A former Hollywood Hills resident who went by names like “Vincent Midnight” and “Director Vinchenzo” pleaded guilty Monday to federal charges related to a cryptocurrency investment fraud scheme that prosecutors say cost victims more than $13 million.
Vincent Anthony Mazzotta Jr., 54, now residing in Arizona, admitted to one count of money laundering and one count of conspiracy to obstruct justice. Prosecutors allege Mazzotta and his co-defendant, David Saffron, lured investors with false promises of high returns from automated cryptocurrency trading platforms and later doubled down on the deception by creating a fake government agency.
The plea was announced by U.S. Attorney Bilal A. Essayli of the Central District of California. Mazzotta is scheduled to be sentenced on December 15 by U.S. District Judge Dale S. Fischer. He faces a maximum of 10 years in federal prison for money laundering and up to five years for obstruction.
According to court documents, Mazzotta and Saffron told victims their investments in companies such as Mind Capital and Cloud9Capital would be managed by artificial intelligence-driven trading bots. Instead, federal authorities say the pair operated a Ponzi-style scheme and diverted funds for personal use.
After the original companies collapsed, Mazzotta and Saffron allegedly created a fictitious entity called the Federal Crypto Reserve (FCR). They then solicited additional payments from victims, claiming the FCR would investigate the failed investment firms — despite the fact that Mazzotta and Saffron were behind those very companies.
“Vincent Mazzotta defrauded investors in a sophisticated cryptocurrency scheme and then doubled down by using a fake government entity to further victimize those who had entrusted him with their money,” said Acting Assistant Attorney General Matthew R. Galeotti of the Justice Department’s Criminal Division.
U.S. Attorney Essayli warned of the dangers associated with rapidly evolving investment technologies. “New types of investments such as Bitcoin and other cryptocurrencies may seem alluring, but they also carry the risk of criminals using their relative novelty to prey on victims,” Essayli said. “An ounce of prevention is worth a pound of cure.”
After Saffron’s initial arrest, Mazzotta worked with others to destroy evidence in an attempt to obstruct the federal investigation, prosecutors said. That included removing an iPad and contents of a safe from Saffron’s apartment, as well as falsifying financial records from Mazzotta’s company, Runway Beauty Inc., to conceal his involvement.
IRS Criminal Investigation led the probe. “The defendants in this case purported to be U.S. governmental entities to legitimize their scams,” said Special Agent in Charge Tyler Hatcher of the IRS-CI Los Angeles Field Office. “Today’s admission of guilt is another example of our resolve and unique ability to unravel complex financial transactions regardless of how sophisticated the scheme may be.”
The case is being prosecuted by Assistant U.S. Attorney James C. Hughes of the Major Frauds Section and Justice Department trial attorneys Theodore Kneller and Siji Moore of the Criminal Division’s Fraud Section.