Josh Garza’s plea deal has been released to the public and it gives us some insight into how his sentencing might go on September 13th.
Josh Garza, whose legal name is Homero Joshua Garza, was the head of GAW Miners, a major player in the industry until its collapse. There were accusations abound about them using hardware before shipping it, delaying shipments to keep the hash power offline and various other things. But things really turned sideways when they started their cloud mining operations called ZenMiner. It used a token that represented hash power.
Each coin was supposed to represent hash power on the bitcoin network and would give holders the corresponding block reward as sort of a dividend. Users could trade hash coins on the open market and they would therefore have their own value.
It was a novel concept but it now seems obvious that at least some of the hash power GAW Miners claimed to have didn’t exist and some of the payments given to users weren’t coming from actual bitcoin mining, but from new GAW customers. That classic Ponzi scheme went on for a while until customers started complaining about late payments. It was at that time GAW Miners and Garza launched the next phase of the scheme: Paycoin.
Paycoin was promised to launch with a $20 floor, and its presale price was significantly below that. So many saw it as a can’t miss investment and even the Wall Street Journal hyped it on the Money Beat Blog. When the coin eventually launched, the supposed $20 floor never materialized and its price quickly tanked. Paycoin promised all sorts of solutions, including a gradual buyback (that would have taken decades at their planned rate). The buyback plan never got going and the hyped partnerships were later proven to be false. GAW hyped partnerships with VISA, MasterCard, Amazon, Target and others, but all of those companies denied any partnership.
Eventually, the whole thing fell apart. The Hyperstakers that offered insane amounts of interest (and inflation) were exposed. Garza threatened another Paycoin employee with Mafioso. By the end, everyone was aware that Paycoin was a scam and the SEC eventually took action.
There was the case against GAW Miners themselves, separate from Garza, and in that case GAW Miners was ordered to pay over $11 million. But it is the case against Garza himself that has a chance to generate some real justice. Garza plead guilty to Wire fraud and in exchange the government dropped the rest of the charges. That doesn’t mean he is getting off easy though, he will likely spend significant time in prison.
According to the plea agreement, Garza could theoretically face up to 20 years in federal prison, but that is unlikely. Rather, the court considered multiple factors, including the amount stolen, the number of victims, that he was the mastermind and that he admitted guilt to give him an “offense level” of 26 and a criminal history level of 1. That sounds arbitrary and it is. The offense levels and criminal history levels vary by state. But what it means in this case is that the prosecuting attorney is recommending that Garza be sentenced to 63 to 78 months of imprisonment, a fine of $25,000 – $250,000 and 1 – 3 years of supervised probation. Garza has also agreed to pay over $9 million in restitution.
But the judge is not beholden to that recommendation and could, in theory, give Garza significantly more time than that. If the judge does give Josh Garza more time than the recommendation, then Garza would regain his ability to appeal the sentencing but would still be unable to withdraw his guilty plea.
Homero Josh Garza’s sentencing date is set September 13th, we will be there to cover it live. We will not only be the first to report the details of his sentence but will likely be the only cryptomedia outlet that will have a first-hand account of Garza’s reaction as his sentence is passed down to him.
Source : Coinjournal