How a Coral Gables lawyer and an ex-Miami cop became cogs in massive alleged Ponzi scheme
28 Sep 2020

John Gerant has played several roles in his life — Miami police officer, pilot, Realtor, drug trafficker and informant for the Drug Enforcement Administration. His latest act: alleged facilitator in a multimillion-dollar global Ponzi scheme.

Leaked documents from the U.S. Treasury Department show that Gerant and his son, Sean, actively recruited people to invest in OneCoin, an allegedly fraudulent cryptocurrency firm tied to a Bulgarian, Ruja Ignatova, who has been branded with the intriguing nickname “Queen of Cryptocurrency.”

Recent federal indictments and testimony given in a Manhattan federal court describe Ignatova’s investment scheme as worth $4 billion, $400 million of which was allegedly laundered by two South Florida men, Gilbert Armenta and Coral Gables attorney Mark S. Scott, with the help of shell companies they set up in the state. Court testimony described Armenta as the “queen’s” lover-turned-FBI informant.

Among the leaked documents was also a February 2017 report to the Treasury from the Bank of New York Mellon about “suspicious transactions” worth roughly $360 million involving OneCoin-related shell companies and private investment firms set up by Scott in the British Virgin Islands. These same firms are at the heart of federal bank fraud and money-laundering charges brought against Scott and Armenta.

Ignatova herself faces charges of wire and securities fraud and money laundering but has absconded. She and her company are also being investigated by law enforcement in multiple countries.

The secret bank documents often draw a straight line between the failure of banks and other financial institutions to keep money laundering in check and the unrelenting pace of criminal activity on a global scale.

The project is based on 2,100 unique documents, reported on by 110 news outlets from 88 countries. It identifies more than $2 trillion in transactions flagged by banks as suspicious and includes reports sent to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), charged with sniffing out money laundering, terror financing and other financial crimes. The stories based on those documents were published this past week around the globe under the common banner The FinCEN Files.

BuzzFeed News will not comment on the identity of its source.

The production of a SAR is not in and of itself evidence of a crime.

Four years ago, the Panama Papers, a massive leak of documents from the law firm Mossack Fonseca, revealed how the rich and devious evade taxes and launder profits through opaque offshore shell companies. The FinCEN Files show how banks remain vital conduits in moving illicit money out of reach. And South Florida is continuing to play an important role.

A SAR from December 2015 shows that Wells Fargo branches in and around Pompano Beach had flagged suspicious OneCoin-related transactions involving Belletide LLC, a Florida incorporated firm in Deerfield Beach.

Belletide is owned by John Gerant, the former Miami cop, and his son, Sean, state incorporation records and SARs show.

OneCoin is not a scam, said Sean Gerant, adding that “thousands of people are using the [OneCoin] app.”

The app is not available online, and OneCoin websites are blocked in the United States.

“Their intent is not to scam and rip people off,” Gerant said of the company.

“Their intent is to give people power back, financial power and growth, that we haven’t had because the rich are getting richer and the poor are getting poorer.”

John Gerant declined to comment. The Gerants have not been charged with any OneCoin-related crime.

While the Justice Department has charged the founders and top leadership of OneCoin, which it described as a “fraudulent cryptocurrency scheme” based “on lies and deceit,” the firm itself is based in Bulgaria and has not been charged.

The department declined to comment on OneCoin’s activities, citing ongoing investigations and court proceedings.

OneCoin did not respond to requests for comment.

MONEY, REIMAGINED

Cryptocurrency is a form of digital money that is decentralized and not tied to any central bank. Common currency like the U.S. dollar is issued by a central bank but its value versus Japan’s yen or Mexico’s peso is determined by underlying economic indicators. The value of cryptocurrency, however, is based on available supply and its demand. It is secured by a technology called “blockchain,” which is essentially a ledger of all transactions, enforced by disparate servers that make it nearly impossible to counterfeit or manipulate the value.

In recent years some cryptocurrencies have provided scammers with a platform to trick people into investing, and federal authorities have been closely watching the nascent digital currency market with an eye toward protecting U.S. consumers. Many digital coin offerings are being shut down by regulators as unregistered securities.

Bad actors count on the lack of transparency around cryptocurrency and the opaque world of shell companies to commit crimes, said Dennis Lormel, a former section chief of the FBI’s Financial Crimes Unit who specialized in investigating money laundering, terror funding and fraud.

Lormel’s advice to consumers is simple: “If it sounds too good to be true, it probably is too good to be true.”

CONTROVERSIAL PAST

Long before his association with OneCoin, John Gerant knew controversy.

As a Miami police officer, he testified against four white Metro-Dade cops in the trial over the killing of Black insurance executive and retired Marine Arthur McDuffie. The four were accused of beating him to death with their department-issued flashlights after a short motorcycle chase. Their acquittal sparked the Liberty City riots in 1980, which left 18 dead and swaths of the city torched.

John Gerant left the force and turned to drug smuggling.

When police arrested him with 22 pounds of cocaine in his car in 1983, he returned home to his wife in Boca Raton. Facing charges in Baltimore for smuggling in 1,700 pounds of Colombian cocaine, he cut a deal, testified against the other conspirators and agreed to become an informant. In return, he escaped prosecution.

The ex-Miami cop bought a plane and flew undercover missions to Colombia and the Caribbean islands for the FBI and the Drug Enforcement Administration, helping them nab dozens of smugglers. He was also allowed to keep around $1.5 million from his drug sales and bought luxury cars and incorporated several firms in Florida.

But in 1991, federal agents charged him with lying and continuing to traffic drugs. He was put behind bars and, according to Federal Bureau of Prisons records, released in July 2011.

Today he lives in a house in a senior-living community in Broward County. According to real-estate website Zillow, it is worth roughly $167,000.

Only one of his neighbors — an older woman — answered her door. She said she knew him, not as a former police officer but as a pilot.

The leaked bank report from Wells Fargo states that the account held by Belletide LLC, the Gerants’ firm, received roughly $56,000 in suspicious transactions from June to September 2015. The account also wired out $73,500 to One Network Services, a OneCoin-related Bulgarian entity, from August to September that year. In return, it received $3,100 marked as “commission” in November 2015.

Interviewed by the Herald and McClatchy, his son described finding OneCoin through ads he saw on social media and YouTube. He said he made investments himself and “didn’t lose any money.”

“The value went up,” he said, but declined to provide numbers. “I haven’t done much with it because I’m waiting for them to open up more territories.”

Gerant said he was signed up by someone who went by the name “Rick Crypto,” a friend of someone named “Sal” who oversaw all Florida signatories and who signed up around 30,000 Americans.

Court records in the Mark Scott case suggest that man was probably Sal Leto, currently a Tennessee resident. Leto is also named as a U.S. representative of OneCoin in a class-action lawsuit against the company.

“I know he [Sal] made millions and millions of dollars … and he had direct contact with Ruja,” Gerant said, adding that he himself became a recruiter and “signed up probably 20 people.”

According to the SAR, roughly $20,000 received by the Gerants’ firm’s account during the period it was transacting with OneCoin-related firms in 2015 came from an account tied to Tropical Treeworks, a Miami nursery owned by Bartholomew Coia. Coia is also a cannabis farmer in Colorado.

By Shirsho Dasgupta, Kevin G. Hall, Ben Wieder, Jay Weaver and Monika Leal, Miami Herald, 25 September 2020

Read more at Miami Herald

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