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Luiz Capuci accused of carrying out crypto fraud

PPeople who knew Luiz Capuci knew him as a great donor. Luxury cars, designer clothes, a villa near the beach – Capuci had it all. If you went out to eat, Capuci – or “Junior”, as he liked to call himself – shopped. His daughter-in-law, Katlyn Capuci, recalled a time when she went shopping with Capuci and he offered to pay for whatever she wanted. When she hesitated, she said, he pulled out his cell phone and showed her a bank account he claimed had $4 billion.

“Don’t worry,” he told her. “I got it.”

Capuci wasn’t always that rich. In promotional materials for his company, he claims to have spent a period of his life homeless “in freezing weather.” Records show he only filed for bankruptcy in 2008. But all that changed with the rise of crypto. Family members say Capuci was exposed to Bitcoin early on and then started his own cryptocurrency mining business.

The company Mining Capital Coin (MCC) was so successful that Capuci was able to buy a house outside of West Palm Beach, Florida. When his third wife became pregnant in 2020, the gender reveal consisted of two Ferraris and a Lamborghini shooting blue smoke out of the exhaust pipes. The baby’s first birthday party featured a ball pit and a live giraffe.

The lavish display of wealth made his family members somewhat suspicious.

“I was always like, ‘Junior, when does the money stop?'” his daughter-in-law recalled. “And it never did. I don’t know how.”

As it turns out, federal investigators were wondering the same thing. The 44-year-old is now the focus of two federal investigations – and on the run in Brazil.

According to a recent lawsuit filed in Florida federal court, Capuci launched his company in 2017 with an enticing promise: Invest at least $125 today and receive a guaranteed 1 percent return every day from then on. For example, someone who has invested $10,000 could expect a return of $700 each week, payable whenever they want. Capuci claimed the profits came from trading cryptocurrencies and traditional stocks, as well as bitcoin mining — the intensive computing process required to harvest the world’s most valuable cryptocurrency.

A bitcoin mining machine can cost as much as $4,000, and the energy required to mine a single coin is three times that. Capuci and his business partner Emerson Pires said they owned more than 45,000 such machines operating simultaneously in Miami, Vermont and Iceland. According to the complaint, they frequently featured the machines in videos posted to Facebook and went about their business over the sounds of whirring engines.

“Do you like the noise?” Capuci boasted in one such video, according to an indictment also filed in federal court in Florida. “It’s mining, it’s mining, make money for you guys.”

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Luiz “Junior” Capuci invented the cryptocurrency CAPTLCoin, which is worth less than a cent today.

Photo illustration by Luis G. Rendon/The Daily Beast/Getty/Facebook

Capuci reportedly sold shares in the company through “packages” ranging from $125 for the “Bronze” to $1.2 million for the “MVP Royal.” After getting on board, the complaint said, investors were encouraged to act as “sponsors” for the company and attract new supporters to share in their shared profits. Sponsors would get 10 percent of every package a new investor buys, plus additional incentives including iPads, Apple Watches or, for particularly large customers, a Porsche Cayenne.

Despite his flamboyance, Capuci strove to bring an air of authority to his business. In promotional materials and presentations cited by prosecutors, he claimed to have studied computer science at Harvard and worked for the FBI for eight years. He reportedly told potential investors that his company had partnered with the Clinton Foundation and the World Bank, which helped them secure an investment in green power generators.

Most importantly, according to the complaint, Capuci told investors they could cash in their returns whenever they wanted. All they had to do was open an account with a crypto trading platform called Bitchain and request their earnings from the company’s “back office”. MCC would then transfer the funds to its bitchain wallet in bitcoin, which the investor could then sell for cash or hold for future sales.

The deal was tremendously successful: According to the lawsuit and indictment, Capuci and Pires attracted at least 65,535 investors who invested a total of $62 million. And the founders rewarded themselves generously, taking in between $5,000 and $20,000 a month in Bitcoin as salary.

During the time the company was in operation, Capuci bought two Ferraris, a Lamborghini, a Mercedes, a yacht and $10,000 worth of clothing at stores including Louis Vuitton, Salvatore Ferragamo and Gucci, according to court documents. Pires reportedly bought his own Lamborghini, along with a Harley Davidson, Mercedes and Land Rover.

But over the years, the complaint says, the system has cracked.

Investors wishing to withdraw funds were now told they would have to withdraw it in CPTLCoin, a cryptocurrency invented by Capuci. Bitchain listed CPTLCoin as valued at around $2.43 per coin, and Capuci insisted it would surge even higher because he said he had signed deals with major hotels and casinos to accept it and was about to launch an online “shopping mall” trading only in CPTLCoin. In a video distributed to investors, he claimed the currency is “guaranteed” to appreciate tenfold by next year.

But when investors cashed out their CPTLCoin, they told investigators they were hit with endless roadblocks and delays. Capuci blamed problems with Bitchain, once telling investors that the company is building new interfaces and is therefore “a bit slow with transfers and withdrawals.” The company later posted a “Bitchain COVID 19 Notice” on its website, attributing delays to the pandemic.

Meanwhile, everything fell apart for Capuci at home. In 2019, he filed for divorce from his second wife, a Brazilian, with whom he had one child. That same year, according to court documents obtained by The Daily Beast and affidavits by SEC investigators, Capuci was sued in St. Lucie County Court for failing to repay the majority of an $11,000 loan he took out in 2015 and became a Payment of another prompted $25,127 for non-payment of rent for another business. The next year, his ex-wife reported that he had failed to pay the mortgage on their home as required by their divorce settlement. (Asked in an affidavit why he stopped paying the mortgage, he replied, “Because I didn’t want to pay it, so I didn’t.”)

Katlyn Capuci said she’s always been suspicious of her father-in-law’s businesses. He was vague on the details, apparently only hiring family members — or attractive young women whose only job seemed to be reviewing photos of potential new investors. While he mentioned owning a bitcoin mining machine, she says, he told her the energy demands were so high that he shut down the entire building complex when trying to run it.

“I used to ask Junior, ‘What’s the catch, I don’t get it,'” she said. “He said, ‘There’s no catch, people give me their money and they get it later.'”

She added: “I think you’ve ever seen it Wolf of Wall Street? It sounds something like that.”

Apparently the federal government agreed. On April 7, the Securities and Exchange Commission filed a 25-page lawsuit against Capuci and Pires, accusing them of running a shell company that defrauded investors of their funds.

Three weeks later, the US District Court for the Southern District of Florida entered an indictment charging Capuci with conspiracy to commit wire fraud, conspiracy to commit securities fraud and conspiracy to commit international money laundering.

According to documents in both cases, the company that Capuci offered to its tens of thousands of investors was essentially worthless. There were no mining machines, no trading robots, no farms in Iceland. The Clinton Foundation and the World Bank had never worked with Capuci’s company. According to an affidavit filed in the SEC lawsuit, Pires told investigators that the company “never operated in the United States.” MCC, SEC lawyers wrote, is “a Potemkin village for the digital age.”

CAPTLCoin, the cryptocurrency that Capuci invented and allegedly forced its investors to accept as payment, was essentially worthless, worth less than a dime. Worse, Bitchain — the trading platform that Capuci had tricked them all into signing up for and then blamed for the withdrawal delays — was owned by none other than Capuci himself. Domain registration records show that Capuci owned Bitchain’s site personally registered and then paid to make the registration private. According to the SEC complaint, internal company documents identify him as the company’s CEO.

Capuci has never applied to trade its currency on a legitimate platform; never done business with casinos or hotels or an e-commerce mall. “In short,” attorneys for the SEC wrote, “no investor — or anyone else — has successfully withdrawn, sold, traded, or otherwise used their CPTL.”

The SEC alleges that during the time that MCC was active, Capuci alone raked in around $18.5 million in crypto assets — money he had on dozens of different digital wallets, six different bank accounts, and two PayPal accounts divided. He is also said to have operated bank accounts on behalf of several of the 17 other companies he owned, including one based abroad.

Shortly after the agency issued subpoenas as part of their investigation, Capuci began closing bank accounts and dumping his assets; Sale of at least two properties, a car and the 42-foot yacht, according to investigators. When the SEC served on Pires and Capuci last June, they invoked their Fifth Amendment rights and declined to testify. Both men have since fled to Brazil.

An evidentiary hearing in the SEC case was held on May 12; a hearing date in the criminal proceedings was not set. Lawyers for the SEC have asked that Capuci and Pires’ assets be frozen and their passports confiscated. A lawyer for Capuci said he “vehemently denies” the allegations but declined to comment further. Pires’ attorney is not listed in the court documents and an employment number for him was not available. He did not respond to emails and a request for comment sent by a family member.

Katlyn Capuci, for example, said she wasn’t surprised at the news of her father-in-law’s legal troubles.

“Junior is a very proud man, he’s a very selfish man,” she said. “He doesn’t care about anyone but himself and he thinks money is the only thing that matters in this world.”

She paused, then added, “I’m sure he’d be happy to hear someone write something about him.”

https://www.thedailybeast.com/luiz-capuci-charged-with-running-crypto-scam?source=articles&via=rss Luiz Capuci accused of carrying out crypto fraud

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