California CEO in bogus cryptocurrency scam gets 10 years


A California man who duped investors out of $147 million in a global digital currency scam of “epic proportions” has been sentenced to 10 years in prison, federal prosecutors said.

Steve Chen cheated some 72,000 investors worldwide by passing off his company US Fine Investment Arts as an extractor of amber and other gemstones from non-existent mines in the US, Dominican Republic, Mexico and Argentina, according to the US Attorney’s Office for the Central District of California.

Prosecutors said Chen sold investors “points” for shares between $1,000 and $30,000 each when the company would later go public — but he never intended for that to happen.

Chen, of Bradbury, later started peddling a phony digital currency called “Gem Coins” in September 2014 in lieu of the fake stock, falsely promoting them as legitimate cryptocurrency backed up by the company’s gemstone holdings, prosecutors said.

Chen promoted the Ponzi scheme, which lasted from July 2013 to September 2015, using a marketing program that compensated investors for recruiting others with new USFIA investors’ payments, prosecutors said.

“Because the primary focus was on recruiting other investors, rather than selling USFIA products to retail customers, the vast majority of investors were destined to lose money – while making [Chen] very wealthy,” prosecutors wrote in a sentencing memo.

The company offered cash, travel, luxury cars and homes throughout Los Angeles to investors who recruited others to buy the bogus investments, prosecutors said.

The amber and other gemstones cited in investment packages, including some at the company’s Arcadia headquarters, were from domestic and foreign suppliers at very inflated prices despite being worth much less.

“‘Gem Coins’ had no circulation in any industry, were not accepted by any merchants, and no economic value,” prosecutors said in a statement Monday.

Chen, who pleaded guilty to conspiracy to commit wire fraud and tax evasion last June, was also ordered to repay more than $1.8 million to the Internal Revenue Service. In 2014, Chen reported an income of $138,015 when he had actually earned more than $4.8 million, prosecutors said.

A judge in the case who noted Chen’s “litany of lies” that led to a scam of “epic proportions” scheduled a hearing in July to determine how much he must repay victims.

A second man who worked with Chen has also been charged in the scheme. Leonard Stacy Johnson, 54, of Huntington Beach, pleaded guilty to tax evasion and making a false statement on an immigration document in July 2019. He’s set to be sentenced in May, prosecutors said.



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