On June 5, 2020, the U.S. Securities and Exchange Commission unsealed a complaint it had filed on May 7, 2020 in Salt Lake City, Utah against Daniel F. Putnam, Jean Paul Ramirez Rico and Angel A. Rodriguez, as well as their company, MMT Distribution. The SEC also announced that it obtained an asset freeze and other emergency relief against the Defendants.
The SEC’s complaint, alleges that, beginning in at least July 2017, Putnam operated a multilevel marketing business known as “Modern Money Team” and sold interests in a purported cryptocurrency mining operation to nearly two hundred investors. The complaint alleges that MMT promised investors huge gains on their investments through the mining of cryptocurrencies on MMT managed mining hardware. The profits were then to be split to the investors each month.
According to the complaint, Putnam misappropriated some of these investor funds and spent them on a condominium and other personal expenses. The complaint further alleges that Putnam, Ramirez, and Rodriguez then raised additional funds by offering so-called “cryptocurrency trading packages” to investors with the potential for high returns. Investors from inside and outside the U.S. paid as little as $50 for a “two-year mining contract” or $2000 for a “lifetime mining contract”. In reality, as alleged, the defendants misappropriated investor funds for personal use and to make Ponzi-like distributions to earlier investors.
The complaint also referred to a WhatsApp communication in which Putnam stated to Rodriguez, “We are going to bring Jean Paul [Ramirez] so much money this year . . . We are either going to retire this year or go to jail . . . And Im [sic] still not sure any of it is real.”
The SEC’s complaint charges Putnam, Ramirez, Rodriguez, MMT Distribution, and R & D Global with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the asset freeze and other emergency relief obtained, the SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties.