Former New Yorker Sentenced To Three Years In Prison For Defrauding Purchasers Of Cryptocurrency-Mining Computers And Miner-Hosting Services

Damian Williams, the United States Attorney for the Southern District of New York, announced that CHET STOJANOVICH, a/k/a “Chester J. Stojanovich,” was sentenced today to three years in prison.  STOJANOVICH was sentenced for defrauding more than a dozen victims of more than $2 million through fraudulent misrepresentations that he would provide his customers with specialized cryptocurrency-mining computers (“Miners”) and Miner-hosting services that would provide the victims with a lucrative stream of “hash power” convertible into cryptocurrency.  Instead, STOJANOVICH misappropriated his victims’ money and failed to provide them with the Miners and Miner-hosting services they had purchased from him.  Stojanovich previously pled guilty on November 29, 2022, to one count of wire fraud and was sentenced today before United States District Judge Denise Cote.

U.S. Attorney Damian Williams said: “Chet Stojanovich took advantage of a flashy new trend in the financial sector to swindle his victims into sending him more than $2 million dollars in exchange for cryptocurrency-related technology and equipment that these victims never received.  This case serves as another reminder that even new financial frontiers are fraught with old-fashioned fraud, but our career prosecutors and law enforcement partners are ever as prepared to root out these schemes.”

According to the Indictment, statements made in court, and other publicly filed documents in this case:

From at least 2019, until his arrest in April 2022, STOJANOVICH controlled various companies, including Chet Mining Co. LLC (“Chet Mining”).  Starting in approximately March 2019, STOJANOVICH engaged in a scheme to defraud people who were seeking to purchase Miners and Miner-hosting services through which they expected to obtain “hash power” convertible into cryptocurrency and money.  STOJANOVICH defrauded these victims by falsely telling them that: he would purchase, and had purchased, Miners on their behalf; and he would provide them with Miner-hosting services and had already obtained such Miner-hosting services for them.  

In total, STOJANOVICH fraudulently induced more than a dozen customer-victims to pay a total of more than $2 million to STOJANOVICH and his companies, ostensibly in return for Miners and Miner-hosting services.  Despite fraudulent representations to the contrary, STOJANOVICH: (i) failed to provide many of the Miners that he told customers he had acquired; (ii) failed to provide the Miner-hosting services and cryptocurrency hash power that he represented he would provide; (iii) employed deceptive practices to create the illusion that such Miners had been acquired and were being used to provide hash power to those customers; and (iv) misappropriated his customers’ funds and spent the funds on unrelated and personal expenditures, including chartered air flights, hotel rooms, limousines, and private parties.

Eventually, at least six of STOJANOVICH’s victims sought to hold him accountable for his fraud by suing him in a civil case, Holmes et al. v. Chet Mining, Chet Stojanovich, et ano., Case No. 20 Civ. 4448 (LJL) (S.D.N.Y.).  STOJANOVICH sought to obstruct their efforts by lying under oath at a deposition, and lying to the presiding district judge, about the existence and location of electronic evidence in the case.

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In addition to his prison sentence, STOJANOVICH, 38, previously of New York, New York, but residing in California since his release on bail in this case, was sentenced today to three years of supervised release, forfeiture of $2,158,927, and restitution to his victims in the amount of $2,108,927.  

Mr. Williams praised the outstanding work of the Federal Bureau of Investigation in the investigation of this case

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney David Raymond Lewis is in charge of the prosecution.