Daniel Schatt, James Alexander, Joseph Podulka, Wire Fraud Conspiracy, California 2023

Three former executives of San Francisco-based financial services firm Cred, LLC have been charged with wire fraud conspiracy and related crimes in connection with an alleged scheme to defraud customers and investors of over $780 million in cryptocurrency assets.

The charges were announced by U.S. Attorney Ismail Ramsey, Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp, and IRS Criminal Investigation Acting Special Agent in Charge Mark Mosley of the Oakland Field Office.

Daniel Schatt, 53, of San Mateo, the former co-owner and Chief Executive Officer of Cred, LLC, has been charged with conspiracy, thirteen counts of wire fraud and money laundering. Schatt allegedly made false and fraudulent statements to customers and investors about Cred’s lending and investing practices.

Joseph Podulka, 51, of Palo Alto, the former Chief Financial Officer of Cred, LLC, has also been charged with conspiracy, thirteen counts of wire fraud and money laundering. Podulka allegedly worked with Schatt to make false and fraudulent statements to customers and investors.

James Alexander, 54, of Sherman Oaks, the former Chief Capital Officer of Cred, LLC, has been charged with conspiracy, four counts of wire fraud and money laundering. Alexander allegedly made false and fraudulent statements to customers and investors about Cred’s lending and investing practices.

The indictments allege that the defendants began making false and fraudulent statements to customers and investors about Cred’s lending and investing practices no later than March 2020. The defendants allegedly represented to Cred’s customers and investors that Cred engaged only in “collateralized or guaranteed lending,” that Cred’s cryptocurrency investments were “hedged,” and that Cred maintained an “all weather approach” to investment to protect against volatility.

The indictment describes how the defendants lured customers to make investments by promising to return a significant yield on cryptocurrency investments—the defendants did not disclose, however, that virtually all the assets to pay the yield were generated by a single company whose business was to make unsecured loans to cryptocurrency investors.

The charges against the defendants are set out in two separate indictments handed down by the grand jury earlier this week. Cred, LLC filed for Chapter 11 bankruptcy on November 7, 2020.

The Northern District of California is home to many of the nation’s most innovative businesses, said U.S. Attorney Ismail Ramsey. Maintaining a market for continued prosperity requires rooting out those who use fraud as a substitute for success. This prosecution demonstrates our determination to keep our markets free of fraudsters and safe for investors.

The allegations against the defendants associated with Cred, LLC highlight a predatory, deceptive scheme defrauding potential victims of hundreds of millions of dollars of cryptocurrency at market value, said IRS Criminal Investigation Acting Special Agent in Charge Mark Mosley. The indictments levied demonstrate the investigative capabilities of IRS Criminal Investigation and our commitment to pursuing justice against financial criminals.

Source: https://www.justice.gov/usao-ndca/pr/former-ceo-cfo-and-cco-cred-llc-charged-alleged-multi-million-dollar-cryptocurrency