IcomTech promoter gets 71 months in prison for multi-million dollar crypto Ponzi scheme

A resident of Mexico who served as a senior promoter in the IcomTech crypto Ponzi has been sentenced to 71 months in federal prison.

According to a statement from the U.S. Attorney’s Office for the Southern District of New York, Magdaleno Mendoza has been handed a prison sentence for his role in helping orchestrate the multimillion-dollar Ponzi scheme that targeted working-class Spanish-speaking investors.

Mendoza allegedly exploited the trust of victims by promising guaranteed daily returns from cryptocurrency trading and mining, but in reality stole millions while using investor funds to enrich himself and fellow promoters.

“As a senior promoter of IcomTech, Mendoza helped prey on Spanish-speaking victims who lacked investment experience, including our fellow New Yorkers,” said U.S. Attorney Jay Clayton.

How did the IcomTech Ponzi work?

IcomTech advertised itself as a cryptocurrency mining and trading firm that operated between mid-2018 and late 2019. The platform promised daily investment returns in cash, along with access to an online portal where users could supposedly track profits.

However, authorities say the company was never engaged in real trading or mining. Instead, it operated as a multilevel marketing Ponzi scheme that recycled money from new investors to pay returns to earlier ones in order to maintain the illusion of legitimacy.

Mendoza, along with his co-conspirators, held flashy promotional events across the United States to lure victims with promises of financial freedom. 

“They boasted about the amount of money they were earning,” the U.S. Attorney’s Office said, and often arrived at events in expensive cars and luxury clothing to project success.

All the while, they were using investor funds to bankroll personal expenses, including lavish lifestyles, real estate, and other luxury goods, while victims watched fake profits accrue on dashboards they couldn’t access or withdraw from.

“Mendoza personally hosted IcomTech promotional events at his restaurant in the greater Los Angeles area, where he collected thousands in cash from his victims as purported IcomTech investments,” the statement noted.

The scheme started to unravel as early as August 2018 when victims who attempted to withdraw their money faced increasing roadblocks. When they reached out to promoters for help, they were met with excuses, delays, and hidden fees—if they were able to recover anything at all.

To keep the scheme afloat, IcomTech started offering its own crypto token, dubbed “Icoms,” as a supposed solution to the growing number of complaints from investors. However, authorities claim these tokens were worthless and ultimately resulted in more financial losses for the victims.

Mendoza ordered to pay restitution

As part of the sentencing, Mendoza has been ordered to pay $789,218.94 in restitution to victims and forfeit $1.5 million, including his residence in Downey, California, which had been purchased using proceeds from the scheme.

His sentence also included penalties for illegally residing in the United States after being deported on four separate occasions—including once under a false identity.

Prosecutors also said Mendoza went on to promote at least three more cryptocurrency Ponzi schemes after IcomTech collapsed.

Late last year, the Commodity Exchange Act and CFTC regulations led to civil penalties for five other promoters of the scheme, who were ordered to pay over $5 million in combined restitution and fines.

The order followed the March 2024 conviction of Gustavo Rodriguez, who built and managed the sham investment portal, and David Brend, who was convicted of misappropriating investor funds and organizing fraudulent promotional events. Both men have since been sentenced to prison.