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)

Earlier today, Patrick McDonnell, also known as “Jason Flack,” pleaded guilty at the federal courthouse in Brooklyn to wire fraud in connection with a scheme to defraud investors in virtual currency.  When sentenced, McDonnell faces up to 20 years in prison as well as forfeiture and restitution to his victims.  The plea took place before United States District Judge Nicholas G. Garaufis.

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 guilty plea.

 “McDonnell has admitted that he used old-fashioned deception to defraud investors seeking to trade 21st century currencies,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners will continue to prosecute those who swindle the investing public to the full extent of the law.”  Mr. Donoghue expressed his grateful appreciation to the United States Commodity Futures Trading Commission (CFTC) for its significant cooperation and assistance in this case. 

Between approximately November 2014 and January 2018, McDonnell portrayed himself 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 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 balance statements purportedly showing that their investments had been profitable, and stole their money for his personal use.  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.

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:  46

Staten Island, New York

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

A nine-count indictment was unsealed today in federal court in Brooklyn charging  Patrick McDonnell, also known as “Jason Flack,” with wire fraud in connection with a scheme to defraud investors in virtual currency.  McDonnell was arrested earlier today, and is scheduled to be arraigned this afternoon before United States Magistrate Judge Sanket J. Bulsara. 

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 charges.

 “As alleged, the defendant defrauded investors by making false promises and sending them fraudulent balance statements, hiding the fact that he was stealing their money for his personal use,” stated United States Attorney Donoghue.  “The defendant’s fraud ends now, he will be held responsible for his criminal conduct.”  Mr. Donoghue expressed his grateful appreciation to the United States Commodity Futures Trading Commission (CFTC) for its significant cooperation and assistance in this case. 

“The defendant, Patrick K. McDonnell, used smoke and mirrors to allegedly dupe investors into paying his company—CabbageTech, for advice and strategies on crypto-currency trading,” stated USPIS Special Agent-in-Charge Bartlett.  “However, Postal Inspectors and their federal law enforcement partners unmasked McDonnell and his scheme to defraud investors, and brought him to justice for his alleged criminal actions.”

As alleged in the indictment, between approximately November 2014 and January 2018, McDonnell portrayed himself as an experienced trader in virtual currency, promising customers he would provide trading advice, and purchase and trade virtual currency on their behalf.  Beginning in approximately May 2016, McDonnell made similar representations 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 balance statements purportedly showing that their investments had been profitable, and stole their money for his personal use.  When investors requested refunds, McDonnell initially offered excuses for delays in repayment, and eventually stopped responding at all.   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.

The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted, McDonnell faces a maximum sentence of 20 years’ imprisonment. 

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:  46

Staten Island, New York

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