Texas Regulators Crack Down on Cryptocurrency Trading Program and Marijuana Operation
The Texas State Securities on April 5, 2018, launched an emergency cease and desist order against Mark J. Moncher who was involved in a cryptocurrency trading program and a marijuana growing operation.
The Enforcement Division found sufficient evidence to convict Moncher of running an unregistered cryptocurrency trading program that promised investors “returns of 8 percent per week.” He published advertisements that targeted Texan residents, directing them to a website with information concerning the cryptocurrency trading program and marijuana investment scheme.
Moncher also concealed to his investors, his history of mail and wire fraud. He was previously sentenced in March 2010 to 57 months in federal prison followed by three years of supervised release and was ordered to pay $2 million in restitution.
Moncher’s Cryptocurrency Trading Program
Moncher, who runs the Financial Freedom Club offered investors a cryptocurrency trading program which he worked in conjunction with Frank Dalotto, the principal of 911MoneyStore. While Dalotto mentioned that he is working with “a trader with excellent results,” he did not disclose the name of the trader who is generating these 8 percent weekly returns to his investors.
Texas Securities Commissioner Travis J.Illes alleged that Dalotto told potential investors to avoid securities law. Dalotto “really [does not] portray this as an investment in crypto” and decided to refer any profits as a “commision.” Dalotto and Moncher, along with their companies were, therefore, encouraging investors to commit felony offenses in the trading program.
Dalotto told the investors that after making an initial $2,000 investment through a charge or debit card, they would receive an invoice for the purchase of “a gold Seiko watch which you’ll never get.” If the “investment goes bad,” the investors could tell the financial institutions that issued the card that they never received the watch to gain a refund. By advising investors to file a misleading statement with financial institutions, Dalotto was encouraging investors to commit a state criminal offense.
Moncher’s Cannabis Operation
Moncher’s Financial Freedom Club is also working with Capital Cash to sell unregistered promissory notes for a marijuana operation. According to the order, the notes are issued by Estrada Trucking Inc. by CEO Caleb Estrada Vasquez.
The companies were encouraging Texas residents to invest in Estrada-issued promissory notes. They promised investors “100 percent guaranteed returns,” using photographs of bank statements to show Estrada’s payments and lucrative returns. One record even demonstrated an investment made by a sole proprietorship in Longview, East Texas.
The marijuana investment is an unsecured loan to Estrada Trucking. Moncher guaranteed that an initial investment of $10,000 would generate a 50 percent profit of $5,000 every four weeks. The Financial Freedom Club mentions that “the medical marijuana industry is racking [sic] in BILLIONS of dollars a year and as new states start to legalize it, it’s just going to get bigger.”
While these companies promise high returns, they have not disclosed to investors any risks associated with marijuana investments including the adoption of state laws and regulations. The individuals and companies mentioned here are also not registered to sell securities in Texas.