The U.S. Department of Justice revealed that Magdaleno Mendoza, a major promoter of the cryptocurrency Ponzi scheme IcomTech, has been sentenced to 71 months in federal prison for his fraudulent activities and for illegally reentering the United States after multiple deportations.

The sentence was handed down by U.S. District Judge Paul G. Gardephe following Mendoza’s guilty plea in July for conspiracy to commit wire fraud and illegal reentry.

Overview of IcomTech Ponzi Scheme

Mendoza was part of a group that falsely marketed IcomTech, a supposed crypto mining and trading enterprise that began in mid-2018, promising investors unrealistic daily returns. In truth, the company functioned as a multi-level marketing Ponzi scheme, using funds from new investors to pay earlier ones, while engaging in no actual trading or mining.

Mendoza was instrumental in recruiting victims, particularly from Spanish-speaking communities lacking cryptocurrency investment experience. He and his associates organized promotional events across the U.S., showcasing luxury cars and lifestyles to promote IcomTech as a path to “financial freedom.”

Prosecutors reported that Mendoza hosted events at his restaurant in Los Angeles, collecting thousands of dollars from investors under the guise of investments. However, most investors were unable to withdraw their funds, ultimately losing their entire investments as promoters siphoned off significant amounts for personal expenses.

Emergence of Worthless Tokens

In response to growing withdrawal complaints, IcomTech introduced a token called “Icoms,” which promoters claimed would appreciate in value. However, the tokens turned out to be virtually worthless, exacerbating investor losses.

By late 2019, the scheme had collapsed, and numerous co-conspirators, including IcomTech founder David Carmona, have already faced convictions and sentencing for their roles.

Prosecutors further noted that Mendoza had been living in the U.S. illegally for decades while promoting the scheme, having been deported multiple times, including once under an alias.