By: Serach Nissim
On Monday, an executive for two sham cryptocurrency companies was arrested by federal authorities for defrauding investors, and then enacting his own disappearance.
As reported by the NY Post, John DeMarr of Santa Ana, Calif., allegedly fooled investors into purchasing his now worthless cryptocurrency companies and spent the money to buy a Porsche, jewelry and renovate his house, the Brooklyn federal complaint states. DeMarr tapped action movie star Steven Seagal to endorse his investments. As per the complaint, the investors did not ever receive any digital tokens, and their funds were not actually used to develop the companies.
“As alleged, DeMarr made misrepresentations and false promises that coaxed investors into pouring millions of dollars into fraudulent cryptocurrency schemes, all to facilitate his extravagant lifestyle,” stated Acting US Attorney Seth DuCharme.
Prosecutors say DeMarr, the 55-year-old former private detective, targeted investors and enticed them into pouring money into ‘Start Options’ and ‘Bitcoiin2Gen’, which was supposed to be a B2G digital currency comparable to Bitcoin, but much more affordable and with room to grow.
For his role endorsing the investments, Seagal is not being criminally charged. However, last February, he was fined $314,000 by the US Securities and Exchange Commission, for his failure to disclose that he was being paid to promote the cryptocurrency, which by now has lost all its value. The complaint says that Seagal “falsely claimed on social media that B2G would generate an 8,000 percent return for investors within one year.” Seagal’s picture and name were also used in company pamphlets, which said he had “Become the Brand Ambassador of Bitcoiin2Gen”. As per the SEC, for his efforts in promoting the products he was slated to receive $250,000 in cash as well as $750,000 worth of B2G tokens.
In addition, Start Options fabricated that retired NBA player Andrew Bogut had endorsed the company. Prosecutors, however, found that Bogut had no affiliation with the company and that his name and photo were publicized without his permission or knowledge.
The complaint says that once investors caught on, DeMarr staged his own disappearance. He had a co-conspirator make a public statement saying that DeMarr had flown to Montenegro, where he was assaulted and had $25 million in B2G tokens stolen from him, and that he could not be found, as per the complaint papers. DeMarr is being charged with one count of conspiracy to commit securities fraud, and can face a maximum of five years in prison if convicted.
DeMarr and his defense lawyer, Thomas Sjoblom, did not respond to the Post’s request for comment.