Staten Island Man Sentenced to 33 Months’ Imprisonment for Defrauding Investors in Virtual Currency

Earlier today, in federal court in Brooklyn, Patrick McDonnell was sentenced by United States District Judge Nicholas G. Garaufis to 33 months’ imprisonment for wire fraud related to a scheme to defraud investors in virtual currency.  In addition, McDonnell was ordered to pay $224,352 in restitution.  McDonnell pleaded guilty in June 2019. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS), announced the sentence.

“Patrick McDonnell is headed to prison for deceiving investors, using an alias, false promises and false balance statements for one purpose only—so that he could steal their money,” stated United States Attorney Donoghue.  “This Office will continue to vigorously prosecute white-collar criminals who defraud the investing public.”  Mr. Donoghue expressed his grateful appreciation to the Commodity Futures Trading Commission for its assistance with the investigation.

“Mr. McDonnell used his knowledge of virtual currencies to scam investors. While he thought he could outsmart law enforcement, his arrest and today’s sentence shows, no matter where you are, what’s done in the dark will be brought to the light,” stated USPIS Inspector-in-Charge Bartlett.

Between approximately November 2014 and January 2018, McDonnell portrayed himself on social media as an experienced trader in virtual currency, promising investors he would provide trading advice and purchase and trade virtual currency on their behalf.  Beginning in approximately May 2016, McDonnell made similar representations and promises to investors through his Staten Island-based company, CabbageTech, Corp., also known as Coin Drop Markets.  However, neither McDonnell nor CabbageTech provided investment services.  Instead, McDonnell sent investors false financial statements showing that their investments had been profitable, and stole their money for his personal use.  In total, McDonnell defrauded at least 10 victims of at least $194,000 in U.S. currency, 4.41 Bitcoin, 206 Litecoin, 620 Ethereum Classic and 1,342,634 Verge currency, for a total loss of $224,350.32.  In addition to lying to investors about his company’s prowess, McDonnell also solicited customers using a false alias, “Jason Flack,” an individual that did not actually exist.

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorney Hiral D. Mehta is in charge of the prosecution. 

The Defendant:

PATRICK MCDONNELL (also known as “Jason Flack”)
Age:  47
Staten Island, New York

E.D.N.Y. Docket No. 19-CR-148 (NGG)