If you thought this case was just about one guy losing his Bitcoin, think again. This legal battle against the Consumer Advocacy Center, which began on October 21, 2019, has evolved into one of the largest fraudulent student loan debt relief schemes in history, featuring fake promises, corporate shell games, and now, a cryptocurrency mystery.
How It All Started: The $95 Million Fraudulent Student Loan Debt Relief Scheme
Back in 2019, the Consumer Financial Protection Bureau (CFPB), along with Minnesota, North Carolina, and California, filed a lawsuit against a group of companies running a massive student loan debt relief operation that was alleged to be deceptive, misleading, and unlawful.
The defendants—Consumer Advocacy Center Inc., True Count Staffing Inc., Prime Consulting LLC, and their owners, including Kaine Wen—were accused of tricking thousands of student loan borrowers into paying illegal upfront fees while falsely promising loan forgiveness and lower payments.
The Game in a Nutshell
- Borrowers were told that for a fee of $900 to $1,300, they could qualify for immediate loan forgiveness or lower monthly payments.
- Salespeople pretended to be affiliated with the U.S. Department of Education, pushing borrowers into expensive and unnecessary services.
- Instead of helping, the companies misled borrowers into believing their loans were being handled or forgiven while actually pocketing the fees and leaving borrowers in worse financial shape.
- The fraudulent student loan debt relief scheme raked in over $95 million before authorities stepped in.
When the case was filed, the government requested a freeze on assets, leading to years of back-and-forth legal battles over missing money, deceptive financial practices, and cryptocurrency holdings.
Fast Forward to 2023: Final Judgment Against Kaine Wen
While I wasn’t actively covering the case, the CFPB did obtain a final judgment against Kaine Wen on May 1, 2023. The court found Wen liable for the unlawful practices tied to the student loan debt relief operation and issued a permanent ban on his involvement in financial services.
Key Findings in the Final Judgment:
- Wen personally controlled the debt-relief companies, making him responsible for the fraudulent scheme.
- The companies illegally collected $95 million in upfront fees from borrowers.
- The court ruled that Wen engaged in deceptive, unfair, and abusive practices under multiple consumer protection laws.
- The judgment ordered Wen to pay $243 million—including $95 million in consumer restitution and $148 million in civil penalties.
- The ruling also included a permanent ban on Wen from participating in financial services.
Despite this, Wen has failed to turn over his cryptocurrency assets, leading to ongoing legal battles.
Where’s the Money, Kaine?
After the final judgment, Wen was ordered to surrender his assets, including a fortune in cryptocurrency. But instead of cooperating, he has offered up a series of convenient excuses that make a magician’s disappearing act look amateur.
Wen’s Excuses for the Missing Crypto Fortune:
- “My phone was stolen in prison!” – The phone allegedly stored vital login credentials.
- “My Bitcoin was handled by someone named ‘Sea’ on WeChat.” – An unknown associate supposedly controlled the assets.
- “I gambled it all away!” – Wen claims he lost millions through high-risk investments and online betting.
- “I don’t keep records.” – Despite dealing with millions in cryptocurrency, Wen conveniently never documented transactions.
The Receiver and the court aren’t buying it. They believe Wen is deliberately hiding the assets, hoping that if he delays long enough, the money will stay out of reach.
New Players in the Game: Corporate Shell Games & Contempt of Court
But Wen isn’t the only one under fire. Jason Blust and his companies, Lit Def Strategies LLC and Fidelis, are now facing increased scrutiny. The Receiver alleges they engaged in a corporate disappearing act to circumvent court orders.
Blust’s Alleged Scheme:
- Lit Def Strategies was ordered to shut down, but Blust helped create Fidelis, which took over similar operations.
- Fidelis received $750,000—money that the Receiver argues should have been accounted for by Lit Def.
- Blust and his associates have been accused of making misleading statements to the court, and some have invoked the Fifth Amendment when questioned.
- The Receiver is demanding that Fidelis assets be seized and requesting daily $1,000 fines for Blust’s continued noncompliance.
Wen’s Rebuttal: “I’ve Done Enough”
In a recent filing, Wen is pushing back against claims that he is hiding assets. He argues:
- He has already turned over luxury items, including expensive watches and a diamond.
- He no longer has access to his lost cryptocurrency.
- He earns only $16 per hour as an office administrator and cannot afford further payments.
However, the Receiver and court remain highly skeptical. The Receiver contends that Wen still has access to undisclosed assets and has a history of avoiding financial accountability. The court has already held him in contempt, demanding further proof rather than taking his claims at face value.
The Bigger Picture: A Case Study in Financial Evasion
This case is no longer just about student loan fraud—it has expanded into a battle over digital assets and corporate restructuring allegedly used to hide money. The court is now dealing with a modern financial enforcement challenge: Can the legal system track and recover assets in the era of cryptocurrency and corporate shell games?
The showdown continues—will Wen and Blust finally comply with court orders, or will they continue to evade financial accountability? One thing is clear: The court remains highly skeptical of Wen’s claims that his cryptocurrency is lost or inaccessible.
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Documents
Additional documents are available through Pacer.gov if you want to read more.
