Northborough man sentenced for aiding romance and lottery schemes targeting elderly

 

​​​​​Date: April 13, 2021

Contact:  newsroom@ci.irs.gov 

Boston — A Northborough man was sentenced today in federal court in Worcester for assisting in fraud schemes targeting elderly victims and agreeing to launder the proceeds of such schemes and other criminal activity, which totaled more than $600,000.

Austin Nedved was sentenced by U.S. District Court Judge Timothy S. Hillman to 97 months and 17 days in prison (12 months of which is to run consecutively to a sentence Nedved is serving for a separate fraud conviction in the Eastern District of Kentucky), three years of supervised release and restitution of $569,750. In December 2020, Nedved pleaded guilty to one count of aiding and abetting wire fraud and one count of money laundering conspiracy.

Nedved ran a business in which he bought and sold digital currencies, including Bitcoin, for cash. Nedved advertised his services under the screen name "USMC1991" over LocalBitcoins.com and Paxful.com, two online businesses that matched Bitcoin buyers and sellers and facilitated their transactions.

From at least 2017 through 2019, Nedved aided and abetted romance and lottery schemes targeting elderly victims. In romance schemes, fraudsters convince victims to send money abroad to purported love interests, while in lottery schemes fraudsters convince victims that they can obtain lottery winnings or sizeable government grants by forwarding cash for administrative fees or expenses. Despite knowing or being willfully blind to the fact that his customers were fraud victims, Nedved sold Bitcoin to them so that they could send money overseas to the fraudsters.

For instance, in late 2017, an individual posing as "Jonathan G." over social media led a 78-year old victim to believe that he was a Weston, Mass. businessman who owned an oil company. Without ever meeting "Jonathan G." in person, the victim fell in love and agreed to marry him. "Jonathan G." then falsely told the victim that his oil company had experienced an accident abroad in which people had died, and that he needed money to settle financial obligations arising from the accident with a foreign government. "Jonathan G." claimed that until he did so, he would not be able to return to the United States to marry the victim. "Jonathan G." told the victim to pay him via Bitcoin. The victim, who had never before purchased digital currency, agreed to send him money and contacted Nedved by phone and text message in Massachusetts to arrange a cash-for-Bitcoin transaction.

On June 25, 2018, in a parking lot in Kittery, Maine, the victim gave Nedved a cashier's check to purchase approximately $100,000 in bitcoin. Nedved then released approximately $100,000 in Bitcoin, less his commission, to a Bitcoin wallet controlled by "Jonathan G." When Nedved accepted $100,000 from the victim, Nedved knew or was willfully blind to the fact that the payor was the victim of a scam. On June 29, 2018, in Leominster, Nedved and a co-conspirator took another $40,000 from the victim for the same purpose.

In total, Nedved and his co-conspirators converted more than $630,000 of fraud and other criminal proceeds to Bitcoin. They then either returned the Bitcoin to the victims of the fraud or forwarded it to unidentified third parties.

Acting United States Attorney Nathaniel R. Mendell; Ramsey E. Covington, Acting Special Agent in Charge of the Internal Revenue Service's Criminal Investigation; and William S. Walker, Acting Special Agent in Charge of Homeland Security Investigations in Boston made the announcement today. Assistant U.S. Attorney Seth B. Kosto, Deputy Chief of Mendell's Securities, Financial & Cyber Fraud Unit, prosecuted the case.