Brooklyn Crypto Influencer Sentenced to Prison for Seinfeld-Inspired Ponzi Scheme
A Brooklyn-based cryptocurrency influencer, known for his podcasting and deceptive investment pitches, has been sentenced to nearly four years in federal prison for orchestrating a multimillion-dollar Ponzi scheme. The scheme, which defrauded at least 17 individuals of over $2 million, involved referencing the popular television show Seinfeld through the fictional "Vandelay Contracting Corporation."
Thomas John Sfraga, 56, who also operated under the alias "TJ Stone," used his platform and personal connections to lure unsuspecting victims into investing in his fraudulent business ventures. Sfraga’s actions targeted not only cryptocurrency investors but also friends, neighbors, old classmates, and even his child’s baseball coach, showcasing a disturbing betrayal of trust.
The Vandelay Contracting Corporation, named after a running gag on Seinfeld where the character George Costanza invents "Vandelay Industries" to fraudulently claim unemployment benefits, became a symbol of Sfraga’s deceit. While Costanza’s fabricated company was a harmless comedic device, Sfraga’s Vandelay proved to be a tool for financial exploitation, causing significant financial and emotional harm to those who invested in it.
According to federal court documents, Sfraga’s Ponzi scheme ran from 2016 to 2022. During this period, he promised investors, primarily from Brooklyn, Long Island, and Staten Island, opportunities in real estate and cryptocurrency. However, instead of investing the funds as promised, Sfraga used the money for personal expenses and to repay earlier investors, a common tactic in Ponzi schemes to maintain the illusion of profitability and attract new victims.
U.S. Attorney for the Eastern District of New York, John J. Durham, condemned Sfraga’s actions, stating, "Sfraga callously stole from friends, next-door neighbors, and the parents of children who played on teams with his own children, as well as from individual cryptocurrency investors. There was nothing funny about his use of a Seinfeldian company, Vandelay Industries, to carry out this fraud, which caused severe financial and emotional harm to the hard-working men and women who trusted him."
As the scheme unraveled, investors began to suspect fraud, leading to demands for their money back. Facing exposure, Sfraga fled to Arizona under a false identity. However, his attempt to evade justice was short-lived. He later fled to Nevada, where he was apprehended for failing to pay his bill at a casino in Las Vegas.
U.S. District Judge Frederic Block sentenced Sfraga in Brooklyn on Thursday to 45 months in prison after he pleaded guilty to wire fraud in May 2024. In addition to the prison sentence, Judge Block ordered Sfraga to forfeit $1.3 million. The amount Sfraga will be required to repay to his victims will be determined at a later date.
The case highlights the dangers of unregulated cryptocurrency investments and the importance of due diligence before entrusting funds to individuals or companies. It also serves as a cautionary tale about the devastating consequences of Ponzi schemes, which often prey on personal relationships and exploit trust for financial gain.
Among Sfraga’s victims were people he had known since grade school, parents of children who played on the same sports teams as his child, and individuals he met at cryptocurrency networking events. He even stole money that had been gifted to a young couple for their wedding, demonstrating a complete disregard for the well-being of others.
Sfraga’s fraudulent ventures included a company called Build Strong Homes and a "virtual wallet" cryptocurrency venture. One victim, who met Sfraga during a difficult divorce, was offered assistance with his financial struggles. He believed Sfraga was a friend that he could trust. The friend’s faith was betrayed as Sfraga used this trust to take advantage of him.
Another victim from Brooklyn believed he was participating in a legitimate business venture, providing Sfraga with insider information on foreclosures in exchange for investment opportunities. Sfraga made a few initial payments to the victim before abruptly cutting off communication.
In another instance, Sfraga convinced a victim from Long Island and the victim’s father to invest substantial sums of money in real estate projects. He later persuaded the same victim to give him $50,000 in wedding gifts. When the victim demanded the money back, Sfraga fabricated a story about his father being terminally ill in Alaska.
Sfraga’s Vandelay Corporation was purportedly affiliated with a cryptocurrency company based in Manhattan. He met one of his victims at the company’s building, introducing himself as TJ Stone. He then convinced the victim to invest $30,000 in Vandelay "e-wallets." Sfraga cashed the check on the same day. When they scheduled an appointment for Sfraga to create an "e-wallet" on the victim’s phone, he failed to appear. When asked for a refund, Sfraga said he was in the hospital after suffering a heart attack. Then Sfraga cut off contact.
During a guilty plea hearing, Sfraga admitted, "Instead of investing money, I used some of it to cover my own expenses and to pay back earlier investors and business associates. I knew that some of the assurances and guaranties that I made to investors were false, and that this was wrong."
Sfraga’s motivation remains somewhat of a mystery to prosecutors as he appeared to enjoy a comfortable life. He was married to a wife described as "unbelievably supportive" and had two healthy children involved in local sports teams. Furthermore, some of his legitimate business ventures generated substantial income.
Court filings indicate that Sfraga also earned a "living wage" from his podcast, a comedy show called 3 People Like This, which had over a million listeners and was sponsored by advertisers from 2017 to 2018.
Despite his opportunities for a productive and lawful life, Sfraga chose to defraud his friends and neighbors, exploiting their trust for personal enrichment. The case serves as a stark reminder of the devastating impact of financial fraud and the importance of remaining vigilant against investment scams.
