San Francisco man gets 6-month prison sentence for embezzling $5M in cash and cryptocurrencies
An illustration showing Bitcoin and cash.
SAN JOSE, Calif. - A San Francisco man was sentenced to six months in prison and ordered to pay restitution after admitting to a multi-million-dollar embezzlement of cash and cryptocurrency.
Jerry Ji Guo, 33, was sentenced in U.S. District Court in San Jose on Tuesday after pleading guilty to a count of wire fraud in connection with a scheme to defraud clients of more than $5 million, according to the government's sentencing memorandum.
The memorandum said that Guo, while serving as a consultant in a cryptocurrency initial coin offering, "directed his clients to deposit money and cryptocurrency into accounts or cryptocurrency wallets ... and falsely promised that the cryptocurrency would not be transferred out of the wallets without the clients' knowledge or consent."
But Guo maintained a private security key and used it to transfer funds from those accounts to himself without his clients' knowledge.
Guo was arrested in Puerto Rico in November 2018. He entered a plea agreement in August 2019 and stipulated to the forfeiture of roughly $200,000 in cash, 350 Bitcoin, and nearly 7,000 units of Ether, the crypto coin that powers the Ethereum platform.
According to the memorandum, the forfeited assets were worth $21.6 million on Jan. 16.
The six-month prison sentence was a downward departure from federal sentencing guidelines.
Guo's personal story aided him in obtaining the reduced sentence. He was born in China in 1987 and came to the U.S when he was 6, joining his father, who was then a graduate student.
Guo's father finished graduate school and was employed as a textile engineer designing personal protective equipment, according to the sentencing memorandum submitted by Guo's attorneys.
As a boy, Guo moved with his family to North Carolina, Ohio and South Carolina, where his father had jobs.
Guo excelled in school and was able to obtain internships at the California Institute of Technology and the National Cancer Institute, according to the memorandum.
He earned a full scholarship to Yale University and was naturalized as a U.S. citizen when he was 19.
While in college, he did environmental research in the Galapagos Islands. According to the memorandum, "Guo also found a passion for journalism, and traveled throughout the world as a writer while still in college, even reporting from North Korea."
Guo received his bachelor's degree in economics from Yale in 2009, according to his LinkedIn profile.
The sentencing memorandum recounts that after graduating, Guo lived in Tehran, Beijing, Antarctica, Berlin, Bucharest, Buenos Aires, Medellin (Colombia) and Puerto Rico, working as a journalist and an entrepreneur.
It was in Puerto Rico that his work as a cryptocurrency consultant resulted in his arrest.
In arguing for a reduced sentence, Guo's lawyers pointed to a number of factors that they argued justified a departure from the sentencing guidelines. The lawyers pointed out that Guo had been detained for nearly two months after his arrest and then spent eight months in home confinement at his parents' home in Ohio.
Guo also agreed to forfeit the fruits of the crime and on Wednesday, as a result of the soaring price of Bitcoin and Ether, there are currently more than sufficient funds to make full restitution to the victims.
Moreover, after his arrest, Guo sought and received mental health treatment for depression and began "a fundamental reassessment of his life goals and priorities."
In July 2019, he married his girlfriend and with the court's approval, he moved to San Francisco that August.
In San Francisco, Guo pursued a variety of community work. He delivered food by bike to food pantries and homeless shelters, and volunteered at a food bank.
When the pandemic hit, he founded a company called Super Effective Health that describes itself on its website as "a San Francisco-based supplier of surface disinfectants (wipes and sprays) and other essential PPE."
Guo's sentencing memorandum says "The company now oversees two manufacturing centers, in California and Indiana, and is in the process of distributing hundreds of thousands of canisters of disinfecting wipes each month. Super Effective Health plans to start production from a third bottling facility in Texas in the coming months, which should increase the company's output to as much as two million units per month."
Guo and his wife had a baby daughter in October 2020.
The memorandum sums up with the statement that Guo "does not view his rehabilitation as complete -- his remorse and self-reflection continue to drive his conduct."
His lawyers requested that he be sentenced to the roughly two months he had already spent in custody. The U.S. Attorney's Office did not recommend a specific sentence but urged that "a sentence of confinement be imposed."
However, according to the government's sentencing memorandum, in imposing a sentence the court could properly consider that the charged crime was Guo's first offense and that his "personal, educational, and professional accomplishments, prior to this serious misconduct, are impressive. He has the talents and abilities to rebuild his career and lead a law-abiding life."
The sentence imposed by the court, in addition to six months' imprisonment and restitution, includes a three-year period of supervised release.