Investors were told a Las Vegas supercomputer with artificial intelligence could generate fixed returns of 20% to 30% a year, compounded monthly. A federal jury has now found the man behind that pitch, Brent Kovar, guilty of running it as a Ponzi scheme that defrauded at least 400 people of $24 million, CoinDesk reported.
The verdict
Kovar was convicted of 11 counts of wire fraud, two counts of mail fraud and two counts of money laundering after a nine-day trial. Sentencing is set for Nov. 30, when he faces a statutory maximum of 280 years in prison. From late 2017 to July 2021, Kovar operated the business, called Profit Connect, representing it as profitable with hundreds of millions of dollars in cryptocurrency reserves and a 100% money-back guarantee. Prosecutors said the fixed returns were manufactured rather than generated by any real trading or mining operation.
Where the money went
Prosecutors and a 2021 SEC civil complaint said the AI supercomputer was never the real source of returns. The SEC first charged Kovar and his mother, Joy Kovar, in July 2021 with fraudulently raising $12 million from at least 277 investors, alleging that investor funds were diverted to a personal bank account and used to make Ponzi-like payments to earlier investors. Kovar also used investor money to buy gifts for employees and a house for himself.
“The victims in this case thought they were engaged in revolutionary technological advancement, but it was merely a deception crafted by the falsehoods and trickery of Mr. Kovar,” said FBI Special Agent in Charge Christopher Delzotto.
A pattern, not an outlier
The conviction is part of a broader federal crackdown on crypto investment frauds that promise outsized, risk-free returns. For retail investors, the case underscores the importance of how to evaluate a crypto platform before committing funds, especially when returns are marketed as fixed and guaranteed. Prosecutors have pursued a string of similar cases as federal agencies step up enforcement against crypto businesses that overstate returns or misuse customer money. Sentencing, set for late November, will determine whether the statutory maximum becomes a reality or the court imposes a shorter term.
