In their sentencing memorandum, prosecutors wrote that Chen “promoted his Pyramid/Ponzi scam using a multi-level marketing program in which compensation for recruiting other investors primarily came from new USFIA investors’ payments.”
The prosecutors added, “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.”
The case is similar to that of Stefan Qin, CEO of Virgil Capital who allegedly told investors that he will use their money for cryptocurrency trading based on a proprietary algorithm, while he was using the money to make high-risk investments.
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