Profit Connect mined crypto for a week before SEC lawsuit
A Ponzi scheme dressed up in the language of artificial intelligence and cryptocurrency mining—that's what Profit Connect was peddling to investors before the SEC shut it down.
The operation claimed to use "proprietary AI and Machine Learning Algorithms" to drive returns. None of it existed. Company leadership also told investors they'd been mining cryptocurrency for years with serious success. The reality: they started mining around June 2021, about a week before federal regulators filed suit.
According to the Profit Connect Receiver's November 1st First Interim Report, the company made approximately $300 from mining activities during that brief three-week window before receivership took over. Strip out the costs for computers, labor, and electricity, and the operation hemorrhaged money. The Receiver's team of computer experts and IT professionals couldn't build a cooling system that would have given Profit Connect any competitive edge in the mining space. The crypto mining business was a nonstarter.
Brent Kovar, who ran day-to-day operations, wasn't short on wild ideas though. He pitched installing supercomputer mining rigs inside cylinders that would heat swimming pools at casinos while simultaneously mining cryptocurrency. That never happened. Another scheme involved dangling cylinder-housed supercomputers from houseboats on Lake Mohave, banking on the water's depth and cold temperatures to cool the equipment. That didn't materialize either.
Eddie Kona, who died before the SEC filed its lawsuit, served as the public face of Profit Connect. Court filings identify him as also known as Donald Edward Sabisch. Eric Garrison was mentioned as a founder alongside Kona. But Kovar controlled everything. He made all the calls.
When the Receiver examined the operation and interviewed employees, a different picture emerged. There were 21 people on staff. There was no legitimate business to save. The Receiver terminated most employees and shut the doors, keeping a handful on contract to help wind things down.
The accounting records told a revealing story about Kovar's priorities. He surrounded himself with unqualified women and handed out lavish gifts. Three people handled Profit Connect's financial and personnel operations: a former pharmacy technician who became accounting manager and Kovar's long-term girlfriend, another former pharmacy technician hired as an accountant, and a third employee with zero prior job experience who filled the junior accountant and receptionist role at the warehouse. None of them had any qualifications for their positions.
The Receiver has recovered $8.6 million so far, including frozen cryptocurrency. It's a fraction of what investors put in, but it's what's left after Profit Connect's house of cards collapsed under federal scrutiny.
🤖 Quick Answer
What was Profit Connect's primary deception regarding cryptocurrency mining?Profit Connect misrepresented its mining operations to investors, claiming years of successful cryptocurrency mining activity. In reality, the company began mining approximately one week before the SEC filed its lawsuit in June 2021, generating only $300 in actual mining revenue during its three-week operational period.
How did Profit Connect attract investors through false claims?
The company utilized artificial intelligence and cryptocurrency mining as marketing mechanisms, falsely claiming to employ "proprietary AI and Machine Learning Algorithms" to generate investment returns. These technologies and their purported capabilities did not exist, constituting fraudulent misrepresentation to potential investors.
What did the receivership investigation reveal about Profit Connect's financial performance?
According to the Profit Connect Receiver's First Interim Report from November 1st, the company's actual mining activities generated approximately $300 in revenue during its operational
🔗 Related Articles
- SEC sues NovaTech FX’s Petions & Ponzi promoters
- Michael Faust’s Project Lantern Ponzi collapses
- Seventh BitConnect class-action voluntarily dismissed (California)
- Athene Network cops $100K trademark infringement judgment
- NRGY launches second Ponzi shitcoin, NRGYGO