Utahn Accused of Defrauding Bitcoin Mining Customers, Moving Customer Money Illegally

Utahn Accused of Defrauding Bitcoin Mining Customers, Moving Customer Money Illegally

Wolfgramm also allegedly told the customer that he could make a return on the Bitcoin if the customer would allow him to keep the Bitcoin in a trading platform Wolfgramm could access. The customer later asked for the Bitcoin, but Wolfgramm did not provide it and “further failed to provide any documentation that he had actually used (the customer’s) funds to purchase Bitcoin as promised,” the charges state. In May 2019, Wolfgramm allegedly received $306,000 from a customer for the purpose of purchasing Bitcoin, with $6,000 of that total being paid as commission to Wolfgramm. He allegedly told the customer that the Bitcoin was purchased on May 14, 2019. That same day, Wolfgramm told the customer that the trading arrangement had “no risk or liability” and the agreement had already yielded returns, according to charging documents. Later, prosecutors say Wolfgramm formed a company named Ohana Capital Financial, which was said to be private investment company that offered loans and accepted deposits for customers.

Wolfgramm owned and operated Bitex, a Utah-based company that bought and sold machines that “mined” for cryptocurrencies. Mining for cryptocurrencies requires sophisticated machinery that enables a user to “mine,” which is how new units of the cryptocurrency are made. Mining equipment also needs large amounts of electricity to power. James Wolfgramm, of Spanish Fork, was charged in Utah’s U.S. District Court on Jan. 6 with four felony counts of wire fraud.

Federal prosecutors allege that in May 2018, one Bitex customer purchased three high-end mining machines — as opposed to lower-cost mining equipment — from Wolfgramm for over $674,000, with roughly $43,000 going toward sales tax, according to charging documents. However, investigators say the customer instead received lower-cost machines and never got the high-end equipment. Charges also allege that the sales tax included in the purchase price was not paid to the state government. SALT LAKE CITY — A Utah man is accused of fraud while running a cryptocurrency business and mishandling his customers’ money.

In November 2020, a film company sent $1 million to an Ohana account with the intention of later sending the funds to pay for a film project they were trying to raise money for. Instead of holding the money, prosecutors allege Wolfgramm used the seven-figure deposit to pay for part of the previous customer’s PPE transaction. Additional federal court records show that in February 2021, a judgment was issued against Bitex and Wolfgramm that required a payment of over $7.4 million to a consulting company based in the United Arab Emirates. One customer transferred over $4.9 million to an Ohana account in September 2020, which was supposed to be held for a future transaction with a Chinese manufacturer to purchase personal protective equipment, or PPE. However, instead of holding the funds for the future transfer, Wolfgramm used over $4 million to pay two separate entities for “settling legal actions against Wolfgramm and Ohana Capital Financial,” according to the charges.

Despite the lack of accreditation, Ohana still received money from customers. However, prosecutors allege that after Ohana would receive deposits from customers, Wolfgram used funds for unrelated business expenses without the customers’ knowledge. Ohana’s motto was “banking the unbankable.” Ohana was registered as a private lender with the Utah Department of Financial Institutions, but was never registered as a full financial institution, charging documents state.

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