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A California man was indicted in an unsealed lawsuit today over his alleged involvement in a coordinated cryptocurrency and securities fraud scheme that used alleged digital currency platforms and US-based financial accounts. foreign.
John DeMarr, 55, of Santa Ana, has been charged in a lawsuit filed in the Eastern District of New York with one count of conspiracy to commit securities fraud. DeMarr made his first appearance this afternoon before US Judge John D. Early of the Central District of California. Judge Early returned the case to the Eastern District of New York for further processing.
“The indictment alleges an elaborate scheme in which the defendant conspired to lure unsuspecting investors with fraudulent promises of significant returns in the cryptocurrency market, only to embezzle millions of dollars for his personal use Said Acting Deputy Attorney General Nicholas L. McQuaid of the Criminal Division of the Department of Justice. “Although technologies and methods are constantly changing, the Criminal Division’s commitment to actively combat fraud in all its forms remains unchanged.”
“As alleged, DeMarr made false statements and promises which persuaded investors to pour millions of dollars into fraudulent cryptocurrency schemes, all to facilitate his extravagant lifestyle,” the US prosecutor said. Acting Seth D. DuCharme of the Eastern District of New York. “We will continue to root out and prosecute those who would trick investors into lining their own pockets.”
“Sir. DeMarr has created an elaborate cryptocurrency system, with high level endorsements and incredibly high returns that have proven to be a mirage costing investors millions,” said Deputy Director in Charge Kristi K. Johnson from the FBI field office in Los Angeles. “Sir. DeMarr is now in custody and no longer spends his victims’ money, or hides from justice by faking his own disappearance.
“In today’s high-tech financial world, there are more and more opportunities for fraudsters to take advantage of people and their bank accounts,” said Special Agent in Charge Ryan Korner of the field office of Los Angeles IRS-Criminal Investigation (IRS-CI). “John DeMarr’s Bitcoin transaction is an example of a cryptocurrency investment plan that has not paid off for its investors. Claiming to be part of a ‘cryptocurrency ecosystem,’ DeMarr created nothing more than an elaborate fraud scheme in which he stole his investors’ money to fund his own personal lifestyle. , resulting in losses totaling over $ 11 million. Financial crimes never pay off, because somehow the person behind the computer will be arrested and held accountable. “
As alleged in the complaint, between 2017 and 2018, DeMarr conspired with others to swindle numerous victims of $ 11.4 million into investing in their businesses, “Start Options” and “B2G,” on the basis of materially false and misleading statements. Start Options claimed to be an online investment platform that provided cryptocurrency mining, trading and digital asset trading services. B2G was allegedly an “ecosystem” that would allow users to trade B2G tokens, provide digital wallet staking, and trade digital and fiat currencies “on a comprehensive and secure platform.”
According to the allegations, however, the startup and B2G options were fraudulent. Around December 2017, DeMarr and others began offering securities in the form of investment contracts to U.S. and international investors through the Start Options website. Investments have been accepted in Bitcoin, US dollars or Euros. To participate, investors had to deposit their funds for a specified contractual period, after which they could allegedly withdraw their money with a significant profit.
Among other things, DeMarr and others falsely claimed that investors’ funds would be invested in digital asset mining and trading platforms that would earn them huge profits. In reality, however, the money was never invested and was diverted to accounts controlled by DeMarr and others and used for various personal expeditions, including the purchase of a Porsche, jewelry, and renovations. at DeMarr’s home in California.
Likewise, according to the complaint, Start Options also purported to present celebrity endorsements to promote its stock offerings. For example, a professional athlete allegedly approved the starting options when, as alleged in the indictment, the athlete was not involved in the starting options and his name and likeness was used without his consent. Based on this and other fraudulent promotional materials, investors sent millions of dollars worth of Bitcoin, Ethereum, and fiat currency to financial accounts, including crypto wallets, controlled by DeMarr and others to United States and abroad.
As alleged, towards the end of January 2018, rather than allowing investors with start-up options to withdraw money from their accounts after the required period of time, DeMarr and others demanded that investors roll over their funds. accounts in an unregistered “initial coin offering”, or ICO, of B2G, the second of two fraudulent companies in which DeMarr was involved. Among other fraudulent misrepresentation, DeMarr and others falsely told investors that the ICO would raise capital for the company to build an “ecosystem” that would allow users to trade B2G tokens, provide wallet staking. digital and negotiate. In truth, investors never received digital tokens, and the funds from the offering were not used to develop the B2G platform.
According to the complaint, DeMarr and others also paid various promoters, including an actor famous for martial arts films made in the 1980s and 1990s, to serve as a promoter and celebrity spokesperson, incorrectly claiming that B2G could generate an “8000%” return for investors within a year, and that he participated in the ICO. DeMarr and others also created fake B2G press releases and white papers, fabricated B2G account statements, and refused to allow investors to withdraw their money.
As alleged in the complaint, DeMarr staged his own demise to avoid facing disgruntled B2G investors. DeMarr asked others to release statements claiming DeMarr had been assaulted and disappeared in Montenegro, and telling B2G investors to stop trying to contact DeMarr or his family about their inability to recover the money they had. invested in B2G. In truth, however, DeMarr did not disappear in Montenegro and would rather have resided in California.
The charge in the complaint is based on allegations, and the accused is presumed innocent unless and until proven guilty.
This matter was investigated by the FBI and IRS-CI. Prosecutor Kevin Lowell of the Fraud Section of the Criminal Division and U.S. Assistant Lawyers Kaitlin Farrell, Hiral Mehta and David Pitluck of the Eastern District of New York are pursuing the case, with the assistance of U.S. Assistant Prosecutor Laura Mantell.
The Criminal Division’s Fraud Section plays a central role in the Department of Justice’s fight against white collar crime across the country.
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