Brent Kovar, a Las Vegas businessman, was convicted after authorities said he used promises of crypto wealth and an "AI supercomputer" to pull more than $24 million from investors.
The case serves as another reminder that flashy tech language and guaranteed returns can be used to sell old-fashioned fraud, particularly in fast-moving markets such as cryptocurrency.
Here's what to know
Authorities said Brent Kovar marketed Profit Connect to roughly 400 investors as a cryptocurrency mining business powered by what he called an artificial intelligence supercomputer. In Nevada, he was convicted on 11 counts of wire fraud, two counts of mail fraud, and two counts of money laundering, according to Tom's Hardware.
Investors were offered unusually specific terms, with promised annual returns of 15-30% and a full money-back guarantee, the outlet stated. Prosecutors said the company did not actually produce profits.
Instead of distributing earnings, the operation reportedly used money from new investors to pay earlier ones, matching the pattern of a Ponzi scheme. Profit Connect claimed to hold cryptocurrency reserves worth hundreds of millions of dollars when it had no such assets.
Kovar faces a maximum sentence of 280 years in prison, and it is unclear whether investors will recover their losses.
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More background
Profit Connect operated from 2017 to 2021, during a period when excitement around bitcoin and other digital assets was surging. Bitcoin rose above $19,000 in December 2017, fueling public interest in crypto ventures that appeared futuristic and highly profitable.
Terms such as "AI" and "supercomputer" likely made the pitch sound especially sophisticated, even though authorities said there was no mining success behind it. While crypto has led to legitimate innovation in finance and computing, and some mining operations have sought cleaner energy sources to reduce their environmental impact, the industry has also been marked by scams, inflated claims, and high-risk speculation.
Another major crypto scheme, BitConnect, led retail investors to lose about $2 billion after promising returns it could not deliver. In China, a separate Ponzi-style operation reportedly ran from 2014 to 2017 and took $6 billion from victims before converting the funds into bitcoin.
What can be done?
One warning sign is if an investment promises high returns with little or no risk. A guaranteed annual percentage rate paired with a money-back guarantee should draw intense scrutiny, especially in a market as volatile as crypto.
It can also help to verify whether a company holds the assets it claims to possess, how it generates revenue, and whether it can explain its business model in plain language. Buzzwords alone — whether "AI," "supercomputer," or "next-generation finance" — are not proof of a legitimate investment.
Prosecutions such as this show that regulators and law enforcement continue to pursue crypto-related fraud years after these schemes begin.
"He used investor money to operate Profit Connect, to buy gifts for employees, to buy a house for himself, and to repay investors as if those repayments came from mining cryptocurrency and verifying cryptocurrency transactions," the Department of Justice stated.
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