Pa. city reels from pair’s alleged investment fraud

Two brothers accused by federal regulators of defrauding friends and neighbors in their Pennsylvania hometown of more than $30 million in an alleged cryptocurrency scheme were indicted this week on related federal criminal charges.

Shane Hvizdzak, 33, of Bradford, and his lawyer brother Sean Hvizdzak, 35, of St. Marys, were accused of converting investors’ money for their own use and lying about their investment performance to lure in more victims.

They were charged with wire fraud, money laundering and conspiracy and are due in federal court later this month. The government is seeking forfeiture of Bitcoins and other digital currencies, two Rolex watches, property in Bradford and $341,000 in cash.

The brothers and their Bradford-based investment company, Hvizdzak Capital Management, drew the attention of federal regulators, leading in March to a filing by the U.S. Securities and Exchange Commission that accused them of misappropriating tens of millions in investor funds.

Efrem Grail, a lawyer for

Shane Hvizdzak and the company, said late Wednesday he was reviewing the indictment.

Sean Hvizdzak’s lawyer, David Berardinelli, said Thursday that “the ‘and/or’ nature of nearly all the allegations in the indictment, instead of articulating anything specific that Sean did wrong, mirrors the improper ‘collective’ allegations that we have raised in the SEC action. Like the SEC action, we intend to vigorously defend the criminal charges.”

The brothers grew up as star athletes in Bradford, a city of about 8,000 with about the same number of people living in the immediate area. Among their alleged victims are people who knew them well, said Mayor James McDonald.

“In a small city like Bradford, Pennsylvania, everyone knows eveyrone,” McDonald said Thursday. “That fact makes what the Hvizdzak brothers did especially painful. The countless acts of betrayal and theft are intimate.”

The Bradford Era last year said Shane Hvizdzak had taught at the University of Pittsburgh at Bradford and St. Bonaventure University, and that Sean Hvizdzak had done legal work for Bradford’s city government.

In a response filed in April, Sean Hvizdzak said he did not “knowingly steal or purloin any money or investor funds or aid and abet his brother in doing so” and indicated some of the SEC allegations were actions of Shane that had been wrongly attributed to Sean. The company also filed a blanket denial of wrongdoing, and Shane Hvizdzak invoked his right against selfincrimination.

They formed a fund in early 2019 and raised more than $31 million from investors to trade in digital assets. The SEC has frozen $7 million, leaving $24 million missing, the SEC alleged in March.

The SEC said one unnamed couple gave them $10 million in May 2020, and that same day $8 million was wired to Shane Hvizdzak’s personal bank account.

“There are some people that have gotten cleaned out and there are some people that have to readjust their retirement expectations,” said McDonald, who noted his city’s annual budget of $11 million is a fraction of the purported losses. “These people, they acted off referrals. It’s not like they were just meeting with complete strangers.”

In a March 2020 pitch to an investor, Shane Hvizdzak claimed that their fund had grown 101% and 93% in the third and fourth quarters of 2019, the SEC said, when in fact the fund had lost money in both quarters. They issued financial statements in early 2020 that claimed the fund had $157 million in assets when it actually had just $2.2 million in cash.

Sean texted Shane on May 5, 2020: “I don’t like how many lies we have to tell,” the SEC said.