Bitcoin Ponzi Schemer Fined $1.9M, Disappears From Longmont

LONGMONT, CO – A Longmont man who ran an online Bitcoin investment scheme that allegedly bilked up to 600 investors of $1.2 million was ordered July 9 in federal court to pay more than $1.9 million in penalties and restitution.

But Dillon Dean, 26, has disappeared.

Judge Sandra J. Feuerstein, of the U.S. District Court for the Eastern District of New York, filed a default judgment against Dean and his company, The Entrepreneurs Headquarters Limited, (TEH) after ruling that Dean engaged in "a fraudulent scheme to solicit Bitcoin from members of the public, misrepresented that customers’ funds would be pooled and invested in products including binary options, and misappropriated pool participants’ funds," the ruling said. Dean also failed to register his British-based company with the Commodity Futures Trading Commission, the ruling said.

The ruling said Dean (who was described as the "sole founder, principal, director, and officer" of the company) solicited at least $499,264.04 worth of Bitcoin from "at least 127 members of the public," and promised to convert the cryptocurrency into regular U.S. currency, which he then claimed to pool and invest. These promises, made on YouTube and Facebook, were false, the judge ruled, and Dean and his company never invested the money.

The order's finding-of-facts said Dean courted an initial group of investors, when he created the group, around March, 2017. He claimed he had three years of experience trading commodities options on the Nadex exchange, which was false, the ruling said. In a Facebook group with 2,000 members, Dean claimed he had earned investment returns between 15.25-28.50 percent. He promised his investors that "profits [could] be withdrawn at anytime," the ruling said. Until August of 2017, several customers made successful withdrawals of Bitcoin from their accounts.

But on Aug. 9, Dean claimed his site had been hacked.

URGENT MESSAGE . .IT HAS BEEN BROUGHT TO OUR ATTENTION THAT SOME HAVE HAD THERE [sic] ACCOUNT HACKED AND WALLET CHANGED ... ASAP GOCHANGE YOUR WALLET ADDRESS AND SA VE PLUS ENABLE ALL SECURITY[.] IF YOU HAVE A PENDING WITHDRAW [sic] DOUBLE CHECK THE ADDRESS IT'S GOING TOO!!! [sic] AND CHANGE YOUR EXSISTING [sic] PASSWORD AS WELL!!!!!"

Later that day, Dean posted, "CRAZY I detected a hacker, but everything is ok, and I have stopped who ever it was. I have hared [sic] that some accounts got hacked, if they did, message me and I can fix the issue. If you need to send me a message, send a fried [sic] request first if your [sic] not friends so the message goes to my primary inbox."

Thus began a series of excuses Dean gave customers as to why the website was down, including that the website was being held for ransom by a hacker, that a new website was being made, how he couldn't answer emails because he had "100s to go through." He then announced "all the data [had been] lost," and asked investors to send screen shots of their statements. He stopped responding to requests for refunds, the court's finding of fact said.

Meanwhile, Dean started another website "Real Trade Profits" that worked the same way TEH had, soliciting investments in Bitcoin for pooled investments in binary options trading. By December, 2017, RTP had 65 members, the ruling said.

In January, CTFC filed suit against Dean, alleging he had defrauded up to 600 investors of up to $1.2 million.

Louisiana investor Collin Bercier told the Daily Camera in January he invested $50,000 worth of Bitcoin with TEH in the early stages, which might be worth more than $1 million. Bercier did not respond to requests for comment.

Where is Dillon Dean?

In the July 9 court ruling, Dean was ordered by the court to pay $432,184.79 in restitution and $1,497,792.12 in penalties.

But the order was issued in Dean's absence, as a "default" since he avoided being served in person. No one knew where he was.

Frustrated agents of the CFTC filed a document March 20 narrating how they attempted to serve Dean by mail at the purported British address of his company. They then tried to find him at the home of his parents, Jeff and Anne Dean, in the 1100 block of Twin Peaks Circle. Anne Dean reportedly told Boulder Sheriff's deputies Feb. 12 that her son was not there and she did not know where he was.

Investigators then looked for Dean at a Longmont address in the 1000 block of Venice Street, Feb. 5, where a female roommate told deputies Dean had abruptly packed up and left "after all of the stuff started coming down." The former roommate and Dean's mother refused to accept service of the complaint – which was also mailed and left in person at the two residences – so CFTC petitioned the court to serve Dean by email.

However, Dean never responded to any of the emails, and no lawyer made an appearance in federal court on his behalf, court records show.

Messages left by Patch for Anne and Jeff Dean in care of their Nederland-based charity Harmony Life International were not immediately returned. A text sent to Dean's listed cellphone number received no response.

The Boulder County District Attorney's office contacted investors April 20. But so far, no charges have been filed against Dean, according to investigator Mark Husmann.

The Daily Camera reported that Dean had a Colorado arrest record dating back 2011, including arrests for illegal marijuana, traffic violations and DUI.

Related: Longmont Bitcoin Ponzi Scheme Alleged By Feds

How to avoid Cryptocurrency Fraud

The CFTC offers several advisories and warnings as resources for consumers to avoid fraud if you are tempted to trade in cryptocurrencies.

Some signs of fraud are provided below:

Watch for the following in the sales pitches:

• High rate of return or guarantee - verify the firm or individual's track record, don't invest unless you can get solid information about the investment and the company.
• Limited time offers or high-pressure sales tactics – don't be pushed into a quick decision. Be suspicious if they demand an immediate commitment or if they ask you to expedite payment, regardless of the method (cash, money transfer, credit card, etc.).
• Little or no risk – except for obligations of the U.S. government, all investments have a degree of risk. Futures contracts are leveraged or margined; you may be liable for losses in excess of your initial deposit. Ask for a written risk disclosure statement.
• Exploiting friendship or trust – check it out with someone whose financial advice you can trust; don't fall for claims that others you know have already invested.
• Exclusive offers, limited supply, special discounts or favors – avoid any offers available just for certain people or claims of urgency due to limited availability.
• Claims of "Interbank Market" trading – avoid companies that offer to trade foreign currency for you in the interbank market, a network of large companies and banks.
• Aggressive sales approach – not taking "no" for an answer, repeated phone calls, threats, urging you to take advantage of a particular trend or event in the market.
• Special credentials, claims of credibility – beware of individuals claiming they have special experience or claiming credibility based on where they work. For example, "Believe me, as a senior vice president of EZY Money Inc., I would never sell an investment that doesn't produce."

Avoid becoming a victim:

• Ask for written materials – legitimate firms will not have a problem providing written information.
• Beware of get-rich-quick schemes – if it sounds too good to be true, it probably is. Be particularly vigilant if you recently retired or came into money and are looking for a safe investment.
• Avoid unsolicited telephone calls about investing – be skeptical if someone you don't know calls you about investment opportunities. Even if they may claim that they obtained your name from a list.
• Check out the company or organization – ask what state or federal agencies the firm is regulated by and with whom it is registered. Verify using CFTC SmartCheck.
• Ask what recourse you have if you're not satisfied– get any warranty or refund provision in writing.
• Beware of testimonials you can't verify – check the legitimacy of an enterprise and all references.
• Beware of fake websites – do your research and verify with the agency or organization that has regulatory authority over the type of investment you are considering.
• Check CFTC SmartCheck – learn about the latest fraud schemes.

Find out more at the CFTC website

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