The federal judge in the cases against the Hvizdzak brothers in an alleged multi-million-dollar cryptocurrency scheme has lifted a freeze on their assets to allow a “deed in lieu of foreclosure” to go through.
The brothers, Shane, 34, of Bradford, and Sean, 36, of St. Marys, allegedly operated a cryptocurrency hedge fund scheme, bilking investors out of approximately $31 million, saying it was being invested in digital assets and fabricating statements saying the investments were earning huge returns. The two allegedly put the assets in their personal accounts and moved it outside the U.S.
The Securities and Exchange Commission filed suit against the brothers in June of 2020, and the two were charged in a 65-count indictment by the Department of Justice in August 2021. Both cases are still ongoing.
In the SEC case, Sean Hvizdzak, through attorney David Berardinelli of Pittsburgh, filed a motion at the beginning of September asking for a limited lift of the asset freeze to permit the transfer of real estate.
The motion stated that the brothers, along with a third-party not involved in the litigation, own an office building on St. James Place in Bradford through an entity they formed called HLH Asset Management Ltd. There is an account at Northwest Bank for HLH that is used for expenses related to the building, and has no investor funds, the motion stated.
The building is subject to three mortgages — Northwest, the City of Bradford Office of Economic and Community Development and the McKean County Industrial Development Council. While an attempt had been made to sell the building, the sale did not go through.
Northwest has agreed to accept a deed in lieu of foreclosure for the building, and will apply the funds remaining in the HLH account to the outstanding mortgage. “It is likely that a deficiency balance will remain due to Northwest Bank after these funds are applied,” the motion stated.
No proceeds from the exchange will go to the OECD or Industrial Development Council, the motion stated.
Judge W. Scott Hardy granted the motion.
