On January 4, 2023, French footballer, Aurélien Michel, was arrested by US authorities as he passed through JFK airport.

He was immediately taken into custody and brought before a federal judge in Brooklyn, where he was arraigned on a complaint charging him with being the leader of a scheme involving NFT fraud. He posted bail on February 1, 2023 and has been at liberty in the U.S. since that time.

According to a complaint sworn by an FBI agent, Mr. Michel is accused of “knowingly and intentionally devising a scheme or artifice to defraud individual cryptocurrency holders in order to obtain money or property from them by means of one or more materially false and fraudulent pretenses, representations and promises, and for the purpose of executing such a scheme and artifice, did transmit or cause to be transmitted, by means of wire communication in interstate and foreign commerce, writings, signs, signals, pictures and sounds ». (Title 18, United States Code, Sections 1343, 2 and 3551 et seq.)

In order for him to be found guilty of this crime, the government must prove that:

1. The defendant engaged in a scheme to defraud;
2. The defendant acted with specific intent to defraud;
3. The scheme resulted, or would result upon completion, in the loss of money, property, and/or honest services;
4. The defendant utilized the courier, mail services or wires in furtherance of the scheme to defraud.

Since April 2022, federal law enforcement officers – in particular, members of the multi-agency Dark Web and Cryptocurrency Task Force – have been investigating a scheme to defraud buyers of NFTs from a collection called “Mutant Ape Planet”, based on the aesthetics of the world-famous and highly prized “Mutant Ape Yacht Club” collection.

The scheme involved soliciting funds from potential buyers, promising them certain benefits before abruptly abandoning the project and keeping the acquired funds. This phenomenon is called a “rug pull” and is well known in the world of cybercrime.

The promised benefits were many and varied: prize draws, exclusive access to other crypto-currency assets and support for a community wallet whose funds would be used to market NFTs.

From January 2022 accounts on social medias platforms such as Twitter and Discord began advertising the NFT “Mutant Ape Planet” project. Messages on social medias described Mutant Ape Planet as a “spin-off collection” of ape-centric NFTs, and directed users to specific websites for more information on the Mutant Ape Planet NFT acquisition, including “mutantapeplanet.com” and a Discord channel for Mutant Ape Planet.

The “mutantapeplanet.com” website presented all the possibilities offered by the purchase of an NFT Mutant Ape Planet and the promise of a vast online marketing campaign designed to highly increase the value of the virtual images.

NFTs, sold on the Ethereum blockchain, cost around $468 each when the collection was launched, based on the price of Ether at the time.

However, once the NFTs had sold out, Aurélien Michel reportedly ceased all communication and withdrew buyers’ funds from the company’s crypto-currency wallets.

According to the US authorities, Aurélien Michel transferred around $2.9 million in crypto-currencies from the buyers to, among other things, asset portfolios controlled by himself.

Subsequently, the only procedural steps taken were orders to continue granted by the magistrate judge overseeing the case at the request of the parties. These various “Orders to continue” can mean several things:

The first possibility is that the parties, i.e. the defendant and the prosecutor, are currently negotiating a “plea”, which is an arrangement enabling Aurélien Michel to plead guilty without having to endure a trial. This type of arrangement is particularly common in the United States. Typically, defendants who plead guilty through a negotiated plea tend to receive more lenient sentences than those who are convicted after jury trials.

The second possibility is that Aurélien Michel’s lawyer, Ira Sorkin (Bernard Madoff’s lawyer, among others), is currently still analyzing the case’s incriminating and exculpatory evidence.

Finally, as permitted by American criminal procedure, it is also possible that Aurélien Michel is a cooperator. This means that, in exchange for a reduced sentence or a more favorable plea bargain, Aurélien Michel would be willing to supply information about co-conspirators in his crime and possibly even testify for the prosecution at the trials of other indicted defendants.

Wire fraud is a federal crime. It is punishable by up to 20 years in prison and a $250,000 fine may also be levied.

The case is USA v. Michel, 1:23-mj-00007, US District Court for the Eastern District of New York (Brooklyn).

Matthew Galluzzo is a federal criminal defense attorney and former Manhattan prosecutor. He speaks fluent French and is a Chevalier in the French National Order of Merit. This article was prepared with the assistance of Marie-Lou Serna, a French trainee lawyer.

It would appear from the complaint that Mr. Michel has an obvious defense that he did not intend to defraud anyone, and that he fully intended to give his customers their NFTs eventually. He may have received the funds and then encountered difficulty in acquiring the NFTs for his customers due to volatile market conditions or other issues.

It is always difficult to estimate sentencing exposure at this stage of a criminal case, but preliminary estimates might suggest the following for Mr. Michel:

Under the federal sentencing guidelines, the base offense level for a wire fraud is usually 6.

For cases involving the alleged theft of over $1.5 million dollars, the sentencing guidelines require that 16 levels be added, resulted in an offense level of 22.

Where there are more than 10 victims of a fraud scheme (or the scheme involves mass-marketing), the guidelines require an additional two offense levels, resulting in a level 24. USSG 2B1.1(b)(2).

There might be an additional two levels relating to the fact that the fraud occurred in a foreign jurisdiction (USSG 2B1.1(b)(10)), but that is unclear.

So, if Mr. Michel is convicted at trial, assuming he has no criminal history (i.e. Criminal History Category I), his sentencing guidelines range would be 51-63 months, or about 4-5 years in prison. Judges use a Sentencing Table promulgated by the Sentencing Commission – see here.

If he pleaded guilty prior to trial, Mr. Michel would likely receive a reduction of 3 levels for acceptance of responsibility, resulting in an offense level of 21 and a range of 37-46 months (3-4 years).

However, there is no mandatory minimum sentence in this case, meaning that he could theoretically be convicted and receive a sentence of time served followed by supervised release.

Mr. Michel would likely be ordered to pay restitution to his victims equal to the amount of their losses, and, if he is not a citizen of the United States, then he would be almost certainly deported following his prison sentence and unable to ever return to the United States (inadmissible).

Matthew Galluzzo is an experienced criminal defense attorney and former Manhattan prosecutor. He specializes in the defense of federal criminal cases in New York City. He also speaks fluent French and has been knighted by the nation of France for his zealous defense of French nationals accused of crimes in the United States and his service to the French Consulate of New York City.

If you or a loved one have been arrested or accused of a federal crime involving wire fraud charges, you should strongly consider contacting Matthew Galluzzo. He has achieved excellent results for many clients accused of these crimes in New York City federal courts and may be able to assist you as well.