A Longmont man has been charged by the federal government with running a Bitcoin-based Ponzi scheme, defrauding hundreds of investors for $1.1 million

Dillon Dean and his company The Entrepreneurs Headquarters (TEH) were formally charged by the U.S. Commodity Futures Trading Commission (CFTC) last week. The government agency alleges that Dean, through TEH, conducted a “fraudulent Ponzi-style” scheme, misappropriated funds and failed to register with the CFTC “in any capacity.”

Dean did not respond to requests for comment. Due to the government shutdown, officials for the CFTC could not be reached, according to a recorded message greeting callers to the agency.

More than 600 investors gave at least $1.1 million worth of Bitcoin to TEH,which promised that it would be pooled and invested in various options. The CFTC claims that, rather than investing, Dean used the funds to pay other investors, “in the manner of a Ponzi scheme.”

“Defendants were not actually engaged in trading on behalf of their customers, and Defendants’ purported trading profits were fictitious,” the CFTC statement read. “As alleged in the Complaint, Defendants stopped making payments to their customers, having misappropriated over $1 million in customers’ funds.”

Angry investors first alerted the newspaper to Dean’s alleged fraud in December, after he posted a message to a private Facebook group alleging that TEH was hit by hackers. Requests for refunds were intermittently honored, and communication with Dean became less and less frequent.

No money was ever returned to Louisiana-based investor Collin Bercier. Bercier said he invested $50,000 worth of Bitcoin with TEH. Given the crypto-currency’s recent meteoric rise, that initial investment would be worth well over $1 million today, he said.

Bercier believes he will “probably not” recover any of those funds, though the CFTC does seek restitution as part of its litigation. He has ruled out private litigation.

“He probably has nothing to pay anybody back with anyway,” Bercier said. “I’d be spending money to get money that’s not there.”

Still, Bercier is pleased with the CFTC’s actions. Through ongoing civil litigation, the agency will seek monetary penalties and trading bans against Dean, according to a release.

Dean will “never be able to escape a Google search of his name (without) this popping up,” he said. “That alone makes me very, very happy.”

Shay Castle: 303-473-1626, castles@dailycamera.com or twitter.com/shayshinecastle