May 8, 2024 • 36 mins
In Episode 8 - The United States vs. Centra Tech, it’s all fun and games until you’re indicted. As sentencing trials begin to loom closer, we hear what went on behind closed doors and hear the emotional statements from Centra Tech victims.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Shortly after my sixteenth birthday, invested two thousand of my
earnings I was going to use for college into the
initial coin operative Center Tech. I lost most of my
original investment and was left with tokens for a company
it's worthless, a sham, and a fraud.
Speaker 2 (00:19):
Victim impact statements these offer the opportunity to describe the emotional, physical,
and financial impact of a crime they have suffered. As
the case against Center Tech drew closer, the government heard
from many investors.
Speaker 1 (00:32):
I bet that most of the victims of this crime
ordinary people like me.
Speaker 3 (00:37):
All your funds are gone, just overnight gone. My soul
was crushed at that point.
Speaker 4 (00:45):
People are financially ruined from this and they're clinging at straws.
Speaker 3 (00:48):
There's been so much trauma involved, it brings it back
up every time I think about it.
Speaker 2 (00:54):
As you can imagine, most of these victims were pissed.
Speaker 5 (00:58):
The founders of CenTra genuinely hurt people.
Speaker 6 (01:01):
In my case, it led to a falling out, and
ultimately I haven't spoken to my father in four years now.
Speaker 1 (01:08):
I ask the court to make sure this case is
a powerful precedent that deters anyone from doing this again.
Speaker 2 (01:13):
But here's the thing, the case against centri Tech would
never go to trial. I'm Johnny be Good and this
(01:49):
is creating a con the story of Bitcom episode eight,
the United States versus centri Tech. Imagine you start a
company in July. By late October, that company has collected
tens of millions of dollars and its valuation is in
the hundreds of millions. That's going to raise a few eyebrows,
(02:13):
and it did. This was the reality for Centritech. By
November twenty seventeen, the SEC was looking deeply into the
activities of the tech firm and its founders. Five months later,
Ray Trepani, Sam Sorby Sharma, and Robert Farkes found themselves
sitting behind bars for wire fraud, securities fraud, and conspiracy
(02:35):
to commit both. They were each facing up to sixty
five years in prison. I fancy myself many things, but
a lawyer is not one of them. So here's former
SEC Prosecutor Howard Fisher to explain the serious charges they
were facing.
Speaker 7 (02:53):
Wire fraud is actually one of the most commonly charged
frauds because it's so broad. It simply means that there
were lies told and wires were used. So if they're emails,
or if there are bank statements, or if there are
transfers of funds that take place electronically, and there were
lies told, it's a wire.
Speaker 5 (03:12):
Fraud and securities fraud.
Speaker 7 (03:15):
Securities fraud is basically I am lying to you or
I'm not telling you something you need to know, and
there is a purchase or sale or offering of a
security involved.
Speaker 2 (03:25):
And of course conspiracy to commit both. Remember, a security
is a term that's used to describe a wide array
of investments, such as stocks and bonds, really any type
of investment that's expected to increase in value. The FEDS
were out to set a precedent to define cryptocurrencies as
a security. They thought by doing so, it would ensure
(03:46):
everyday investors were in preyed on by fraudile on actors
in the crypto space like Centritech. To do so, the
SEC wanted to pin y Sam Sharma and Robert Farcus
to the wall. Just to be clear, I know exactly
what the Feds came across in their investigation, but we
wanted to take you through some of the evidence we
saw in the SEC's indictment, evidence that we also came
(04:08):
across and producing this podcast a timeline of the life
and death of CenTra. It wasn't a long life, but
it was a full one. For the FEDS to build
their case, they would need to start by understanding how
the concept behind Centritech came to be. That information was
public from one of Sam Sharma's early interviews.
Speaker 8 (04:31):
One day, I was like, what if I could just
go spend my bitcoins and just go buy stuff with
it without having to worry about withdrawing, depositing, et cetera.
And that's where kind of the idea manifested for centric Card.
Speaker 2 (04:44):
Sam Sharma's vision to disrupt the crypto space was conceived
on July eighth, twenty seventeen, when he registered the website
CenTra dot tech. Ray remembers hearing the idea from Sam
for the first time.
Speaker 9 (04:58):
But no fucking idea what crypto is or anything about
it or what he's talking about. But I do trust
his business sense.
Speaker 2 (05:04):
Ray joined the company that very same month, and Robert Farcas,
the brother of Sam's girlfriend, joined shortly after.
Speaker 5 (05:12):
Later.
Speaker 2 (05:13):
In July of twenty seventeen, Sam Sharman incorporated center Tech
in Delaware, with offices out of Sam's apartment in Miami.
According to the government filings, Center Tech was born on
July twenty seventh, twenty seventeen.
Speaker 9 (05:27):
After the groundworks all laid where in Serbey's apartment every day.
Speaker 2 (05:31):
A bunch of guys working out of an apartment wasn't
the look they were going for, so they created a
fictitious CEO named Michael Edwards.
Speaker 9 (05:39):
The name is obviously just a very generic Michael Edwards
with a picture of some random guy from Canada that
looks professional.
Speaker 2 (05:47):
This didn't go unnoticed, As Nathaniel Popper of The New
York Times recalls, one.
Speaker 10 (05:51):
Of the bloggers started digging into this and discovered that
the image of their CEO, this guy Michael Edwards, was
back to professor at a Canadian university who had absolutely
nothing to do with Center Tech.
Speaker 2 (06:07):
This was the first clear case of fraud marketing to
potential investors that your company was being run by a
Harvard educated banker with decades of experience, when in reality,
Michael Edwards never even existed. That wasn't the only thing
Ray and Sam did to mislead investors. According to text
(06:27):
messages obtained by the SEC, in late July twenty seventeen,
Sam told Ray to go make a LinkedIn and make
as many connections as you can link yourselves as Center Tech,
as COO, Google coo LinkedIn profiles and get all the info.
Ray responded accordingly, it was like.
Speaker 9 (06:45):
A mad rush to create LinkedIn's and me and sorby
both put education from Harvard. Obviously, people start questioning that
I changed mind to UCLA shortly after.
Speaker 2 (06:55):
Oh, I didn't know he transferred another instance of whire fraud.
Ray never attended Harvard or UCLA for that matter, but
he had investors thinking he did. As Center Tech's fundraising ICO,
or initial coin offering, launched at the end of July
twenty seventeen, the guys slapped together a white paper using
(07:16):
sophisticated methods such as control C and control v plagarizing
their business plan from another crypto company. The SEC found
that Centra's original white paper touted relationships with Bancor as
well as Visa and MasterCard, but New York Times reporter
Nathaniel Popper revealed those relationships never existed.
Speaker 9 (07:38):
That's like the most illegal thing we did was saying
that we had those bank contracts.
Speaker 5 (07:42):
More wire fraud.
Speaker 2 (07:45):
Look, I have no idea how Ray comes up with
his whole criminal scoring system. But it all sounds super
illegal to me. Then in August, center received an unlikely
endorsement from a crypto guru named Cliff High.
Speaker 9 (08:00):
From Cliff, I kickstarted our whole thing.
Speaker 2 (08:02):
Cliff naming the wrong CenTra and his wealth report that
misprint sparked a flurry of investments from his fan base,
and even though he retracted it and apologized quickly, Cliff's
words carried some significant financial weight. We emailed Cliff asking
him to sit for an interview on this podcast. He
responded to our producer, Nope, period, not interested. Period in
(08:28):
the past period alrighty. Then by the end of August,
Centertech received their first season desist letter from Bancourt. That's
when investigators found evidence that the co founders started scrubbing
bankcor from their marketing materials. Here's Nathaniel Popper of The
New York Times again.
Speaker 10 (08:47):
Every time that they respond by scrubbing something, they're acknowledging
that whatever they've scrubbed as a problem.
Speaker 2 (08:55):
I'd imagine investigators agreed with Nathaniel's assessment removal of the
fraud that should count. By September, Center Tech had brand ambassadors.
Speaker 9 (09:07):
We got in touch with Floyd Mayweather and we're like,
you know, let's get an endorsement. And Floyd Mayweather does
a commercial for US and he does two Instagram posts
for two hundred thousand.
Speaker 2 (09:16):
Then came a second celebrity promoter another.
Speaker 9 (09:19):
One, and so we're like, yo, let's get DJ Khaled.
Speaker 5 (09:22):
Some would say the best.
Speaker 11 (09:23):
Way, the best.
Speaker 2 (09:28):
The guys paid fifty thousand to DJ Khaled, who in
turn posted on Instagram about the center Card being a
game changer.
Speaker 9 (09:37):
And that brings in, like, you know, a couple million.
Speaker 2 (09:40):
That was problematic for the SEC because Floyd Mayweather and
DJ Khaled failed to disclose that they were paid to
endorse centri Tech. And guess what, the SEC came after
them too. Turns out they were the first to get
fined by the SEC for promoting a cryptocurrency. These fines
weren't light. Floyd Mayweather paid over six hundred thousand dollars
(10:02):
in penalties, while DJ Khaled was fined over one hundred
and fifty thousand dollars. The SEC came across more text
messages between the co founders. September twenty ninth, Sam texts
Ray and farcas anything that doesn't exist current we need
to remove we don't have a real product either.
Speaker 5 (10:23):
Right now.
Speaker 9 (10:24):
There's text messages in my indictment that say, you know,
we have to clear all the fufu, Like that's kind
of what we were thinking, like all the bullshit, We
had to just take it away.
Speaker 2 (10:32):
That was around the time Nathaniel Popper was investigating Centritech
for his New York Times cover story.
Speaker 10 (10:38):
How Floyd Mayweather helped two young guys from Miami get rich.
Speaker 2 (10:42):
After lots of digging into the company, Nathaniel learned the
truth or lack thereof around centri Tech and printed his
juicy article.
Speaker 10 (10:51):
On October twenty seventh. That's the day that the New
York Times article appeared, and that's the day when it
became clear that this was not a real business.
Speaker 2 (11:01):
By the end of March twenty eighteen, the Southern District
of New York, the FBI, and the SEC filed charges.
On April first, twenty eighteen, the SEC officially shut down
center Tech, and by the end of the month, all
three co founders were sitting in jail facing criminal charges.
Center Tech investor Mehdi was shocked at what he found online.
Speaker 3 (11:24):
I went onto center Tech's website and you get that
big screen that says SEC Security Exchange Commission shut down
site and had their big logo in the middle of
the screen.
Speaker 2 (11:36):
The government felt confident with the evidence they had, but
they wanted one more asset on their side before going
to trial. By the end of April twenty eighteen, Ray
(11:56):
found himself locked up in Broward County Jail in Miami,
awaiting word on what would be next for him. His
bail was set at seven hundred and fifty thousand dollars.
Speaker 9 (12:06):
I'm in jail for like a week, basically just withdraw
cold turkey in a prison.
Speaker 2 (12:12):
Ray's mom, Carrie, she always finds a way. She posted
bond for Ray that week, but the court had one condition.
His next stop would have to be rehabed. It would
be Ray's thirteenth visit. We were all hoping things would
be different this time.
Speaker 9 (12:30):
I'm just like fucking going on like paddle boards and
going to the beach and you know, flirting with like
random crackheads in the rehab you know, regular shit. More
worried about like my cigarettes than I was about like
anything people had been to rehab. Understand what I'm saying.
Speaker 2 (12:49):
I gotta believe that deep down, Ray knew if he
didn't get his shit together, he'd be sitting in a
cell until his ninetieth birthday. Ray and I were talking
more regularly at this point. Ray's mom had just landed
him a new lawyer and they were forming a defense
on one call with him. I remember Ray explaining the
choices as lawyer laid out for him.
Speaker 12 (13:10):
She's like, three things you can do fight the case, which,
of course you like a million dollars, cooperate, or you
can plead out or some shit like that.
Speaker 1 (13:21):
You know.
Speaker 7 (13:22):
The push for cooperators really took off following the financial crisis.
Speaker 2 (13:28):
Once again, here's our friend Howard Fisher, formerly of the SEC.
Speaker 7 (13:33):
Cooperators can be essential for variety of reasons. First, they
could tell you where the bodies are buried. They could
also help you in the discovery process, walk you through
the documents. I mean, in a lot of cases you
have literally millions of documents, but they don't necessarily connect
unless you have someone to connect them. And finally, and
(13:55):
perhaps the most important reason why you have a cooperator
is that it prevents the other defenders from telling a
story without any checks on it.
Speaker 9 (14:05):
I might fucking whatever, I'll cooperate sounds good to me.
I mean, I've always co operated every time, every time
I've ever got in trouble in my life.
Speaker 5 (14:13):
I'm just like, all right, fucking I'll help with you.
Speaker 9 (14:15):
Benef it's me fuck them words.
Speaker 2 (14:17):
I never thought I would hear Ray Trepani, state's witness.
Speaker 9 (14:22):
I was just so willing to talk at this point.
I was like, there's nothing for me to hide anymore
in my life, Like I want to get this shit across.
Speaker 2 (14:31):
Ray flipping on salmon farcas was the final piece prosecutors needed.
At the advice of his attorney, Ray agreed to the
government steal. But to get that deal, Ray would need
to spill the tea like kettles of tea, like the
fucking Boston Tea Party two point zero.
Speaker 9 (14:47):
The first time meeting with them is the hardest. You know,
you end up having to go back to like your
youngest childhood crimes, and you committed selling wheat and large
amounts of heroin and cocaine and drugs like that.
Speaker 5 (15:00):
This was no simple interrogation.
Speaker 2 (15:02):
Ray was sitting in front of FBI agents, SEC investigators,
and US district attorneys.
Speaker 5 (15:09):
Tough crowd, i'd say, and he break that ice.
Speaker 9 (15:13):
They're basically just dogging me, right, like, just completely shitting
on me. We're going to fuck you if you're not
telling us the truth because there's a trust barrier, right.
Speaker 2 (15:24):
If they were going to put Ray on the stand
testify against Sam Sharma and Robert Farcas, they needed to
know he was willing to come clean about everything from
high school to crimes. He wasn't even alive to see.
Speaker 9 (15:38):
They even asked me about my grandfather and if my
grandfather ever committed any crimes. I'm like, yeah, he definitely
committed crimes. I just have no idea what he did.
Speaker 2 (15:50):
That's a tall order for Ray. This kid is coming
down off a decade of excessive drug use. To remember
each one of his infractions had to be impossible, right well,
Ray past the test and Rai's cooperation. It led to
a pretty wild indictment by the SEC, which they brought
to the Southern District of New York.
Speaker 7 (16:12):
There's so much it's like you're going to Thanksgiving. There
are forty seven vegetable side dishes, and you like vegetable
side dishes.
Speaker 2 (16:19):
Here's former SEC Prosecutor Howard Fisher again, who happens to
be pretty good with analogies.
Speaker 7 (16:25):
Do you go for lying about your executive board, making
stuff up about your business partners, perhaps a little appetizer
of using celebrity endorsements. Maybe finish up with a dessert
of paying off people on the internet who put in
bad statements about you. Whatever you choose, you have an
incredible feast laid out before you.
Speaker 2 (16:48):
That feast for the SEC prosecutors, well, it was served
up by Rays. He cooperated with investigators and it didn't disappoint.
Speaker 7 (16:57):
It's also not only one of these loast of complaints
with tons of stuff. It was among the first ico prosecutions.
Speaker 5 (17:06):
That's right.
Speaker 2 (17:07):
Centro was one of the first crypto companies to be
prosecuted for fraud because it was the first of its kind.
The SEC had Ray walk them through everything that took
place behind Centra's doors.
Speaker 13 (17:18):
At the time, you had the SEC, Justice Treasury all
trying to figure out what the fuck is bitcoin.
Speaker 2 (17:29):
That's Robert Farcas's lawyer, Paul Petruzzi. Robert was raised former
partner at Center Tech.
Speaker 13 (17:36):
From an idea perspective, CenTra was a very very good idea.
But you can only fake it till you make it.
For so long before they find out that your Harvard
degree is not so crimson fake pictures, fake degrees, it's
stuff that's easy to prove is false. And see, that's
(17:56):
where you become a.
Speaker 2 (17:58):
Target and has a strong opinion about what happened once
Center Tech became a target.
Speaker 13 (18:04):
I think if there wasn't a New York Times article,
it wouldn't have been a prosecution.
Speaker 2 (18:11):
That could be true, But remember the New York Times
article came out the same month that authorities copied all
the data off Ray's business phone. That's text, messages, emails, contacts,
you name it. Authorities got full access to all of
Ray's frauduleent behavior. Our team couldn't confirm exactly what started
the investigation, but Ray's arrests from his perjury charge certainly
(18:34):
feels like a front runner.
Speaker 13 (18:36):
I think they were almost embarrassed into prosecuting the case.
Speaker 2 (18:39):
On the opposite side, I'm sure the government was less
concerned about the optics around the New York Times article
and more focused on ensuring their key witness didn't embarrass
them in court.
Speaker 13 (18:49):
I don't know how they prepped Ray, because they managed
to get him on a day where he wasn't high.
Speaker 2 (18:53):
I mean He's not wrong. Ray was whacked out of
his mind throughout his time at Center Tech. So was
the government see curious about putting Ray on the stand.
Speaker 13 (19:02):
I was chomping at the bit to go to trial
on this because I wanted to cross Ray bad. It
was more than just you know, him going on benders
and burglarizing houses. It was more than him violating his
conditions of release by testing positive for drugs to bad
shit bringing a gun to the office repeatedly. I mean,
(19:24):
who does that?
Speaker 2 (19:25):
The trial kept getting pushed, and then COVID hit, which
put the trial on ice for even longer. Farcas and
Petruzzi had an important decision to make.
Speaker 13 (19:34):
Could we have put on a defense that the real
purpose that the false statements were made were to fit
in We're to stop being rassed about being so young
or so brown. We're to stop being rassed for being
a dropout from West Virginia University instead of a Harvard grad. Yes.
Was there an obvious intent to have this company be legitimate? Yes?
(20:00):
But does that take away from prior misrepresentations? No, and
so a trial in this case would have been extraordinarily risky.
Speaker 2 (20:11):
During the summer of twenty twenty, over two years since
their arrest, both Robert and Sam Sharma decided to plead out.
In Robert's deal, he admitted to one count of wirefraud
and one count of conspiracy to commit wirefraud.
Speaker 13 (20:26):
Robert's the good man who got caught up in something
that just went too far.
Speaker 2 (20:32):
Given that most of the world was on lockdown thanks
to COVID. Both sentencing hearings were done virtually, like over
a zoom call. Farcas's hearing was up first in December
twenty twenty. Instead of standing in a New York courtroom,
he was in front of a computer screen at his
home in Florida. His family and even Sam were there
with him. His lawyer made one final case for why
(20:54):
Robert shouldn't spend the next ten years behind bars.
Speaker 13 (20:57):
He's one of those defendants that shouldn't have been a
defendant to begin with. He came into CenTra, and I
was really doing good things there to try to turn
what started initially in a wrong way into a company
that could have gone places.
Speaker 2 (21:16):
Robert would then make his final plea to the judge
for mercy. There aren't recordings of these hearings, so we
used voice actors. To recreate what was said in the
court transcripts of the proceedings. Here's Robert Farcas's statement to
Judge Laurna Schofield.
Speaker 4 (21:31):
I do want to say that I am extremely ashamed
of my actions. There are not enough words for me
to find to say that I'm sorry to the victims,
but I'm sincerely sorry. As I rock my daughter to
sleep every night, I think of what kind of father
I want to be. Being her father is the most
incredible and fulfilling role that I've ever been granted that
(21:52):
it saddens me.
Speaker 2 (21:53):
At the same time, the judge called Farcas the least
guilty of the three partners, but was his guilt small
enough to avoid prison time.
Speaker 14 (22:02):
Mister Farcas, after assessing the particular facts of this case,
it is the judgment of the court that you were
to serve a custodial sentence of a year and a day,
to be followed by three years of supervis relief.
Speaker 13 (22:15):
I wasn't expecting a pass I thought it was a
good sentence. I thought it was a good result in
the case.
Speaker 2 (22:21):
With Robert getting a year and a day in prison,
the court turned its attention to Sam Sharma, whose sentencing
hearing took on a completely different tone. In March of
twenty twenty one, nearly three years since his arrest, Sam
(22:42):
Sharma logged onto the most important zoom call of his life,
his sentencing hearing. The mastermind behind Centritech had pled guilty
to conspiracy to commit wire fraud, conspiracy to commit mail fraud,
and conspiracy to commit securities fraud. Unlike Robert Farcas's hearing,
they were a handful of tech investors listening in.
Speaker 1 (23:01):
The FBI had reached out to me and asked me
to testify as a victim in Sam Sharma's sentencing.
Speaker 2 (23:08):
Nick Bail was one of those Center Tech investors on
the call. By the time of Sam's sentencing, Nick was
a freshman in college and had lost the two grand
he invested when he was only sixteen. He listened to
the hearing from his college dorm in Michigan.
Speaker 1 (23:24):
The prosecution comes up and they just teared the guy
to shreds. I mean for almost an hour. You know,
every detail of his life, every stone got unturned, every relationship,
every petty thing he did when he was probably sixteen
that he thought was funny.
Speaker 2 (23:37):
Here's the thing about sentencing hearings, every bad thing you've
done in your life, it all gets brought up. That
meant that judge heard about Sam's many scams and schemes,
including the perjury charge that stemmed from SAM'SDWI, even crimes
that Sam was never charged with, like those ghost loans
from his days as a car salesman and the three
(23:58):
hundred ninety five thousand in law he took out in
the name of an elderly man. They even touched on
the time Sam ripped off a priest. According to prosecutors,
Sam Sharma pulled off four major schemes, with Centritech being
his greatest. Here's what prosecutor Nagar Tekie had to say,
followed by Sam Sharma's attorney, Jerry Coriglia.
Speaker 15 (24:21):
Your honor, he was the admitted and undisputed mastermind of
this scheme, who oversaw every aspect of its operation, and
who personally obtained approximately thirty six million in fraud proceeds.
Speaker 1 (24:35):
You're like, Okay, this guy's going to jail for life,
and then the defense comes up.
Speaker 11 (24:42):
During his teen years, his parents got divorced, which took
an emotional toll on him. Not just an emotional toll,
a financial toll. He was a disappointment to his father,
and his father put immense pressure on him and that
had a substantial effect on him.
Speaker 1 (25:00):
Remember like almost tearing up at that point. I was like,
this is really raw, really.
Speaker 11 (25:03):
Emotional, but the bottom line is passed. As well as
the fact that he was using alcohol and marijuana during
this time factored into his decision making.
Speaker 1 (25:14):
You're like, Okay, maybe he's not going to jail for life,
even though I probably shouldn't have. I've felt empty. He's
a young guy trying to start a family, and how
he's gotten receive the light a day.
Speaker 2 (25:25):
For years, Sam's lawyer claimed Sam was in way over
his head. One lie led to another and then to another.
Speaker 1 (25:32):
I expected to be an hour long, with the judge
talking most of the time. The defense would talk for
five minutes, the prosecut would talk for five minutes and
then get our sentence sing and that would be that.
Speaker 2 (25:44):
The hearing dragged on for over three hours as lawyers
from both sides spoke about Sam's past and debated how
he'd spend his future. Sam was just twenty nine years
old and was facing up to fifteen years in prison.
Nick wasn't the only Center Tech investor who dialed into
the hearing. There were a handful of others who shared
(26:04):
their victim impact statements.
Speaker 1 (26:06):
The statement I remember vividly was the mom who had
invested most of her kid's college fund.
Speaker 16 (26:13):
Centritech stole from our children, from our retirement, and we
are incredibly disappointed that we chose to trust, support and
invest in a startup company, only to be taken advantage of.
Speaker 2 (26:27):
A victim named Lisa, who was a mother of six,
went off on Sam.
Speaker 16 (26:31):
I have anxiety now, in constant worry over a lack
of retiring savings, and my husband, who works very hard
to provide for us, has developed chronic anxiety and he
struggles with insomnia and depression. It's really despicable and incredibly
low blow that our family and many other families will
never recover from.
Speaker 2 (26:50):
One by one, a handful of other Center Tech investors
unmuted themselves and unleashed their anger. One called Sam a
con artist, and another set his crime was un American.
But then things got interesting. There were also a handful
of victims who spoke during the teleconference praising centri Tech,
(27:11):
including a guy named George.
Speaker 9 (27:13):
I was delivered everything I was led to believe and
promised when investing in the ICO.
Speaker 2 (27:19):
Some of these victims sounded more like defense witnesses. Here's
what another guy from Hong Kong named Tomo had to say.
Speaker 17 (27:27):
I can definitely testify that he was very respectful, hard
working and delivered on all he promised. I sincerely hope
Sam Sharma can avoid jail time as much as possible,
as I believe he has been punished enough already.
Speaker 2 (27:42):
It all highlighted the major issue. Both sides disputed whether
centri Tech was a legitimate company. For the prosecution, there
was no dispute.
Speaker 16 (27:53):
Your honor.
Speaker 15 (27:53):
Thousands of investors believing his lives poored approximately thirty six
million dollars worth of funds into this defendant's hands, and
immediately he began spending that money, including millions of dollars,
for his personal use and for his friends and his
co conspirators. But that was not the end of it.
(28:16):
Rather than come clean and own up to his lies,
this defendant doubled down. He lied to his victims, he
obstructed the SEC's investigation, and then after he was arrested
in this case, he doubled down again.
Speaker 2 (28:33):
After his arrest in twenty eighteen, Sam was supposed to
provide the FEDS with a pass code to the account
that started all the investors' money, but according to court documents,
Sam gave the FEDS an altered code to the account,
which of course did not work. A month after his arrest,
Sam finally came clean to the FBI. The correct passcode
(28:53):
was taped to the bottom of a silverware drawer at
his condo.
Speaker 15 (28:58):
Your honor, these are not the actions of a legitimate
business person with true intentions. These were not, as he
puts it, mistakes or poor decisions. These were calculated, painstaking,
and thoroughly fraudulent actions that this defendant took day in
and day out, over the course of many months to
(29:19):
carry out and then to cover up his scheme.
Speaker 2 (29:23):
Sam's lawyer asked the court to sentence Sam to thirty
months in prison, which amounted to two and a half years,
followed by three years of supervisor release. And then it
was Sam's turn to speak.
Speaker 6 (29:37):
Your honor, this is the first time that I can
finally express myself publicly since my arrest, with everything that
I've had bottled up inside of myself for years. When
I started Centertech, Your honor, I had a vision of prosperity, happiness,
and good fortune for everyone involved in Center Tech. For
the hardship any of them suffered. I'm truly sorry, and
(30:00):
I pray for a day where there is solitude in
everyone's life affected by this. I wanted to go with
the Silicon mentality, build fast, fix later. I wanted to
fake it till I made it, and I was hoping
that the ends justified the means. I only cared about
delivering on the promises and delivering at any cost necessary.
Speaker 2 (30:20):
Build fast, fix later, and fake it till you make it.
We're familiar refrains throughout Sam's nearly eight minute plea for mercy.
Speaker 6 (30:29):
I needed this wake up call to really put my
life on the right track and for me to use
my talents and skills to be a positive member of society.
I'm working now and I will never need nor want
to commit any type of bad deed. This has been
the most frightening experience in my life. Being around murderers,
(30:52):
rapists and really bad people was the wake up call.
I needed your honor. I understand that I have to
go to pri isn't for my actions. Two and a
half years in prison is going to be extremely difficult
for myself and my family. Please allow me this punishment
so that I can go start a family, continue working
(31:14):
to pay my debts, give back, and continue giving back
to my community. Thank you for your time, your honor.
Speaker 2 (31:23):
Remember it's a sentencing hearing. There are no jurors or
closing statements by counsel. Sam is already guilty. All he
could hope for was the judge would take his statements
into consideration. Here's what the Honorable Judge Lorna Schofield said
in response.
Speaker 18 (31:39):
I think the disconnect is and I see it sometimes
in people who are in this situation. They're so kind
and caring and generous to people in their immediate circle
because they are real people to them, they mean something
to them. But somehow they can't extend that to other people,
(32:02):
people who are strangers, who become faithless and therefore unimportant,
And that's something that you need to work on.
Speaker 2 (32:11):
The government sought a sentence of fourteen years, but the
decision ultimately was up to the judge.
Speaker 18 (32:16):
It is the judgment of the court that you were
remanded to the custody of the Bureau of Prisons for
a total of eight years, followed by three years of
supervised release.
Speaker 2 (32:26):
Sam cried a bit after the ruling and appeared to
be stunned by his eight year sentence. Others following the
case reacted as well. Here's Paul Petruzzi, Robert Farcas's attorney.
Speaker 13 (32:38):
I watched Sam's hearing and I was really disappointed. I
don't think that the judge really saw through the government's
smoke screen with Sam.
Speaker 19 (32:48):
I think that Sam got a pretty decent sentencing for
what I've seen the standard to be for white collar crimes.
Speaker 2 (32:55):
That Center investor Jacob Renzel he also shared what he
say if he had the opportunity to speak to Sam today.
Speaker 19 (33:03):
If I saw him in the bathroom, I'd be like,
first off, fuck you, You're a piece of shit. And then
I'd be like, this is not how you cope with
your problems, and you're fucking other people's lives up.
Speaker 2 (33:12):
Sam Sharma's sentence was one of the harshest punishments received
by a crypto founder to date. It sent shockwaves through
the crypto community, but one question loomed large. Where did
that leave Ray.
Speaker 9 (33:25):
I'd rather go to jail now than have to fucking
wait another year then go to jail.
Speaker 2 (33:31):
Ray's day and court was coming, but he wouldn't get
his wish. He'd stand in front of a judge over
a year after Sam Sharma was sentenced.
Speaker 9 (33:40):
Thank you, your honor for allowing me to address the
court Today is a very heavy day for me.
Speaker 2 (33:48):
Unlike his partners, Ray was facing one hundred and seventy
five years in prison.
Speaker 9 (33:53):
I know the things that I have done are wrong,
and I understand this fraud affected many people's lives. I
cannot take back the things that I've done, and I
will forever have to live with the guilt and sorrow.
Speaker 2 (34:05):
Would this fraudsterare my best friend walk out of court
a freeman or would he be locked up for the
rest of his life? That's on the season finale of
Creating a Con. Creating a Con is a production of
Glass Podcasts, a division of Glass Entertainment Group in partnership
(34:27):
with iHeart Podcasts. If you would like to reach out
to the Creating a Con team, email us at Creating
a Con at gmail dot com. That's Creating a coen
at gmail dot com.
Speaker 5 (34:40):
We appreciate your support.
Speaker 2 (34:42):
One way to support our show is by subscribing to
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and review Creating a Con Five star reviews go a
long way. A big thank you to those who are listening.
Also be sure to check us out and follow us
on Instagram at Glass Podcasts. The show is hosted and
produced by me Johnny be Good, with executive producers Nancy Glass,
(35:06):
Ben Fetterman, and Andrea Gunning. Written and produced by Ben
Fetterman and Todd Gans, Additional writing by Matt Delvecchio. Operations
and production support by Kristin Melchiori. Additional production support Trey Morgan.
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(35:27):
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(35:50):
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(36:13):
Apple Podcasts, or wherever you get your podcasts
Shortly after my sixteenth birthday, invested two thousand of my
earnings I was going to use for college into the
initial coin operative Center Tech. I lost most of my
original investment and was left with tokens for a company
it's worthless, a sham, and a fraud.
Speaker 2 (00:19):
Victim impact statements these offer the opportunity to describe the emotional, physical,
and financial impact of a crime they have suffered. As
the case against Center Tech drew closer, the government heard
from many investors.
Speaker 1 (00:32):
I bet that most of the victims of this crime
ordinary people like me.
Speaker 3 (00:37):
All your funds are gone, just overnight gone. My soul
was crushed at that point.
Speaker 4 (00:45):
People are financially ruined from this and they're clinging at straws.
Speaker 3 (00:48):
There's been so much trauma involved, it brings it back
up every time I think about it.
Speaker 2 (00:54):
As you can imagine, most of these victims were pissed.
Speaker 5 (00:58):
The founders of CenTra genuinely hurt people.
Speaker 6 (01:01):
In my case, it led to a falling out, and
ultimately I haven't spoken to my father in four years now.
Speaker 1 (01:08):
I ask the court to make sure this case is
a powerful precedent that deters anyone from doing this again.
Speaker 2 (01:13):
But here's the thing, the case against centri Tech would
never go to trial. I'm Johnny be Good and this
(01:49):
is creating a con the story of Bitcom episode eight,
the United States versus centri Tech. Imagine you start a
company in July. By late October, that company has collected
tens of millions of dollars and its valuation is in
the hundreds of millions. That's going to raise a few eyebrows,
(02:13):
and it did. This was the reality for Centritech. By
November twenty seventeen, the SEC was looking deeply into the
activities of the tech firm and its founders. Five months later,
Ray Trepani, Sam Sorby Sharma, and Robert Farkes found themselves
sitting behind bars for wire fraud, securities fraud, and conspiracy
(02:35):
to commit both. They were each facing up to sixty
five years in prison. I fancy myself many things, but
a lawyer is not one of them. So here's former
SEC Prosecutor Howard Fisher to explain the serious charges they
were facing.
Speaker 7 (02:53):
Wire fraud is actually one of the most commonly charged
frauds because it's so broad. It simply means that there
were lies told and wires were used. So if they're emails,
or if there are bank statements, or if there are
transfers of funds that take place electronically, and there were
lies told, it's a wire.
Speaker 5 (03:12):
Fraud and securities fraud.
Speaker 7 (03:15):
Securities fraud is basically I am lying to you or
I'm not telling you something you need to know, and
there is a purchase or sale or offering of a
security involved.
Speaker 2 (03:25):
And of course conspiracy to commit both. Remember, a security
is a term that's used to describe a wide array
of investments, such as stocks and bonds, really any type
of investment that's expected to increase in value. The FEDS
were out to set a precedent to define cryptocurrencies as
a security. They thought by doing so, it would ensure
(03:46):
everyday investors were in preyed on by fraudile on actors
in the crypto space like Centritech. To do so, the
SEC wanted to pin y Sam Sharma and Robert Farcus
to the wall. Just to be clear, I know exactly
what the Feds came across in their investigation, but we
wanted to take you through some of the evidence we
saw in the SEC's indictment, evidence that we also came
(04:08):
across and producing this podcast a timeline of the life
and death of CenTra. It wasn't a long life, but
it was a full one. For the FEDS to build
their case, they would need to start by understanding how
the concept behind Centritech came to be. That information was
public from one of Sam Sharma's early interviews.
Speaker 8 (04:31):
One day, I was like, what if I could just
go spend my bitcoins and just go buy stuff with
it without having to worry about withdrawing, depositing, et cetera.
And that's where kind of the idea manifested for centric Card.
Speaker 2 (04:44):
Sam Sharma's vision to disrupt the crypto space was conceived
on July eighth, twenty seventeen, when he registered the website
CenTra dot tech. Ray remembers hearing the idea from Sam
for the first time.
Speaker 9 (04:58):
But no fucking idea what crypto is or anything about
it or what he's talking about. But I do trust
his business sense.
Speaker 2 (05:04):
Ray joined the company that very same month, and Robert Farcas,
the brother of Sam's girlfriend, joined shortly after.
Speaker 5 (05:12):
Later.
Speaker 2 (05:13):
In July of twenty seventeen, Sam Sharman incorporated center Tech
in Delaware, with offices out of Sam's apartment in Miami.
According to the government filings, Center Tech was born on
July twenty seventh, twenty seventeen.
Speaker 9 (05:27):
After the groundworks all laid where in Serbey's apartment every day.
Speaker 2 (05:31):
A bunch of guys working out of an apartment wasn't
the look they were going for, so they created a
fictitious CEO named Michael Edwards.
Speaker 9 (05:39):
The name is obviously just a very generic Michael Edwards
with a picture of some random guy from Canada that
looks professional.
Speaker 2 (05:47):
This didn't go unnoticed, As Nathaniel Popper of The New
York Times recalls, one.
Speaker 10 (05:51):
Of the bloggers started digging into this and discovered that
the image of their CEO, this guy Michael Edwards, was
back to professor at a Canadian university who had absolutely
nothing to do with Center Tech.
Speaker 2 (06:07):
This was the first clear case of fraud marketing to
potential investors that your company was being run by a
Harvard educated banker with decades of experience, when in reality,
Michael Edwards never even existed. That wasn't the only thing
Ray and Sam did to mislead investors. According to text
(06:27):
messages obtained by the SEC, in late July twenty seventeen,
Sam told Ray to go make a LinkedIn and make
as many connections as you can link yourselves as Center Tech,
as COO, Google coo LinkedIn profiles and get all the info.
Ray responded accordingly, it was like.
Speaker 9 (06:45):
A mad rush to create LinkedIn's and me and sorby
both put education from Harvard. Obviously, people start questioning that
I changed mind to UCLA shortly after.
Speaker 2 (06:55):
Oh, I didn't know he transferred another instance of whire fraud.
Ray never attended Harvard or UCLA for that matter, but
he had investors thinking he did. As Center Tech's fundraising ICO,
or initial coin offering, launched at the end of July
twenty seventeen, the guys slapped together a white paper using
(07:16):
sophisticated methods such as control C and control v plagarizing
their business plan from another crypto company. The SEC found
that Centra's original white paper touted relationships with Bancor as
well as Visa and MasterCard, but New York Times reporter
Nathaniel Popper revealed those relationships never existed.
Speaker 9 (07:38):
That's like the most illegal thing we did was saying
that we had those bank contracts.
Speaker 5 (07:42):
More wire fraud.
Speaker 2 (07:45):
Look, I have no idea how Ray comes up with
his whole criminal scoring system. But it all sounds super
illegal to me. Then in August, center received an unlikely
endorsement from a crypto guru named Cliff High.
Speaker 9 (08:00):
From Cliff, I kickstarted our whole thing.
Speaker 2 (08:02):
Cliff naming the wrong CenTra and his wealth report that
misprint sparked a flurry of investments from his fan base,
and even though he retracted it and apologized quickly, Cliff's
words carried some significant financial weight. We emailed Cliff asking
him to sit for an interview on this podcast. He
responded to our producer, Nope, period, not interested. Period in
(08:28):
the past period alrighty. Then by the end of August,
Centertech received their first season desist letter from Bancourt. That's
when investigators found evidence that the co founders started scrubbing
bankcor from their marketing materials. Here's Nathaniel Popper of The
New York Times again.
Speaker 10 (08:47):
Every time that they respond by scrubbing something, they're acknowledging
that whatever they've scrubbed as a problem.
Speaker 2 (08:55):
I'd imagine investigators agreed with Nathaniel's assessment removal of the
fraud that should count. By September, Center Tech had brand ambassadors.
Speaker 9 (09:07):
We got in touch with Floyd Mayweather and we're like,
you know, let's get an endorsement. And Floyd Mayweather does
a commercial for US and he does two Instagram posts
for two hundred thousand.
Speaker 2 (09:16):
Then came a second celebrity promoter another.
Speaker 9 (09:19):
One, and so we're like, yo, let's get DJ Khaled.
Speaker 5 (09:22):
Some would say the best.
Speaker 11 (09:23):
Way, the best.
Speaker 2 (09:28):
The guys paid fifty thousand to DJ Khaled, who in
turn posted on Instagram about the center Card being a
game changer.
Speaker 9 (09:37):
And that brings in, like, you know, a couple million.
Speaker 2 (09:40):
That was problematic for the SEC because Floyd Mayweather and
DJ Khaled failed to disclose that they were paid to
endorse centri Tech. And guess what, the SEC came after
them too. Turns out they were the first to get
fined by the SEC for promoting a cryptocurrency. These fines
weren't light. Floyd Mayweather paid over six hundred thousand dollars
(10:02):
in penalties, while DJ Khaled was fined over one hundred
and fifty thousand dollars. The SEC came across more text
messages between the co founders. September twenty ninth, Sam texts
Ray and farcas anything that doesn't exist current we need
to remove we don't have a real product either.
Speaker 5 (10:23):
Right now.
Speaker 9 (10:24):
There's text messages in my indictment that say, you know,
we have to clear all the fufu, Like that's kind
of what we were thinking, like all the bullshit, We
had to just take it away.
Speaker 2 (10:32):
That was around the time Nathaniel Popper was investigating Centritech
for his New York Times cover story.
Speaker 10 (10:38):
How Floyd Mayweather helped two young guys from Miami get rich.
Speaker 2 (10:42):
After lots of digging into the company, Nathaniel learned the
truth or lack thereof around centri Tech and printed his
juicy article.
Speaker 10 (10:51):
On October twenty seventh. That's the day that the New
York Times article appeared, and that's the day when it
became clear that this was not a real business.
Speaker 2 (11:01):
By the end of March twenty eighteen, the Southern District
of New York, the FBI, and the SEC filed charges.
On April first, twenty eighteen, the SEC officially shut down
center Tech, and by the end of the month, all
three co founders were sitting in jail facing criminal charges.
Center Tech investor Mehdi was shocked at what he found online.
Speaker 3 (11:24):
I went onto center Tech's website and you get that
big screen that says SEC Security Exchange Commission shut down
site and had their big logo in the middle of
the screen.
Speaker 2 (11:36):
The government felt confident with the evidence they had, but
they wanted one more asset on their side before going
to trial. By the end of April twenty eighteen, Ray
(11:56):
found himself locked up in Broward County Jail in Miami,
awaiting word on what would be next for him. His
bail was set at seven hundred and fifty thousand dollars.
Speaker 9 (12:06):
I'm in jail for like a week, basically just withdraw
cold turkey in a prison.
Speaker 2 (12:12):
Ray's mom, Carrie, she always finds a way. She posted
bond for Ray that week, but the court had one condition.
His next stop would have to be rehabed. It would
be Ray's thirteenth visit. We were all hoping things would
be different this time.
Speaker 9 (12:30):
I'm just like fucking going on like paddle boards and
going to the beach and you know, flirting with like
random crackheads in the rehab you know, regular shit. More
worried about like my cigarettes than I was about like
anything people had been to rehab. Understand what I'm saying.
Speaker 2 (12:49):
I gotta believe that deep down, Ray knew if he
didn't get his shit together, he'd be sitting in a
cell until his ninetieth birthday. Ray and I were talking
more regularly at this point. Ray's mom had just landed
him a new lawyer and they were forming a defense
on one call with him. I remember Ray explaining the
choices as lawyer laid out for him.
Speaker 12 (13:10):
She's like, three things you can do fight the case, which,
of course you like a million dollars, cooperate, or you
can plead out or some shit like that.
Speaker 1 (13:21):
You know.
Speaker 7 (13:22):
The push for cooperators really took off following the financial crisis.
Speaker 2 (13:28):
Once again, here's our friend Howard Fisher, formerly of the SEC.
Speaker 7 (13:33):
Cooperators can be essential for variety of reasons. First, they
could tell you where the bodies are buried. They could
also help you in the discovery process, walk you through
the documents. I mean, in a lot of cases you
have literally millions of documents, but they don't necessarily connect
unless you have someone to connect them. And finally, and
(13:55):
perhaps the most important reason why you have a cooperator
is that it prevents the other defenders from telling a
story without any checks on it.
Speaker 9 (14:05):
I might fucking whatever, I'll cooperate sounds good to me.
I mean, I've always co operated every time, every time
I've ever got in trouble in my life.
Speaker 5 (14:13):
I'm just like, all right, fucking I'll help with you.
Speaker 9 (14:15):
Benef it's me fuck them words.
Speaker 2 (14:17):
I never thought I would hear Ray Trepani, state's witness.
Speaker 9 (14:22):
I was just so willing to talk at this point.
I was like, there's nothing for me to hide anymore
in my life, Like I want to get this shit across.
Speaker 2 (14:31):
Ray flipping on salmon farcas was the final piece prosecutors needed.
At the advice of his attorney, Ray agreed to the
government steal. But to get that deal, Ray would need
to spill the tea like kettles of tea, like the
fucking Boston Tea Party two point zero.
Speaker 9 (14:47):
The first time meeting with them is the hardest. You know,
you end up having to go back to like your
youngest childhood crimes, and you committed selling wheat and large
amounts of heroin and cocaine and drugs like that.
Speaker 5 (15:00):
This was no simple interrogation.
Speaker 2 (15:02):
Ray was sitting in front of FBI agents, SEC investigators,
and US district attorneys.
Speaker 5 (15:09):
Tough crowd, i'd say, and he break that ice.
Speaker 9 (15:13):
They're basically just dogging me, right, like, just completely shitting
on me. We're going to fuck you if you're not
telling us the truth because there's a trust barrier, right.
Speaker 2 (15:24):
If they were going to put Ray on the stand
testify against Sam Sharma and Robert Farcas, they needed to
know he was willing to come clean about everything from
high school to crimes. He wasn't even alive to see.
Speaker 9 (15:38):
They even asked me about my grandfather and if my
grandfather ever committed any crimes. I'm like, yeah, he definitely
committed crimes. I just have no idea what he did.
Speaker 2 (15:50):
That's a tall order for Ray. This kid is coming
down off a decade of excessive drug use. To remember
each one of his infractions had to be impossible, right well,
Ray past the test and Rai's cooperation. It led to
a pretty wild indictment by the SEC, which they brought
to the Southern District of New York.
Speaker 7 (16:12):
There's so much it's like you're going to Thanksgiving. There
are forty seven vegetable side dishes, and you like vegetable
side dishes.
Speaker 2 (16:19):
Here's former SEC Prosecutor Howard Fisher again, who happens to
be pretty good with analogies.
Speaker 7 (16:25):
Do you go for lying about your executive board, making
stuff up about your business partners, perhaps a little appetizer
of using celebrity endorsements. Maybe finish up with a dessert
of paying off people on the internet who put in
bad statements about you. Whatever you choose, you have an
incredible feast laid out before you.
Speaker 2 (16:48):
That feast for the SEC prosecutors, well, it was served
up by Rays. He cooperated with investigators and it didn't disappoint.
Speaker 7 (16:57):
It's also not only one of these loast of complaints
with tons of stuff. It was among the first ico prosecutions.
Speaker 5 (17:06):
That's right.
Speaker 2 (17:07):
Centro was one of the first crypto companies to be
prosecuted for fraud because it was the first of its kind.
The SEC had Ray walk them through everything that took
place behind Centra's doors.
Speaker 13 (17:18):
At the time, you had the SEC, Justice Treasury all
trying to figure out what the fuck is bitcoin.
Speaker 2 (17:29):
That's Robert Farcas's lawyer, Paul Petruzzi. Robert was raised former
partner at Center Tech.
Speaker 13 (17:36):
From an idea perspective, CenTra was a very very good idea.
But you can only fake it till you make it.
For so long before they find out that your Harvard
degree is not so crimson fake pictures, fake degrees, it's
stuff that's easy to prove is false. And see, that's
(17:56):
where you become a.
Speaker 2 (17:58):
Target and has a strong opinion about what happened once
Center Tech became a target.
Speaker 13 (18:04):
I think if there wasn't a New York Times article,
it wouldn't have been a prosecution.
Speaker 2 (18:11):
That could be true, But remember the New York Times
article came out the same month that authorities copied all
the data off Ray's business phone. That's text, messages, emails, contacts,
you name it. Authorities got full access to all of
Ray's frauduleent behavior. Our team couldn't confirm exactly what started
the investigation, but Ray's arrests from his perjury charge certainly
(18:34):
feels like a front runner.
Speaker 13 (18:36):
I think they were almost embarrassed into prosecuting the case.
Speaker 2 (18:39):
On the opposite side, I'm sure the government was less
concerned about the optics around the New York Times article
and more focused on ensuring their key witness didn't embarrass
them in court.
Speaker 13 (18:49):
I don't know how they prepped Ray, because they managed
to get him on a day where he wasn't high.
Speaker 2 (18:53):
I mean He's not wrong. Ray was whacked out of
his mind throughout his time at Center Tech. So was
the government see curious about putting Ray on the stand.
Speaker 13 (19:02):
I was chomping at the bit to go to trial
on this because I wanted to cross Ray bad. It
was more than just you know, him going on benders
and burglarizing houses. It was more than him violating his
conditions of release by testing positive for drugs to bad
shit bringing a gun to the office repeatedly. I mean,
(19:24):
who does that?
Speaker 2 (19:25):
The trial kept getting pushed, and then COVID hit, which
put the trial on ice for even longer. Farcas and
Petruzzi had an important decision to make.
Speaker 13 (19:34):
Could we have put on a defense that the real
purpose that the false statements were made were to fit
in We're to stop being rassed about being so young
or so brown. We're to stop being rassed for being
a dropout from West Virginia University instead of a Harvard grad. Yes.
Was there an obvious intent to have this company be legitimate? Yes?
(20:00):
But does that take away from prior misrepresentations? No, and
so a trial in this case would have been extraordinarily risky.
Speaker 2 (20:11):
During the summer of twenty twenty, over two years since
their arrest, both Robert and Sam Sharma decided to plead out.
In Robert's deal, he admitted to one count of wirefraud
and one count of conspiracy to commit wirefraud.
Speaker 13 (20:26):
Robert's the good man who got caught up in something
that just went too far.
Speaker 2 (20:32):
Given that most of the world was on lockdown thanks
to COVID. Both sentencing hearings were done virtually, like over
a zoom call. Farcas's hearing was up first in December
twenty twenty. Instead of standing in a New York courtroom,
he was in front of a computer screen at his
home in Florida. His family and even Sam were there
with him. His lawyer made one final case for why
(20:54):
Robert shouldn't spend the next ten years behind bars.
Speaker 13 (20:57):
He's one of those defendants that shouldn't have been a
defendant to begin with. He came into CenTra, and I
was really doing good things there to try to turn
what started initially in a wrong way into a company
that could have gone places.
Speaker 2 (21:16):
Robert would then make his final plea to the judge
for mercy. There aren't recordings of these hearings, so we
used voice actors. To recreate what was said in the
court transcripts of the proceedings. Here's Robert Farcas's statement to
Judge Laurna Schofield.
Speaker 4 (21:31):
I do want to say that I am extremely ashamed
of my actions. There are not enough words for me
to find to say that I'm sorry to the victims,
but I'm sincerely sorry. As I rock my daughter to
sleep every night, I think of what kind of father
I want to be. Being her father is the most
incredible and fulfilling role that I've ever been granted that
(21:52):
it saddens me.
Speaker 2 (21:53):
At the same time, the judge called Farcas the least
guilty of the three partners, but was his guilt small
enough to avoid prison time.
Speaker 14 (22:02):
Mister Farcas, after assessing the particular facts of this case,
it is the judgment of the court that you were
to serve a custodial sentence of a year and a day,
to be followed by three years of supervis relief.
Speaker 13 (22:15):
I wasn't expecting a pass I thought it was a
good sentence. I thought it was a good result in
the case.
Speaker 2 (22:21):
With Robert getting a year and a day in prison,
the court turned its attention to Sam Sharma, whose sentencing
hearing took on a completely different tone. In March of
twenty twenty one, nearly three years since his arrest, Sam
(22:42):
Sharma logged onto the most important zoom call of his life,
his sentencing hearing. The mastermind behind Centritech had pled guilty
to conspiracy to commit wire fraud, conspiracy to commit mail fraud,
and conspiracy to commit securities fraud. Unlike Robert Farcas's hearing,
they were a handful of tech investors listening in.
Speaker 1 (23:01):
The FBI had reached out to me and asked me
to testify as a victim in Sam Sharma's sentencing.
Speaker 2 (23:08):
Nick Bail was one of those Center Tech investors on
the call. By the time of Sam's sentencing, Nick was
a freshman in college and had lost the two grand
he invested when he was only sixteen. He listened to
the hearing from his college dorm in Michigan.
Speaker 1 (23:24):
The prosecution comes up and they just teared the guy
to shreds. I mean for almost an hour. You know,
every detail of his life, every stone got unturned, every relationship,
every petty thing he did when he was probably sixteen
that he thought was funny.
Speaker 2 (23:37):
Here's the thing about sentencing hearings, every bad thing you've
done in your life, it all gets brought up. That
meant that judge heard about Sam's many scams and schemes,
including the perjury charge that stemmed from SAM'SDWI, even crimes
that Sam was never charged with, like those ghost loans
from his days as a car salesman and the three
(23:58):
hundred ninety five thousand in law he took out in
the name of an elderly man. They even touched on
the time Sam ripped off a priest. According to prosecutors,
Sam Sharma pulled off four major schemes, with Centritech being
his greatest. Here's what prosecutor Nagar Tekie had to say,
followed by Sam Sharma's attorney, Jerry Coriglia.
Speaker 15 (24:21):
Your honor, he was the admitted and undisputed mastermind of
this scheme, who oversaw every aspect of its operation, and
who personally obtained approximately thirty six million in fraud proceeds.
Speaker 1 (24:35):
You're like, Okay, this guy's going to jail for life,
and then the defense comes up.
Speaker 11 (24:42):
During his teen years, his parents got divorced, which took
an emotional toll on him. Not just an emotional toll,
a financial toll. He was a disappointment to his father,
and his father put immense pressure on him and that
had a substantial effect on him.
Speaker 1 (25:00):
Remember like almost tearing up at that point. I was like,
this is really raw, really.
Speaker 11 (25:03):
Emotional, but the bottom line is passed. As well as
the fact that he was using alcohol and marijuana during
this time factored into his decision making.
Speaker 1 (25:14):
You're like, Okay, maybe he's not going to jail for life,
even though I probably shouldn't have. I've felt empty. He's
a young guy trying to start a family, and how
he's gotten receive the light a day.
Speaker 2 (25:25):
For years, Sam's lawyer claimed Sam was in way over
his head. One lie led to another and then to another.
Speaker 1 (25:32):
I expected to be an hour long, with the judge
talking most of the time. The defense would talk for
five minutes, the prosecut would talk for five minutes and
then get our sentence sing and that would be that.
Speaker 2 (25:44):
The hearing dragged on for over three hours as lawyers
from both sides spoke about Sam's past and debated how
he'd spend his future. Sam was just twenty nine years
old and was facing up to fifteen years in prison.
Nick wasn't the only Center Tech investor who dialed into
the hearing. There were a handful of others who shared
(26:04):
their victim impact statements.
Speaker 1 (26:06):
The statement I remember vividly was the mom who had
invested most of her kid's college fund.
Speaker 16 (26:13):
Centritech stole from our children, from our retirement, and we
are incredibly disappointed that we chose to trust, support and
invest in a startup company, only to be taken advantage of.
Speaker 2 (26:27):
A victim named Lisa, who was a mother of six,
went off on Sam.
Speaker 16 (26:31):
I have anxiety now, in constant worry over a lack
of retiring savings, and my husband, who works very hard
to provide for us, has developed chronic anxiety and he
struggles with insomnia and depression. It's really despicable and incredibly
low blow that our family and many other families will
never recover from.
Speaker 2 (26:50):
One by one, a handful of other Center Tech investors
unmuted themselves and unleashed their anger. One called Sam a
con artist, and another set his crime was un American.
But then things got interesting. There were also a handful
of victims who spoke during the teleconference praising centri Tech,
(27:11):
including a guy named George.
Speaker 9 (27:13):
I was delivered everything I was led to believe and
promised when investing in the ICO.
Speaker 2 (27:19):
Some of these victims sounded more like defense witnesses. Here's
what another guy from Hong Kong named Tomo had to say.
Speaker 17 (27:27):
I can definitely testify that he was very respectful, hard
working and delivered on all he promised. I sincerely hope
Sam Sharma can avoid jail time as much as possible,
as I believe he has been punished enough already.
Speaker 2 (27:42):
It all highlighted the major issue. Both sides disputed whether
centri Tech was a legitimate company. For the prosecution, there
was no dispute.
Speaker 16 (27:53):
Your honor.
Speaker 15 (27:53):
Thousands of investors believing his lives poored approximately thirty six
million dollars worth of funds into this defendant's hands, and
immediately he began spending that money, including millions of dollars,
for his personal use and for his friends and his
co conspirators. But that was not the end of it.
(28:16):
Rather than come clean and own up to his lies,
this defendant doubled down. He lied to his victims, he
obstructed the SEC's investigation, and then after he was arrested
in this case, he doubled down again.
Speaker 2 (28:33):
After his arrest in twenty eighteen, Sam was supposed to
provide the FEDS with a pass code to the account
that started all the investors' money, but according to court documents,
Sam gave the FEDS an altered code to the account,
which of course did not work. A month after his arrest,
Sam finally came clean to the FBI. The correct passcode
(28:53):
was taped to the bottom of a silverware drawer at
his condo.
Speaker 15 (28:58):
Your honor, these are not the actions of a legitimate
business person with true intentions. These were not, as he
puts it, mistakes or poor decisions. These were calculated, painstaking,
and thoroughly fraudulent actions that this defendant took day in
and day out, over the course of many months to
(29:19):
carry out and then to cover up his scheme.
Speaker 2 (29:23):
Sam's lawyer asked the court to sentence Sam to thirty
months in prison, which amounted to two and a half years,
followed by three years of supervisor release. And then it
was Sam's turn to speak.
Speaker 6 (29:37):
Your honor, this is the first time that I can
finally express myself publicly since my arrest, with everything that
I've had bottled up inside of myself for years. When
I started Centertech, Your honor, I had a vision of prosperity, happiness,
and good fortune for everyone involved in Center Tech. For
the hardship any of them suffered. I'm truly sorry, and
(30:00):
I pray for a day where there is solitude in
everyone's life affected by this. I wanted to go with
the Silicon mentality, build fast, fix later. I wanted to
fake it till I made it, and I was hoping
that the ends justified the means. I only cared about
delivering on the promises and delivering at any cost necessary.
Speaker 2 (30:20):
Build fast, fix later, and fake it till you make it.
We're familiar refrains throughout Sam's nearly eight minute plea for mercy.
Speaker 6 (30:29):
I needed this wake up call to really put my
life on the right track and for me to use
my talents and skills to be a positive member of society.
I'm working now and I will never need nor want
to commit any type of bad deed. This has been
the most frightening experience in my life. Being around murderers,
(30:52):
rapists and really bad people was the wake up call.
I needed your honor. I understand that I have to
go to pri isn't for my actions. Two and a
half years in prison is going to be extremely difficult
for myself and my family. Please allow me this punishment
so that I can go start a family, continue working
(31:14):
to pay my debts, give back, and continue giving back
to my community. Thank you for your time, your honor.
Speaker 2 (31:23):
Remember it's a sentencing hearing. There are no jurors or
closing statements by counsel. Sam is already guilty. All he
could hope for was the judge would take his statements
into consideration. Here's what the Honorable Judge Lorna Schofield said
in response.
Speaker 18 (31:39):
I think the disconnect is and I see it sometimes
in people who are in this situation. They're so kind
and caring and generous to people in their immediate circle
because they are real people to them, they mean something
to them. But somehow they can't extend that to other people,
(32:02):
people who are strangers, who become faithless and therefore unimportant,
And that's something that you need to work on.
Speaker 2 (32:11):
The government sought a sentence of fourteen years, but the
decision ultimately was up to the judge.
Speaker 18 (32:16):
It is the judgment of the court that you were
remanded to the custody of the Bureau of Prisons for
a total of eight years, followed by three years of
supervised release.
Speaker 2 (32:26):
Sam cried a bit after the ruling and appeared to
be stunned by his eight year sentence. Others following the
case reacted as well. Here's Paul Petruzzi, Robert Farcas's attorney.
Speaker 13 (32:38):
I watched Sam's hearing and I was really disappointed. I
don't think that the judge really saw through the government's
smoke screen with Sam.
Speaker 19 (32:48):
I think that Sam got a pretty decent sentencing for
what I've seen the standard to be for white collar crimes.
Speaker 2 (32:55):
That Center investor Jacob Renzel he also shared what he
say if he had the opportunity to speak to Sam today.
Speaker 19 (33:03):
If I saw him in the bathroom, I'd be like,
first off, fuck you, You're a piece of shit. And then
I'd be like, this is not how you cope with
your problems, and you're fucking other people's lives up.
Speaker 2 (33:12):
Sam Sharma's sentence was one of the harshest punishments received
by a crypto founder to date. It sent shockwaves through
the crypto community, but one question loomed large. Where did
that leave Ray.
Speaker 9 (33:25):
I'd rather go to jail now than have to fucking
wait another year then go to jail.
Speaker 2 (33:31):
Ray's day and court was coming, but he wouldn't get
his wish. He'd stand in front of a judge over
a year after Sam Sharma was sentenced.
Speaker 9 (33:40):
Thank you, your honor for allowing me to address the
court Today is a very heavy day for me.
Speaker 2 (33:48):
Unlike his partners, Ray was facing one hundred and seventy
five years in prison.
Speaker 9 (33:53):
I know the things that I have done are wrong,
and I understand this fraud affected many people's lives. I
cannot take back the things that I've done, and I
will forever have to live with the guilt and sorrow.
Speaker 2 (34:05):
Would this fraudsterare my best friend walk out of court
a freeman or would he be locked up for the
rest of his life? That's on the season finale of
Creating a Con. Creating a Con is a production of
Glass Podcasts, a division of Glass Entertainment Group in partnership
(34:27):
with iHeart Podcasts. If you would like to reach out
to the Creating a Con team, email us at Creating
a Con at gmail dot com. That's Creating a coen
at gmail dot com.
Speaker 5 (34:40):
We appreciate your support.
Speaker 2 (34:42):
One way to support our show is by subscribing to
our podcast on Apple Podcasts and don't Forget to rate
and review Creating a Con Five star reviews go a
long way. A big thank you to those who are listening.
Also be sure to check us out and follow us
on Instagram at Glass Podcasts. The show is hosted and
produced by me Johnny be Good, with executive producers Nancy Glass,
(35:06):
Ben Fetterman, and Andrea Gunning. Written and produced by Ben
Fetterman and Todd Gans, Additional writing by Matt Delvecchio. Operations
and production support by Kristin Melchiori. Additional production support Trey Morgan.
Our iHeart team is Ali Perry and Jessica Crincheck. Sound
(35:27):
editing and mixing by Matt Delvecchio, Consulting producer Nathaniel Popper.
Creating a CON's theme composed by Oliver Baines. Music library
provided by MiB Music, and a special thanks to our
voice actors Carrie Hartman, Rocky Ault, Steve Hanilek, Kevin Cult
and Trey Morgan. Thank you for subscribing to iHeart True
(35:50):
Crime Plus exclusively on Apple. We hope you enjoyed this
ad free presentation of Creating a Con. The story of
bitcom continue Binging the Rest of the Sea. One hundred
percent add free and stay tuned for early access to
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more podcasts from iHeart and Glass Podcasts, visit the iHeartRadio app,
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Apple Podcasts, or wherever you get your podcasts
Host
Jonny B. Good
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