A Las Vegas businessman who sold investors on an “artificial intelligence supercomputer” that supposedly generated cryptocurrency profits has been convicted after taking $24 million from at least 400 investors.
- A federal jury convicts Las Vegas businessman Brent C. Kovar for orchestrating a twenty-four million dollar fake AI supercomputer fraud.
- Brent C. Kovar faces a maximum sentence of 280 years after deceiving at least 400 investors through his firm, Profit Connect.
- The case highlights the growing use of complex AI narratives to mask traditional Ponzi schemes and evade regulatory scrutiny from the SEC.
A federal jury found Brent C. Kovar guilty of 11 counts of wire fraud, two counts of mail fraud and two counts of money laundering following a nine-day trial, the U.S. Justice Department said Monday.
Kovar faces a statutory maximum of 280 years in prison. He is scheduled to be sentenced on Nov. 30, with the final penalty to be determined by a federal judge under sentencing guidelines and other statutory factors.
Kovar owned Profit Connect from late 2017 through July 2021. He told investors the company used AI software running on a supercomputer to mine cryptocurrency and verify transactions.
He promised fixed annual returns of 15% to 30%, along with a 100% money-back guarantee. He also claimed Profit Connect held hundreds of millions of dollars in cryptocurrency reserves. Prosecutors said none of it was true.
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→ Submit a Press ReleaseThe Supercomputer Pitch
Profit Connect marketed its investment program around the supposed AI technology. Kovar represented the company as profitable and said the supercomputer generated the returns paid to investors. The company also promoted the investment through its website, YouTube videos and presentations, according to the Justice Department.
The SEC had challenged those claims years earlier. In July 2021, the regulator obtained an emergency court order and asset freeze against Profit Connect, Kovar and his mother, Joy Kovar, after alleging the company had raised more than $12 million from at least 277 investors.
The SEC said Profit Connect had claimed its “artificial intelligence supercomputer” generated enormous returns that allowed it to guarantee investors 20% to 30% annual returns. But more than 90% of the company’s funds came from investors, the SEC alleged. It said the money was not being used as promised to trade securities or buy cryptocurrency.
Instead, investor funds were allegedly transferred to personal accounts, paid to promoters and used for Ponzi-like payments to other investors.
Where the $24 Million Went
The criminal case put the amount obtained from investors at $24 million, involving at least 400 people. Prosecutors said Kovar knew Profit Connect was not profitable and had no cryptocurrency reserves or legitimate way to generate the promised returns.
Instead, investor money was used to keep the company operating, buy gifts for employees and purchase a house for Kovar. He also used new investor money to repay earlier investors while presenting those payments as proceeds from cryptocurrency mining and transaction verification, according to the Justice Department.
Kovar also falsely told some investors that their investments were backed by the Federal Deposit Insurance Corp., prosecutors said.
From $12 Million to $24 Million
The case had already drawn federal attention before the criminal prosecution. The SEC’s 2021 action said Profit Connect had raised more than $12 million from at least 277 retail investors. The regulator alleged the company encouraged people to use retirement funds and home equity to invest.
The later criminal case involved twice that amount and more investors. After the nine-day trial, the jury convicted Kovar on all 15 counts announced by the Justice Department. The FBI, IRS Criminal Investigation and FDIC Office of Inspector General investigated the case.
280 Years Is the Statutory Maximum
The 280-year figure is the combined statutory maximum for Kovar’s convictions. It is not the sentence he will necessarily receive.
A federal judge will determine the actual sentence after considering the federal sentencing guidelines and other statutory factors. Kovar is scheduled to be sentenced Nov. 30.
The case began with a promise built around emerging technology: an AI-powered supercomputer supposedly capable of generating steady cryptocurrency returns. Federal prosecutors said the money behind those returns came instead from the investors themselves.
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