Brooklyn Federal Court Charges AI Fund Manager Kanen Flowers with Securities Fraud, Wire Fraud, and Money Laundering

In Brooklyn’s federal court earlier today, an indictment was unsealed accusing Kanen Flowers, a portfolio manager for an AI investment fund, of serious financial crimes including securities fraud, wire fraud, and money laundering. The official announcement of the charges was made by Breon Peace, United States Attorney for the Eastern District of New York, alongside James E. Dennehy, FBI Assistant Director in Charge of the New York Field Office, according to details obtained by the

Department of Justice’s website

. Arrested this morning in Tucson, Arizona, Flowers is due to face arraignment in the Eastern District of New York on these charges.

“Flowers is charged with shamelessly lying to investors to get their money and capitalizing on disruptions in the cryptocurrency market to hide the fact that he had pilfered investor funds for his own benefit,” in a scheme that utilized false claims about the asset diversification and value of the fund, according to a statement made by United States Attorney Peace. Acting from 2020 to 2023, Flowers is alleged to have inflated the fund’s value, deceived investors about the investment strategies in play, and misrepresented the liquidity of assets within the cryptocurrency market for his personal gains, as detailed by the

U.S. Attorney’s Office

.

The indictment puts forth that Flowers committed outright theft of the fund’s assets, using a portion to settle a personal loan and transferring a significant sum of cryptocurrency to himself. Adding further to the litany of accusations, in January 2022, in one such act of personal profit, Flowers reportedly made the fund purchase a non-fungible token, or NFT, for over $100,000, which he then kept for himself. These activities have raised flags about the safeguards in place within the sectors of advanced financial tech, such as AI-driven investment strategies and digital assets.

United States Attorney Peace, now heading the White Collar Fraud subcommittee for the Attorney General’s Advisory Committee, has made it a point of emphasis to combat such financially motivated crimes. The prosecution of this case is being led by the Office’s Business and Securities Fraud Section, under the charge of Assistant United States Attorney Tara McGrath, along with the assistance of Paralegal Specialist Liam McNett. If convicted, Flowers faces up to 20 years for securities fraud and wire fraud, and an additional 10 years for money laundering. It’s a situation where Flowers, if proven guilty, could be made an example for those who might be tempted to abuse the burgeoning yet volatile field of cryptocurrency investment.

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