New Nebraska law takes action against crypto-mining company

by Martha Stoddard

State banking officials have issued a cease-and-desist order against a crypto-mining investment company after it took $725,000 from a Nebraska investor and her mother.

The order bars Satitech Mining and Machinery, an online company, from offering or selling securities in Nebraska until the securities are registered with the Nebraska Department of Banking and Finance and company officials are registered as broker-dealers or broker-dealer agents under state law. The order took effect Nov. 10.

Department officials were alerted to the situation under a new state law aiming to protect elderly Nebraskans and other vulnerable adults from financial exploitation.

The law, passed this year, allows broker-dealers and investment advisers to pause transactions and notify state officials if they suspect someone is taking advantage of a vulnerable client. A similar law passed last year allows banks and credit unions to take similar action.

Claire McHenry, deputy director for the department’s securities bureau, said the recent case was the first one that led to a cease-and-desist order. But she said the department has received several reports from bankers, credit union officials, broker-dealers and investment advisers with concerns about clients.

“I am very pleased that financial firms are already using the tools provided by the Nebraska Protection of Vulnerable Adults from Financial Exploitation Act,” she said. “This case is an example of how the financial industry and regulators are working together to protect investors.”

According to the department’s order, the recent case began when a Nebraska woman, identified as “MM,” met a person claiming to be “Stephon Lang” on a dating website. He introduced her to his friend, “Michael,” at Satitech, an online entity that offered investments in cryptocurrency mining.

Cryptocurrencies are a form of unregulated digital money that can be used to buy goods and services. They use encryption technology to make them secure. The currencies have been compared to arcade tokens or casino chips, because people exchange real money for the cryptocurrency.

The other way to get more cryptocurrency is through mining, which rewards people for using computing systems to solve extremely complex mathematical puzzles. The process is part of maintaining the technological underpinnings for cryptocurrency. Initially, mining was done on desktop computers but now involves large pools of computers.

Much of the interest in cryptocurrencies has been driven by people looking to trade them for profit, similar to stocks and other assets. Nearly 15,000 different cryptocurrencies are traded publicly, according to CoinMarketCap.com, a market research website.

Satitech’s website touted the entity as: “Best in crypto activities, we focus on crypto currency mining and crypto machinery sales. Be part of the world most biggest (sic) system today.”

Investors were invited to open accounts using cryptocurrencies, such as Bitcoin. The entity was to use the money for mining more cryptocurrency and the investors would share in the profits.

The order said that MM invested $575,000 in Satitech between June 6 and July 1 this year. By late July, the company said her investment had grown to $2.3 million. They said she would need to pay an 18% “clearance fee” to get money out of the investment. She sent a total of $200,000 between July 19 and Aug. 23, which included $100,000 she got from her mother.

At that point, Satitech told MM that she could not get her money because the fee was paid in multiple transactions. The company said she needed to pay another $350,000 fee to draw out her investment.

MM’s mother went to her broker-dealer to get $250,000 of the additional fee. That’s when the broker raised concerns and, based on the new law, reported the situation to the banking department and to Adult Protective Services.

The broker’s intervention and efforts by banking officials kept MM and her mother from sending the additional fee, although they did not get the previous investments back. MM later discovered that the photo Stephon had sent her was associated with other dating site frauds.

“Unfortunately, as with most financial exploitation we come across, it’s very difficult to get the money back,” McHenry said.

State banking officials cautioned investors about doing business online with financial companies with whom they are unfamiliar. In many cases, the investor is told to wire money or send a prepaid card, often to a location outside the United States.

In other cases, investors are instructed to send bitcoin to fund their investment. Investors never receive the promised return and cannot recover their money. Furthermore, they may be asked to provide personal information such as Social Security and bank account numbers, which makes them prime targets for identity theft.

State Sen. Brett Lindstrom of Omaha, who sponsored the newly passed law, said he was pleased that the measure had helped protect Nebraskans.

“While the investment industry continues to evolve, I am confident that appropriate regulation can and will work to combat those that attempt to exploit others for financial gain,” he said.

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New Nebraska law takes action against crypto-mining company

OPINION: The Demise of Mary Cobbs Under Conservatorship of Court Appointed Conservator Michelle Tiernan

By Michelle Snider

Mary Cobbs was conserved in the early Spring of 2015.  Mary developed the onset of early dementia leading to concern by her church family at Allen Temple Baptist Church.  An anonymous call was made to APS leading to a conservatorship without seeking relatives or additional family members who resided in the Bay Area.

A temporary conservator James C. Plummer was assigned, removed within six months, Michele Tiernan became conservator, and that’s when mismanagement of Mary Cobbs’ finances and her health/wellness began to decline.

The care Michele Tiernan set up for Mary was subpar and inadequate.

Mary’s nieces learned of her conservatorship and quickly became involved, visiting her at  “Heart & Soul care facility and immediately felt her finances should’ve afforded her better healthcare. Frank Cobbs, Mary’s ex-husband called a niece in 2018 with concerns about her tooth missing that the care facility couldn’t give an answer regarding what happened.  Her nieces noticed visible scars on her forehead upon their visit.  Once questioning began, Mary’s care changed, her health and wellbeing went downhill.  Cousin Carolyn Hewett asked care providers about her disheveled appearance, as Mary was very well kept, an elegant lady. To see her dressed in oversized, soil clothing and too large shoes was shockingly disturbing.  A call to the owner of the care facility went nowhere, blank stares, and no answers.

Mary had an unexpected fall and broke her hip in the Spring of 2019, never recovered, and passed away shortly thereafter.  The conservator did not allow the family to properly memorialize Mary and noted in her documents to the courts that “Mary’s friends were not available.”

Cousin Carolyn disputes Tiernan’s documentation. “I called Tiernan and asked if a memorial service could be held and Tiernan told me “no.”

Mary was a member of Allen Temple for more than 50 years and served for her would have been appropriate.  The family learned of her burial by calling the cemetery, where she’d been placed two days prior to their inquiry.  The family contacted Tiernan making her aware of their concerns. She ignored them.

Mary had enough assets to afford better care and attention she received under Tiernan.  Her million-dollar estate was mismanaged by Tiernan.  She inflated all costs for service, while Mary’s care was unjust and totally disturbing.  Tiernan must be stripped of her duties for not looking out for the wellbeing of Mary, and the Cobbs family demands an investigation into her practices.

Mary’s niece Donna Pinkard has filed a court motion regarding Mary’s estate and distribution of assets. The final accounting is problematic, as lots of charges and fees that should have been questioned, were not.

Mary was a devout Christian who lived and worked in Oakland for most of her life.  She worked hard for everything she had and for a stranger to step in with what appears to be financial gain is not acceptable to family and should not be to the courts.  To take out loans, divert money, inflate service costs, cash-out money outlined in the will for designated beneficiaries is blatant fraud.

Michele, Tiernan has taken advantage of a vulnerable client and must answer and be held accountable for her actions.

Editor’s Note: Attorney Michele Tiernan was contacted by Post writer Tanya Dennis by email and phone to respond to this op-ed article, as was the management of Heart and Soul, who were contacted by phone.  Both parties failed to respond.

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OPINION: The Demise of Mary Cobbs Under Conservatorship of Court Appointed Conservator Michelle Tiernan