A citizen of Sweden has pled guilty in a US federal court to charges of securities fraud, wire fraud and money laundering. He defrauded more than 3,500 victims of more than US$16 million.
Roger Nils-Jonas Karlsson, 47, and his company, Eastern Metal Securities (EMS), was charged in a criminal complaint filed on 4 March 2019, with crimes involving a scheme to defraud victims. Karlsson, also known by several aliases, was arrested on 17 June 2019 in Thailand and was extradited to the United States to face the charges. A federal grand jury indicted Karlsson and EMS on July 25, 2019. Karlsson pled guilty to all the charges against him. EMS has ceased to exist.
Between 2012 and 2019, Karlsson and EMS used www.easternmetalsecurities.com to make fraudulent representations and convince victims to send funds using a virtual currency exchange. During the same period, they used deceptive “devices and contrivances” to sell securities and then tried to conceal the proceeds.
During the proceedings, Karlsson admitted that he used the website to invite potential investors to purchase shares of the plan for less than $100 per share, promising an eventual payout of 1.15 kilograms of gold per share, an amount of gold which as of 2 January 2019 was worth more than $45,000. Karlsson advised investors that, in the unlikely event that the gold payout did not happen, he guaranteed to them 97% of the amount they invested. Karlsson admitted that he had no way to pay off the investors. Instead, the funds provided by victims were transferred to Karlsson’s personal bank accounts and he then used proceeds to purchase expensive homes and a resort in Thailand.
As the government has alleged, Karlsson also used a second website, www.hci25.com, to make false claims to potential investors. On one occasion, he told them that a payout had not occurred because the release of so much money all at once could damage financial systems throughout the world. Karlsson also falsely said that EMS was working with the US Securities and Exchange Commission to prepare the way for a payout.
Karlsson directed his victims to make investments using virtual currencies such as Bitcoin.