Two individuals, including a man from Utah, have been charged in connection with a fake casino ponzi scheme, having defrauded millions from investors. The accused, Thomas Paul Madden, 66, of Washington City, and Jeremy Tyler Grabow, 54, of Ladera Ranch, California, created a fictitious casino project in Mexico in a bid to secure investment. The casino development was supposed to exist in Cabo San Lucas and investors were promised high returns for their support. The duo claimed that they had secured reputable partnerships for the project to help boost credibility. However, the revenue generated was reportedly used to pay earlier investors and cover personal expenses. Both of which are the hallmarks of a Ponzi scheme.

Traditional brick-and-mortar casinos have already started to see a decline in patronage due to the rise of online gambling. According to a recent study by Jefferies Equities Research, there was a 5% drop in casino visitors in December 2024 across the USA. This case doesn’t help an already struggling sector, further damaging the reputation of traditional brick-and-mortar casinos. Traditional gambling has seen significant challenges due to the rise of the internet and a shift in how players want to participate in betting. Many bettors are now looking online for ease of access and a better gambling experience. They are switching to platforms that offer privacy, a variety of games, and secure transaction methods.

As people start to move away from traditional casinos, many bettors are looking for an online alternative with advanced security and privacy protocols to protect their investments. Many bettors are now even looking at crypto casinos due to the security that blockchain technology can offer.

Experienced and new gamblers alike are looking for options like the best Bitcoin sites at Card Player, that support multiple cryptocurrencies and offer an extra layer of transparency that is difficult to achieve for traditional casinos. According to Andjelija Blagojevic Cvetanovic from Card Player, these online gambling platforms use high-end SSL encryption and most do not require KYC information, ensuring player anonymity.

Crypto casinos boast a range of benefits for players due to their decentralized ecosystem. Their popularity is credited to excellent security features, enhanced privacy, and consumer trust. Blockchain technology protects online casinos from data breaches, fraud, and game manipulation. There is a reduced need for personal information and transactions are both fast and secure. Although crypto casinos don’t come without risks, players can place their bets knowing that their investments in the platform are secure.

This wasn’t the case for the investors of the fake Mexican casino, who lost millions of pounds due to the actions of Madden and Grabow. Investments that were given to the duo were used to pay off existing investors, giving the impression that the project was extremely successful. In Ponzi schemes, scammers will often promise their investors big returns with next to no risk. Ponzi schemes need a consistent flow of new investment to continue. When this new investment dries or when multiple investors ask for their money back the scheme will collapse.

Madden and Grabow used their company, Savitar Systems LLC, to defraud investors into putting up cash for the fake casino in Mexico. To do this they claimed that they had secured strong partnerships to deliver the project including; MGM Resorts, Mexican tour operator Cabo Paradise, Datapod, and the Mexican Lottery. They claimed that they had already received millions of dollars in investment from new potential partners.

The duo also made fake documents to help convince investors that the project was legitimate. The pair made more than 2 million from the Ponzi scheme at the beginning of 2021, from 10 victims. Investors were promised a huge return once the casino had been built, however, the money was not only used to pay off old investors but for personal expenses like real estate and high-end vehicles.

One of the men involved, Madden, has also been running another Ponzi scheme since 2017 through another bogus company Cascade. Madden was able to secure $23 million from 200 investors by promising big returns for penny stock sales. The cash generated was again linked to personal expenses and paying off earlier investors.

The prosecutor stated that the defendants in the casino Ponzi scheme lured investors by organizing high-profile meetings and networking events. The pair went as far as to create fake architectural plans and flew to Cabo San Lucas under the guise of inspecting the apparent casino site. The deception lasted for several years. Madden was then arrested in 2023 for issuing bad checks to his investors. However, he continued to seek investment for his projects even after his felony conviction in 2024 by the Utah 5th District Court.

In March 2024, Madden asked the Fifth District Cout Judge for a probationary sentence. This was to allow him to ‘meet restitution obligations to investors’. He falsely claimed that the ‘project down in Cabo…could be funded as soon as next week, which will bring in substantial funds.’ The federal grand jury returned an indictment last week which led to the arrest of both culprits. Madden has been charged with four counts of wire fraud, whilst both he and Grabow have been charged with money laundering conspiracy.

This is not the only recent case of investment fraud in the casino industry either. The Kevin Foster case also brought significant attention to the gambling world. Foster managed to secure £34 million in investments through a Ponzi scheme. Using his company KF Concept, Foster promised high returns to investors on a collection of gambling and network marketing activities. Using the same strategic tactics previously mentioned, Foster used extravagant presentations and networking events to lure investors. In the Foster case, many investors lost huge sums of money.

The increase in gambling-related Ponzi schemes has increased player scrutiny of the traditional brick-and-mortar casino industry with bettors now looking for trusted operators that prioritize fairness, security, and privacy for both investors and players alike.