The $24M "AI mining" Ponzi: the wrapper was new, the payment schedule was not
Brent Kovar's Profit Connect ran on a supercomputer that did not exist and on guaranteed returns paid out of new deposits. Measured illicit crypto flows suggest the type is not rare.
The Investor · Invest desk
What happened
- A federal jury in Nevada convicted Brent Kovar on 11 counts of wire fraud, two of mail fraud and two of money laundering after a nine-day trial.
- At least 400 investors put more than $24 million into his company Profit Connect between late 2017 and mid-2021.
- The pitch was a profitable business paying fixed annual returns of 15% to 30%, backed by a full money-back guarantee.
- Kovar also told investors their deposits were FDIC-insured and that the firm held hundreds of millions in crypto reserves. Neither was true.
- Sentencing is set for 30 November 2026, with a combined statutory maximum of 280 years and the term left to the judge.
Why it matters
- What it limits constraint A guaranteed 15% to 30% turns $24 million of principal into $3.6m to $7.2m of yearly cash due, so the operator has to keep raising whatever the technology is doing.
- Who has to decide decision Screening a yield claim comes down to the split the SEC published in 2021: how much of the payout comes from customer revenue and how much from the next subscriber.
- What it sets up precedent The first civil action captured half the eventual money and two-thirds of the eventual victims, so treat the figure in an early freeze order as a floor.
- Who's exposed exposure Losses sit with households regulators say were steered into retirement withdrawals and home equity, the investors least able to wait five years for a courtroom outcome.
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A fixed 15% to 30% a year is a payment schedule before it is a marketing claim. On $24 million of principal, that promise carries between $3.6 million and $7.2 million of annual obligation [19], and the court-appointed receiver who took over Profit Connect in 2021 found the claimed mining had produced only negligible results [14]. Prosecutors said payouts were funded by money from newer investors and presented as proceeds of crypto activity, while investor cash also covered company expenses, employee gifts and a house for Kovar [8]. FBI special agent Christopher Delzotto said victims "thought they were engaged in revolutionary technological advancement" when the operation was "merely a deception" [18].
The diligence question in this case was never technical. When the SEC froze the company's assets in July 2021 [10], it said more than 90% of what Profit Connect had raised came from investors rather than from trading [13]. An allocator needs no opinion on whether software can mine profitably to ask what share of distributions is funded by customer revenue against new subscriptions. That ratio was on the public record in 2021, and it is the ratio to ask of any operator selling a guaranteed yield now.
The timeline carries the other useful number. The indictment came on 14 February 2025, about three years and seven months after the freeze, and sentencing is set for 30 November 2026, roughly five years and four months after it [12][9][22]. In that window the measured harm doubled. The SEC described over $12 million from more than 277 retail investors [13]; the criminal case established at least $24 million from at least 400 [7], twice the money and 44% more victims [21].
Scale sets the last limit on what one verdict can do. TRM Labs estimates investment into the illicit crypto market reached a record $158 billion in 2025, up nearly 145% on the year [15], and Chainalysis counts at least $14 billion received on-chain by scams in 2025, a figure it expects to pass $17 billion as more addresses are identified [16]. The two measure different things, but at the Chainalysis rate, Profit Connect's entire four-year take is about fifteen hours of scam inflows, or 0.17% of a single year [20]. INTERPOL flagged the "industrialization of fraud" in March 2026 [17]. A nine-day trial and five years of process, ending in one conviction [1], does not bend a base rate of that size. The screening stays with whoever writes the cheque, and the SEC's allegation that Profit Connect pushed people toward retirement savings and home equity [11] indicates who tends to write it without asking.
What to watch
- The 30 November 2026 sentencing: the term imposed against the 280-year statutory ceiling, and any restitution figure attached to it.
- Whether the receivership returns anything material to the 400-plus investors, and how the criminal loss figure moves at sentencing.
- Whether Chainalysis revises its 2025 scam receipts past $17 billion as more addresses are attributed.
Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence86
- Adoption42
- Hype gap+18
- Incentives58
- Confidence80
Perspective Coverage
3 publishers- Builder
- Builder 12%
- Operator
- Operator 35%
- Investor
- Investor 53%
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
A federal jury in Nevada found Las Vegas businessman Brent C. Kovar guilty on 11 counts of wire fraud, two counts of mail fraud and two counts of money laundering after a nine-day trial.
- [2]
Kovar was convicted on August 24; the US Justice Department announced the verdict on a Monday.
- [3]
Kovar owned Profit Connect from late 2017 to July 2021, and the company purportedly used artificial intelligence software on a supercomputer to mine crypto and verify crypto transactions.
- [4]
Profit Connect presented itself as an artificial-intelligence company mining cryptocurrency on a supercomputer; that technology did not exist.
- [5]
Kovar falsely presented Profit Connect as profitable and promised fixed annual returns ranging from 15% to 30% along with a 100% money-back guarantee.
- [6]
Kovar claimed investor deposits were protected by the Federal Deposit Insurance Corporation and that Profit Connect held hundreds of millions of dollars in crypto reserves; both claims were false.
- [7]
At least 400 investors gave more than $24 million to Profit Connect between late 2017 and mid-2021.
- [8]
Prosecutors showed Profit Connect generated virtually no legitimate mining revenue and that Kovar used money from newer investors to pay earlier ones while presenting the payments as proceeds from crypto activity; investor funds also covered company expenses, employee gifts and a house for Kovar.
- [9]
Kovar is scheduled to be sentenced on November 30, 2026; the combined statutory maximum is 280 years, with the final sentence set by the judge under federal guidelines.
- [10]
The SEC secured an emergency asset freeze against Profit Connect in July 2021, and against Kovar and his mother Joy Kovar, described as a control person.
- [11]
Regulators alleged Profit Connect encouraged people to take money out of retirement savings and home equity, and targeted individuals saving for their children's education.
- [12]
A federal indictment was handed down on February 14, 2025.
- [13]
The SEC said that at the time of the freeze Profit Connect had raised over $12 million from more than 277 retail investors, with over 90% of the money raised coming from investors rather than from trading.
- [14]
A court-appointed receiver took control of Profit Connect in 2021 after finding the claimed mining operations had produced only negligible results.
- [15]
TRM Labs estimates the illegal crypto market attracted record investment of $158 billion in 2025, up by nearly 145% from the previous year.
- [16]
Chainalysis found at least $14 billion received on-chain by crypto scams in 2025, a figure that may rise above $17 billion as additional illicit addresses are uncovered.
- [17]
In March 2026 INTERPOL raised red flags about the "industrialization of fraud".
- [18]
FBI Las Vegas special agent Christopher Delzotto said the victims "thought they were engaged in revolutionary technological advancement" when the operation was "merely a deception".
- [19]
A fixed 15% to 30% annual return on $24 million of principal implies $3.6 million to $7.2 million of annual payout obligation.
- [20]
Profit Connect's $24 million total is about 0.17% of the $14 billion Chainalysis counts as 2025 on-chain scam receipts, equivalent to roughly 15 hours of inflows at that annual rate.
- [21]
The criminal case established roughly twice the money and about 44% more investors than the SEC's July 2021 tally: $24 million versus over $12 million, and at least 400 investors versus more than 277.
- [22]
The indictment came about three years and seven months after the July 2021 asset freeze, and sentencing is set for about five years and four months after it.
Sources
3 independent publishers whose own reporting we read for this story.
- cointelegraph.comBusiness owner faces up to 280 years over $24M crypto Ponzi scheme
1 article · August 25, 2026
- crowdfundinsider.comLas Vegas Entrepreneur Found Guilty in Multimillion Dollar Crypto Investment Fraud
1 article · August 25, 2026
- cryptopolitan.comAI and crypto hype collide in a $24M Ponzi conviction
1 article · August 25, 2026
Topics and entities
Topics
- Illicit Crypto Flow Measurement
- Ponzi and High-Yield Investment Schemes
- Retail Investor Protection
- Crypto Fraud Enforcement
- AI Washing in Corporate Narratives
Entities
- IRS Criminal Investigation
- TRM Labs
- Christopher Delzotto
- Chainalysis
- U.S. Department of Justice
- SEC
- FDIC Office of Inspector General
- Interpol
- Federal Bureau of Investigation