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BRATTLEBORO — The Securities and Exchange Commission is asking a federal court in Connecticut to order a former Brattleboro man's bitcoin mining companies to pay more than $12 million in reimbursement and civil penalties.

According to a proposed order for entry of default judgment filed in the U.S. District Court for the District of Vermont, GAW Miners and ZenMiner "have failed to plead or otherwise defend in this action ..." and because of that there is "a reasonable and satisfactory factual basis for default judgment and that a further hearing is not warranted."

Though Joshua Garza is named as a defendant in the court documents, only his two companies are listed in the proposed order, which is in response to an Order for Entry of Default Judgment filed by the court on May 29. This order restricts the two entities' activities and does not affect Garza's personal activities outside of these two entities. The SEC is still in talks with Garza as to how to resolve claims against him. A criminal case against Garza has been assigned to a different judge and any criminal consequences will be addressed in that separate criminal case, not in the SEC's case.

The SEC, in its proposed order, is asking the district court to order the two companies to surrender $10,078,331 plus $305,768 in interest from the profits they made in their illegal or wrongful acts, as well as $2 million in civil penalties. The suggested text of the proposed order states "The Court therefore finds that [the SEC] has established liability as to both defendants, and that [the SEC] has adequately supported its requests for permanent injunctive relief ... disgorgement, and third-tier civil penalties pursuant ..."

The injunctive relief decrees that GAW Miners and ZenMiner be "permanently restrained and enjoined from violating, directly or indirectly ..." Securities Exchange Act regulations, and to not "engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person."

The SEC filed its complaint against Garza in late 2015.

Garza was the founder of the now-defunct Optima Computers in Brattleboro in 2002. After Optima Computers went out of business, Garza and his then business mentor, Stuart Fraser, founded Great Auk Wireless High Speed Internet, also in Brattleboro, whose client base was later bought by an unrelated internet provider.

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Garza and Stuart also founded GAW Miners and ZenMiner selling $20 million worth of Hashlets from August to December 2014 in a bitcoin mining scheme that has been termed a Ponzi scheme by plaintiffs in a civil suit originally filed against Garza and Fraser. Garza was later dismissed from the civil suit after conducting "talks" with the plaintiffs. For his part, Fraser, a vice president at the investment firm Cantor Fitzgerald, has contended that he had very little, if any, control of Garza's actions in the alleged Ponzi scheme, claiming the plaintiffs made "a deal with the Devil, agreeing with the previously alleged mastermind of the fraud ... Joshua Garza, to dismiss all the claims against [him]."

According to court documents filed by the SEC, violations committed byGarza "relate to his sale of investment contracts, that he named Hashlets, to more than 10,000 investors."

"Defendants sold far more Hashlets worth of computing power than they possessed. Garza and his companies also made numerous false and misleading statements about their virtual currency mining operations to potential and actual investors," stated the Securities and Exchange Commission.

Garza has had little to say, pleading the Fifth Amendment and refusing to answer any questions about his involvement.

The civil suit against Fraser is still pending.

Bob Audette can be contacted at 802-254-2311, ext. 160. Follow him on Twitter @audette.reformer.