According to DoJ, AMIR BRUNO ELMAANI, a/k/a “Bruno Block,” the founder of the cryptocurrency “Oyster Pearl,” was charged with with tax evasion on December 9, 2020.
As alleged, ELMAANI made millions of dollars from the sale of a new cryptocurrency but evaded reporting that income to the IRS, including by filing a false tax return, operating his business and owning assets through pseudonyms and shell companies, obtaining income through nominees, and dealing in gold and cash.
ELMAANI was arrested on December 9, 2020 in Martinsburg, West Virginia, and was presented before United States Magistrate Judge Robert W. Trumble in the Northern District of West Virginia.
In a separate civil action, the Securities and Exchange Commission is filing civil charges against ELMAANI today. Acting Manhattan U.S. Attorney Audrey Strauss said:
“As Alleged, Amir Bruno Elmaani Purported To Establish A High-Tech Method Of Financing A High-Tech Business, But The Underlying Scheme Was Old Fashioned Fraud And Tax Evasion.
Elmaani allegedly generated millions by soliciting investor money through his own cryptocurrency, adding to the purportedly fixed number of tokens and converting them to other cryptocurrencies, and failing to report or pay tax on any of the proceeds.
Thanks to the FBI and IRS-CI, Elmaani is now in custody and facing federal prosecution.” FBI Assistant Director William F. Sweeney Jr. said: “Taking advantage of the ever-so-popular cryptocurrency market, Elmaani allegedly capitalized on the investments of those who purchased virtual currency through Oyster Pearl, which he founded.
As it turns out, Elmaani was funneling the proceeds of his alleged cryptocurrency scheme through a shell company that hid the true nature of his financial interests, ultimately never paying taxes on his earnings.
With Minimal Reported Income In 2018, He Still Managed To Spend Over $10 Million For The Purchase of Yachts,
Anywhere Anytime Soon.”
IRS Special Agent-in-Charge Kelly R. Jackson said: “Ensuring the integrity of our tax system is a priority of IRS-CI. Evading taxes only aims to deteriorate the confidence in this system and those who fail to pay their fair share will be investigated.
– Following The Money.”
As alleged in the Indictment :
- In September and October 2017, ELMAANI began promoting online his new cryptocurrency known as Pearl tokens. Using a variation of his online pseudonym “Bruno Block,” ELMAANI stated that he planned to develop an online data-storage platform, known as Oyster Protocol, which would allow users to purchase online data storage with Pearl tokens.
- Instead of using his real name, ELMAANI operated almost exclusively online under the pseudonym “Bruno Block.”
- ELMAANI concealed his true identity from his prospective employees and business associates and never met them in person.
- In the fall of 2017 and thereafter, ELMAANI sold Pearl tokens to the investing public through an “initial coin offering” and on cryptocurrency market platforms. ELMAANI announced that he intended to take a “founder’s share” of Pearl tokens for his own personal use.
- ELMAANI owned and controlled the subsequently established company Oyster Protocol Inc. through a shell company not associated with his true name. In a statement issued under ELMAANI’s online pseudonym on June 7, 2018, ELMAANI stated that he was retaining millions of Pearl tokens as his “ownership stake” in Oyster Protocol, but that he had to move the tokens to a different cryptocurrency wallet “in order to avoid being double-taxed.”
- In truth, ELMAANI did not report or pay tax on any of his cryptocurrency proceeds.
- At various points, ELMAANI used friends and family as nominees to receive cryptocurrency proceeds and transfer them or U.S. currency to his own accounts.
- ELMAANI dealt substantially in precious metals, kept gold bars in a safe on a yacht he owned, and used large amounts of cash to pay personal expenses.
- In late October 2018, although the number of Pearl tokens was purportedly fixed, ELMAANI used his access to the blockchain technology used to create Pearl tokens to mint new tokens, which he took for his own personal use (the “Exit Scheme”). ELMAANI thereby increased the total volume of Pearl tokens.
- Shortly after creating the new tokens, ELMAANI converted the Pearl tokens he had obtained to other types of cryptocurrency on an online marketplace or exchange.
- As a result of ELMAANI’s conduct, trading in Pearl tokens halted on that exchange and the price of Pearl tokens held by investors dropped substantially.
- Pearl tokens were subsequently de-listed from the primary exchange where they were traded.
- Subsequent to the Exit Scheme, ELMAANI used his friends and family to receive cryptocurrency and to transfer funds to a bank account in his name.
- While ELMAANI initially attempted to hide even “Bruno Block’s” involvement in the Exit Scheme, he later effectively admitted to the conduct online under his “Bruno Block” pseudonym.
- In a recorded call with the then-chief executive officer (“CEO”) of Oyster Protocol Inc., after the Exit Scheme, the CEO asked ELMAANI why he had to take the additional new Pearl tokens if he had already cashed out millions of dollars’ worth of Pearl tokens in the past. ELMAANI responded, in part, that “taxes are pretty nasty.”
- ELMAANI carried out the Exit Scheme only days before the exchange he had used to cash out his Pearl tokens was set to require “know your customer” personal identifying information from its users.
ELMAANI filed a false 2017 tax return stating that he had only approximately $15,000 of income from a “patent design” business, and he filed no return and reported no income to the IRS in 2018.
Nevertheless, ELMAANI spent, in 2018, over $10 million for the purchase of multiple yachts, $1.6 million at a carbon fiber composite company, hundreds of thousands of dollars at a home improvement store, and over $700,000 for the purchase of two homes, one of which was titled in the name of a shell company and the other in the name of two of his associates.
ELMAANI, 28, is charged with two (2) counts of tax evasion, each of which carries a maximum sentence of five (5) years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge. The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Read more at: Tax Times blog