Las Vegas businessman convicted in $24M crypto fraud scheme

A federal jury convicted Las Vegas businessman Brent C. Kovar of fraudulently obtaining $24 million from at least 400 investors through his cryptocurrency company, Profit Connect, The Block reported.

Kovar was found guilty on 11 counts of wire fraud, two counts of mail fraud, and two counts of money laundering, according to a statement from the U.S. Attorney's Office for the District of Nevada issued Monday.

Kovar owned Profit Connect, a Las Vegas company that operated from late 2017 to July 2021. He told investors the firm ran artificial intelligence software on a supercomputer to mine crypto and verify transactions, and marketed it as a profitable venture promising fixed annual returns of 15% to 30% plus a full money-back guarantee. He also claimed Profit Connect held hundreds of millions of dollars in crypto reserves and told investors their money was insured by the FDIC.

None of it held up in court. Prosecutors said the company was never profitable, held no reserves, and couldn't pay the promised returns or honor the guarantee it advertised. The FDIC insurance claim was false. That coverage protects bank deposits, not crypto holdings, and Profit Connect was never a bank.

“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.”

— Christopher S. Delzotto, Special Agent in Charge, FBI Las Vegas Field Office

The AI pitch is what set Profit Connect apart from a plain old Ponzi scheme, at least on paper. Framing crypto mining as something a supercomputer running AI software handled automatically gave Kovar a story that sounded technical enough to discourage questions, while the fixed returns and money-back guarantee did the rest of the work convincing investors there was no real risk. It's a pattern regulators have flagged repeatedly this year: wrapping an old promise, guaranteed returns with no downside, in language borrowed from whatever technology is generating headlines.

• Amount obtained: $24 million from at least 400 investors
• Convictions: 11 counts wire fraud, 2 counts mail fraud, 2 counts money laundering
• Company: Profit Connect, operated late 2017 to July 2021
• Promised returns: 15%-30% annually, with a 100% money-back guarantee
• Statutory maximum: 280 years; sentencing set for Nov. 30

Kovar faces a statutory maximum of 280 years in prison. A federal judge will set the actual sentence at a hearing scheduled for Nov. 30, and that number will land far below the maximum, as it does in most federal fraud cases, where sentencing guidelines weigh the amount stolen and the defendant's record rather than stacking every count's ceiling on top of the others. Even a fraction of that maximum would still mean Kovar spends the rest of his life in prison.

Kovar's case is smaller in scale than the collapses that have defined crypto's reputation for fraud. Sam Bankman-Fried's fraud at FTX involved $8 billion and drew a 25-year sentence, a case that showed the same core dynamic at far larger scale: investors trusted a story about technical sophistication that never matched the reality underneath it.

Kovar's operation ran for nearly four years before it collapsed, long enough for hundreds of investors to hand over money based on claims no one at Profit Connect could substantiate.

This article is for informational purposes only and does not constitute investment advice.