Crypto Fraudsters Created Fake Federal Agency to Probe Their Own $13M Scam: DOJ

LOS ANGELES, CA — A former Hollywood Hills man on Monday admitted in federal court to defrauding investors out of more than $13 million in a cryptocurrency scheme, according to the U.S. Attorney's Office.

Vincent Mazzotta Jr., 54, pleaded guilty to charges of money laundering and conspiracy to obstruct justice.

He's due back in court Dec. 15 for sentencing, where he faces up to 10 years in prison for money laundering and up to five years for conspiracy, according to prosecutors.

Mazzotta and co-defendant David Saffron falsely promised victims high-yield returns if they invested with companies Mind Capital, Cloud9Capital and others. They bilked investors with the promise that their investments would yield high profits with the help of trading robots powered by artificial intelligence, prosecutors said.

The pair created a phony government entity called the Federal Crypto Reserve and solicited thousands to hire the entity to "investigate" Mind Capital, Cloud9Capital and other crypto-investment firms that had disappeared with the victims' money, prosecutors said.

Mazzotta also conspired with others to obstruct justice by trying to hide and destroy evidence at Saffron's apartment after his arrest, including an iPad and the contents of a personal safe. Mazzotta also falsified the records of his business, Runway Beauty Inc., to hide his ties to the investment fraud scheme from a federal grand jury, the U.S. Attorney's Office said.

Saffron is set to stand trial in September.

City News Service contributed to this report.