A New Jersey federal judge cited a parallel criminal case in pausing a US Securities and Exchange Commission suit against an Essex County woman that was arrested in January for her alleged role in a crypto fraud scheme that duped investors to hand over $30 million.
The court accepted the US government’s motion to intervene in the case and keep the civil action pending until a related criminal case against the promoters behind the Blockchain Terminal (BCT) initial coin offering (ICO) is resolved.
Edith Pardo, 68, and Boaz Manor, 46, both from Canada, are each charged with one count of conspiring to commit wire fraud, three counts of wire fraud, and one count of securities fraud.
The Securities and Exchange Commission also charged Pardo and Manor with fraud for raising over $30 million from hundreds of investors in a fraudulent ICO that promised a cryptocurrency version of the Bloomberg Terminal. The scam was organized by their two firms CG Blockchain Inc. and BCT Inc.
The most controversial defendant is Boaz Manor, a convicted Canadian hedge fund fraudster who served jail time following the collapse of the Toronto-based hedge fund he co-founded. In 2012, Manor accepted a lifetime ban on operating within the securities industry following his conviction in the $106 million scam. He was sentenced to four years in prison.
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According to the SEC, Manor had adopted a fake persona, allegedly named Shaun MacDonald, in an elaborate scheme that fooled employees as well as investors.
Although he acceded to a lifetime ban from the securities industry, Manor installed a figurehead CEO to conceal his leadership role in raising money for CG Blockchain.
In fact, Manor was the mastermind running the ill-fated ICO behind the curtain, but he could not show his real face. As alleged, he also hid his true identity and criminal past from investors and others by using a variety of aliases, darkening his hair and growing a beard.
Arguably one of the most audacious ICO scams in recent years, Boaz claimed that he onboarded 20 hedge funds to test out his professional trading service. In fact, he’s never seen the product in action, even though it sent a prototype to a dozen funds, but none of them used or paid for it.
Manor, who was born in Israel, is known in Canada for setting up a hedge fund called Portus Alternative Asset Management in 2003, promising investors guaranteed returns. It shortly became one of Canada’s biggest hedge funds, thanks in part to a deal with the country’s biggest life insurance firm, Manulife Financial, which referred clients for a fee.
On Wednesday, Stanley Chesler, Judge for the District of New Jersey granted a bid by federal prosecutors to stay the SEC action against the notorious hedge fund manager and the Bloomfield woman, who allegedly posed as a wealthy investor, pending the resolution of their criminal charges. Either party could seek to modify or lift the stay as circumstances change, the judge said.