FINANCIAL FRAUD
A federal court has blocked three men accused of running massive cryptocurrency scams from accessing their assets and has ordered them to hand over all documents related to their schemes.
Scott Chandler, Louis Gatto and Thomas Dluca faced a preliminary injunction after the FTC sued them last month for operating as top earners in three separate scams: Bitcoin Funding Team, My7Network and JetCoin. The court's April 16th order freezes their assets and compels document production—rejecting every objection the defendants raised.
Chandler and Gatto fought back hard. They claimed they knew nothing about the schemes and argued that handing over documents would constitute an unlawful "broad all-encompassing search for incriminating information." The court wasn't buying it. Judge Snow's magistrate report, which heavily influenced the decision, concluded the FTC had presented sufficient evidence to justify both the asset freeze and document demands.
"The FTC requests only documents, computer equipment, and electronically stored information that contains information about Defendants' operation or promotion of Bitcoin Funding Team, My7Network, JetCoin, or any other money-making opportunity that Defendants promoted or in which Defendants participated since January 1, 2014," the court wrote, dismissing claims the request was too broad.
The defendants' argument about self-incrimination crumbled under established law. The court reminded them that people have long been required to produce specific documents even when those documents contain incriminating information. If that production triggers a criminal investigation, the judge made clear, that's a problem for another day.
Dluca apparently decided not to fight at all. He filed no response to the lawsuit and has since disappeared from sight.
The preliminary injunction finds that Chandler, Gatto and Dluca violated the FTC Act multiple times and reaped ill-gotten gains from their schemes while "consumers nationwide suffer harm including economic injury." The court determined the FTC is likely to succeed on the merits and that stopping the defendants from accessing their money serves the public interest.
The injunction effectively freezes the defendants' ability to operate. They cannot promote any money-making opportunity, cannot misrepresent earning potential, and must provide detailed accounting of their assets and financial dealings. The court also prohibited them from destroying or concealing documents.
For Chandler and Gatto, the "we knew nothing" defense lasted about as long as it takes to read a court filing. Their claims that the temporary restraining order was too narrowly tailored went nowhere. Their refusal to comply with document requests—before the preliminary injunction even took effect—only strengthened the court's hand.
The case now moves forward with the defendants' bank accounts locked down and their own paperwork working against them.
🤖 Quick Answer
What preliminary injunction was issued against Chandler, Gatto and Dluca?A federal court entered a preliminary injunction freezing the assets of Scott Chandler, Louis Gatto and Thomas Dluca, who were accused by the FTC of operating cryptocurrency scams including Bitcoin Funding Team, My7Network and JetCoin. The court also compelled them to produce all documents related to their schemes, rejecting their legal objections.
What arguments did the defendants raise against the injunction?
Chandler and Gatto claimed they had no knowledge of the schemes and argued that document production would constitute an unlawful broad search for incriminating information. However, the court rejected all their objections and upheld the preliminary injunction orders.
When was the preliminary injunction entered?
The federal court issued the preliminary injunction order on April 16th, freezing the defendants' assets and
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