The U.S. Justice Department announced Friday that John DeMarr, a 55-year-old man from California, had agreed to plead guilty to one criminal count of securities fraud, which carries a maximum prison sentence of five years.
His sentencing is scheduled to take place on Jan. 4, 2022.
DeMarr participated in a multi-million securities fraud scheme linked to two cryptocurrency companies.
Back in 2017, he and his accomplices started selling unregistered securities of a bogus cryptocurrency mining firm called “Start Options” on its website, with Bitcoin being among the possible payment methods.
In order to drum up interest for the project, the fraudsters started touting a fake endorsement allergy made by a famous sports star.
While investors were promised they could easily withdraw their money, this wasn’t the case, according to prosecutors. DeMarr and others allegedly spent the investors’ funds on a Porshe and other luxuries after obtaining millions of dollars:
According to court documents, DeMarr and others falsely claimed that investor funds would be invested in digital asset mining and trading platforms that would earn them massive profits. In truth, however, the money was never invested and was instead diverted to accounts controlled by DeMarr and others and used for various personal expenditures, including the purchase of a Porsche, jewelry, and to remodel DeMarr’s home in California.
In early 2018, the victims were forced to move their funds to B2G, a fraudulent initial coin offering that was promoted by American actor Steven Seagal.
As reported by U.Today, Seagal had to pay a $314,000 fine to the U.S. Securities and Exchange Commission after being charged with illegally touting the investment.