is too good to be true.”
Federal prosecutors say it was exactly that, and that the crypto investment strategy Jicha was pitching — which he promised would yield 1% returns every single day — was actually a scam.
The house of cards collapsed in 2018, when several state and provincial regulators in the U.S. and Canada issued cease and desist letters to USI Tech, saying it was selling unregistered securities and was in violation of a multitude of financial regulations. But instead of returning investors’ money, prosecutors said, Jicha quickly transferred $150 million to accounts he controlled overseas.
For the next five years, Jicha — a 64-year-old German national — lived abroad. He was arrested on a sealed indictment just before Christmas when he tried to fly to Miami for a vacation, prosecutors said.
“In the early days of crypto, the defendant deployed a multi-level marketing scheme to defraud U.S. investors excited about the crypto market,” Breon Peace, the U.S. attorney for the Eastern District of New York, said in a statement. “Although the defendant did not return to the United States for half a decade, my office and the FBI worked to ensure that when he did, he would be brought to justice.”
In the same statement, James Smith, assistant director in charge of the FBI’s New York field office, said: “Horst Jicha allegedly advertised a platform that made cryptocurrency investing simple and more accessible to investors, with guaranteed returns. In reality, the platform was just a facade.”
Jicha was scheduled to be arraigned in federal court in Brooklyn on Friday on charges of securities fraud, conspiracy to commit securities fraud, wire fraud and money laundering.
In a statement, Jicha’s attorneys Marissel Descalzo and David Tarras said the case was more complicated than prosecutors had alleged and suggested that others had played a more significant role.
“It’s always difficult when investors have suffered losses at the hands of certain bad actors. We look forward to zealously defending the allegations against Mr. Jicha and bringing forth the facts of his involvement with USI Tech in hopes that the bad actors will be brought to justice,” they said.
According to court documents, Jicha launched the USI Tech investment plan in Dubai in 2017, pitching it as a way for novice and experienced investors alike to get in on the new cryptocurrencies that were gaining in popularity and shooting up in price.
The purported strategy was simple: People could invest in so-called Bitcoin packages worth 50 euros each that, within 140 days, would yield a 140% return — or 1% per day. In promotional materials, Jicha never gave a clear explanation of how USI Tech delivered such returns, aside from unspecific mentions of crypto mining and algorithms, prosecutors said.
At first, USI Tech operated mainly overseas, but later in 2017 Jicha launched operations in North America with a marketing blitz and promotional seminars hosted by him around the country, according to court filings.
When asked by some prospective investors whether USI Tech was a Ponzi scheme, Jicha and other executives assured them it was not and said they had consulted with regulators and lawyers specializing in Securities and Exchange Commission compliance to verify that their plan was fully legal.
Part of the pitch included the offer of substantial commissions to customers who brought other investors into the platform, prosecutors said.
Within a year, USI Tech had brought in tens of millions of dollars in investments — and attracted the attention of regulators in Texas, North Carolina and in several Canadian provinces, who told the executives that what they were doing was illegal, according to the court filings.
As a result, prosecutors say Jicha opted to shut down USI Tech’s operations in the U.S. At first he told investors that he was working on ways to get the platform into compliance with the law and up and running again. But soon after, prosecutors say, he simply disappeared with the $150 million.
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